With the IOC’s announcement, regarding the recent doping scandal, to allow 271 Russian athletes to compete at the Rio Games, there is now a massive shadow cast over these Olympics. In this blog we are going to examine the potential commercial impact of this scandal.
Given that the IOC is the biggest and most influential rights holder in the world, their decision seems very short-sighted. This was a protracted and ultimately flawed process given that the major exposé on the state sponsored doping scandal centred around the extraordinary levels of corruption by the host nation at an event controlled by the IOC just 2 years ago. If the IOC are not willing to impose serious sanctions as a result of breaches at their most recent Games they are only proving themselves to be thoroughly inept, impotent or equally corrupt.
As a result, having made this decision, the IOC are creating serious commercial issues for themselves down the line because they are undermining the integrity of sport; without integrity, sport loses its relevance.
Why is this such an issue? Fundamentally, both the IOC and FIFA, who have undergone their own well documented series of serious scandals recently, do not compete in the free market. Both organisations have an absolute monopoly on their products, therefore there is no competition or series of checks and balances to keep them in line. This is a unique position. Given recent scandals, if they were to trade in any other competitive business environment they would have fallen by now. However, they do not which has led to both organisations believing that they are invincible and do not have to adhere to the same codes as the rest of the global business community. This is a very dangerous mindset because ultimately this will lead to fans losing patience over this loss of integrity and switching off, meaning that TV audiences drop and broadcast rights revenue will eventually fall. Additionally, brands will question if the high rights fees can continue to be justified in light of both the ethical challenges and also audience reductions.
This potential loss of interest and revenue will not be sudden, which is why the IOC do not appear to be worried. However, when Russian athletes start to win medals, fans, fellow athletes, broadcasters and all other stakeholders are not going to react well and this will begin the erosion of the Olympic brand. The IOC should take note of the number of potential bidding cities who have been dropping out of the process recently. When bidding to host the 2022 Winter Games, the number of cities fell from 9 to 2 before Beijing was chosen. This trend is being repeated for the 2024 Summer Games with Boston, Hamburg, Budapest, Toronto and Rome either withdrawing or likely to withdraw from the process. The IOC need to understand that this is a barometer of global public opinion towards the Games, which is decisively saying that the world’s love of the Olympics is not unconditional.
From a legal perspective, a blanket ban of the Russian team may have been difficult, however in order to sustain the long-term future of the Games the IOC need to resolve this fast to restore faith in this celebration of global sport. Whilst it is too late for this Games, the IOC need to send a very clear zero tolerance message going forward. Additionally, FIFA need to take note of what is going on due to the fact that the next World Cup will be hosted in Russia. Given the Russians track record during the Sochi games, how is the world’s football community going to react when they start winning matches during the 2018 World Cup?
These global sporting organisations need to realise that fans will not continue to accept endless scandals. There will be a tipping point, and with so many other entertainment and sporting experiences vying for our attention, fans will eventually lose patience. Whilst they don’t have to deal with direct competition, these rights holders need to understand fans, sponsors and broadcasters won’t continue to indefinitely support their highly political, corrupt and scandal ridden organisations. They need to act fast and decisively in order to maintain the integrity of all sport and future generations of sports men and women.