The NBC – IOC Television Deal

It was announced on Wednesday that the International Olympic Committee (IOC) and NBC, the United States television network that has televised the Summer Olympics since 1988, have signed an agreement extending NBC’s hegemony over the Summer Olympics in the United States through 2032. The fee was $7.65 billion (US) – that’s billion, which sounds like a huge amount of Franklins – for the rights to the Summer and Winter Games from 2022-2032. We’ll disregard the $100,000,000 signing bonus, presumably for the IOC signing their name nicely, which technically makes it $7.75 billion. How does this compare to previous Olympic television rights in the United States and how have they increased over time?

The Olympic Games have been televised in the United States since 1960. In 1960 CBS Television paid Rome $394,940 for the rights fee, and CBS also paid Squaw Valley $50,000 for the rights fee. Looks like those fees have really skyrocketed over the years, and it continues to skyrocket. As we always do, let’s look at the numbers.

Below are all the Summer Olympics since 1960, with the host city, the US network televising them, and the rights fee. In the far right column, we have calculated the change in rights fees (ΔRF) since 1960. As you can see the US television rights for the Summer Olympics have gone up almost 400000% since 1960. Now we made a few assumptions for 2024-2032. It is known that the rights for 2022/2024, 2026/2028, and 2030/2032 are divvied up as $2.50B, $2.55B, and $2.60B. It isn’t yet known how much of that is allocated to the Summer Olympics and how much to the Winter Olympics. We arbitrarily allocated 60% of each period to the Summer Olympics and 40% to the Winter Olympics, which is approximately the historical average.

Year

Host Network Rights Fee ΔRF

1960

Rome CBS $394940

1964

Tokyo NBC $1500000 380%

1968

Mexico City ABC $4500000 1139%

1972

Munich ABC $13500000 3418%

1976

Montréal ABC $25000000 6330%

1980

Mockba NBC $85000000 21522%

1984

Los Angeles ABC $225600000 57123%

1988

Seoul NBC $300000000 75961%

1992

Barcelona NBC $401000000 101534%

1996

Atlanta NBC $456000000 115461%

2000

Sydney NBC $705000000 178508%

2004

Athens NBC $793500000 200917%

2008

Beijing NBC $893000000 226110%

2012

London NBC $1181000000 299033%

2016

Rio de Janeiro NBC $1226000000 310427%

2020

Tokyo NBC $1418000000 359042%

2024

TBD NBC $1500000000 379805%

2028

TBD NBC $1530000000 387401%

2032

TBD NBC $1560000000 394997%

This is what the chart of those increases looks like, showing the huge upward trend although it does seem to taper off a bit at the right-hand side of the chart.

USTTVSumYr

Here are the corresponding numbers for the US television rights for the Winter Olympics. The original fee of $50,000 for Squaw Valley will increase to $1,040,000,000 for the 2030 Winter Olympics, wherever they may be held. This is an absolute increase even greater than for the Summer Olympics, checking in at just over a 2000000% (that’s 2 million percent) increase, mainly due to the pittance paid for the 1960 rights.

Year

Host Network Rights Fee ΔRF

1960

Squaw Valley CBS $50000

1964

Innsbruck ABC $597326 1195%

1968

Grenoble ABC $2000000 4000%

1972

Sapporo NBC $6401000 12802%

1976

Innsbruck ABC $10000000 20000%

1980

Lake Placid ABC $15500000 31000%

1984

Sarajevo ABC $91550000 183100%

1988

Calgary ABC $309000000 618000%

1992

Albertville CBS $243000000 486000%

1994

Lillehammer CBS $295000000 590000%

1998

Nagano CBS $375000000 750000%

2002

Salt Lake City NBC $545000000 1090000%

2006

Torino NBC $613400000 1226800%

2010

Vancouver NBC $820000000 1640000%

2014

Sochi NBC $775000000 1550000%

2018

Pyeongchang NBC $963000000 1926000%

2022

TBD NBC $1000000000 2000000%

2026

TBD NBC $1020000000 2040000%

2030

TBD NBC $1040000000 2080000%

Here’s what the chart of the Winter Olympics rights increases look like since 1960, again showing some flattening at the right-hand side, near 2022-2030.

USTTVWinYr

So it looks like the US television networks, and since 1988, that pretty much means NBC, are paying out the wazoo for the Olympics, and possibly severely overpaying. But are they really? NBC announced very good ratings for the recent Sochi Olympics and announced that they were pleased with their return on investment (ROI).

How about if we look at the numbers for rights fees corrected against inflation? In 1960, a hamburger at McDonald’s, an Olympic sponsor since 1997, cost 25¢, while today the same hamburger costs you around $1.00. So based on that it appears that the US dollar has inflated about 4 times since 1960. But that only reflects the cost of a McDonald’s hamburger. The actual historical figures in the United States have the US dollar inflated about 8 times since 1960.

