NBC to lose $200 million on Olympics

There have been many posts discussing the economic impact of the Olympics, with economists pointing towards the massive debt which cities and others governments are forced to deal with after hosting the Olympic games.  One of the more popular cases is the 1976 Winter Olympics in Montreal, where the Olympic stadium nicknamed the Big O (and subsequently the Big “Owe”) took 30 years to be paid off.  Initial costs for the stadium were estimated around $125 million (Canadian), but Montreal and Quebec ended up paying over a billion Canadian dollars for the stadium construction, renovation, debt servicing and emergency repairs.  This debt was not fully paid off until 2006, a full three decades after the Olympics had ended.

While the Olympics has been a financial detriment to governments, cities, and municipalities, it has been the source of big payoffs for media outlets.  NBC is reported to have sold around $930 million of advertising time space during the 2006 Turin Winter Olympics.  However, on Michael Ozanian’s blog on Forbes online, he is reporting that NBC paid $200 million more for the rights to the Olympics this time around, however they are predicting they will not even sell $800 million in advertisements.  From this, it is estimated that NBC will lose about $200 million from the Vancouver games, this is a large amount especially considering NBC turned a $100 million profit from the 2008 Beijing Olympic games.  With such high costs to get the media rights for Olympic games which only last a few weeks, combined with the potential for less advertising revenue, I wonder if media companies will continue to bid such high amounts to get the rights for games in the future.