Now we have to make some assumptions to analyze this thru 2032, since we don’t know what inflation will be from 2014-2032. In our analysis below, we used an annual inflation rate of 2.81% in the US for 2014-2032, because that has been the annual inflation rate from 1988-2013, or the period when NBC really became the US Olympic Network.

So here is what the numbers look like, corrected against inflation. In the following we have used the benchmark as the value of the US dollar in 2000, a nice benchmark year as the end of the millennium.

Year

Host Network RRF ΔARF ΔRRF

1960

Rome CBS $2541996

1964

Tokyo NBC $9180704 361% 361.2%

1968

Mexico City ABC $25168221 990% 274.1%

1972

Munich ABC $61622693 2424% 244.8%

1976

Montréal ABC $83826050 3298% 136.0%

1980

Mockba NBC $205738715 8094% 245.4%

1984

Los Angeles ABC $384700667 15134% 187.0%

1988

Seoul NBC $446313591 17558% 116.0%

1992

Barcelona NBC $493600318 19418% 110.6%

1996

Atlanta NBC $499993768 19669% 101.3%

2000

Sydney NBC $705000000 27734% 141.0%

2004

Athens NBC $716275315 28178% 101.6%

2008

Beijing NBC $712879459 28044% 99.5%

2012

London NBC $867348798 34121% 121.7%

2016

Rio de Janeiro NBC $820155950 32264% 94.6%

2020

Tokyo NBC $846386112 33296% 103.2%

2024

TBD NBC $798858546 31426% 94.4%

2028

TBD NBC $727036786 28601% 91.0%

2032

TBD NBC $661417806 26020% 91.0%

RRF = relative rights fee, ΔARRF = change in absolute relative rights fees (since 1960), ΔRRF = change in relative rights fees Olympics-to-Olympics

You can see that corrected against inflation, the rise in US television rights fees is not so dramatic, going up not 400K% since 1960, but about 26K%. Still a huge increase, but looking at it more closely, from 2000-2032 there will be very little change in the relative rights fees NBC is paying, corrected for inflation. In fact, from 2012-2032 the relative rights fees paid to the IOC will mostly decrease, except for a small upward blip for Tokyo in 2020. Here is what the chart looks like, which shows the downward trend starting after London (14 below).

 USTTVRelSumYr

Here are the similar figures for the Winter Olympics, again corrected against inflation from 1960-2030, using the same assumption about rates 2014-2030, and using the 2000 US dollar as the benchmark. Again note that the fees do not go up 2 million percent, but about 145000% – still a huge increase. But now starting in 2002, from Salt Lake City onward, there is not much change in relative US television rights fees. Again, after Vancouver in 2010 the trend is mostly downward, except for another small upward blip for Pyeongchang in 2018.

Year

Host Network RRF ΔARF ΔRRF

1960

Squaw Valley CBS $321820

1964

Innsbruck ABC $3655916 1136% 1136.0%

1968

Grenoble ABC $11185876 3476% 306.0%

1972

Sapporo NBC $29218286 9079% 261.2%

1976

Innsbruck ABC $33530420 10419% 114.8%

1980

Lake Placid ABC $37517060 11658% 111.9%

1984

Sarajevo ABC $156114123 48510% 416.1%

1988

Calgary ABC $459702999 142845% 294.5%

1992

Albertville CBS $299114407 92944% 65.1%

1994

Lillehammer CBS $341661893 106165% 114.2%

1998

Nagano CBS $389670308 121083% 114.1%

2002

Salt Lake City NBC $511728840 159011% 131.3%

2006

Torino NBC $520435355 161716% 101.7%

2010

Vancouver NBC $632247732 196460% 121.5%

2014

Sochi NBC $548863699 170550% 86.8%

2018

Pyeongchang NBC $608520791 189087% 110.9%

2022

TBD NBC $563813489 175195% 92.7%

2026

TBD NBC $513123568 159444% 91.0%

2030

TBD NBC $466811406 145053% 91.0%

Here is the chart for the relative Winter Olympics rights fees, demonstrating the downward trend in the last few years of the NBC contracts. This shows that the 2002 Winter Olympics in Salt Lake City and the 2006 Winter Games in Torino (12/13 below) rights fees will be worth more than the 2030 Winter Olympics, and about the same as the 2026 Winter Olympics, in 2000 US dollars.

USTTVRelWinYr

So it looked like a huge number – $7.65 billion – and it is, of course, in absolute dollars. But looking at it more carefully, correcting the time course corrections that will certainly occur in the US dollar, NBC may have gotten a bargain.

However, the IOC also guaranteed itself money thru 2032, ensuring a major source of its income, and it did so at rates approximately keeping pace with expected inflation. So this could certainly be a win-win deal for both parties.

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