How the 2012 Olympics Are a Triumph of Capitalism

Corporate money, freely spent, can benefit both athletes and spectators.

As a New Yorker whose home city's bid to host the Olympics that will begin this week was defeated, it's tempting to greet the arrival of the Olympic flame in London with at least a touch of derision. The whole enterprise is spoiled by biased, anti-American judges from countries like Cuba and North Korea. The Greek fiscal crisis that is dragging down the entire world economy arguably had its roots in the costs of the 2004 Athens games. Some of the sports, like badminton or modern pentathlon, are obscure enough that they verge on the ridiculous, or at least that few people are interested enough to watch them when it isn't the Olympics.

Get past the sour grapes though, and what is about to unfold in Great Britain — 10,490 athletes competing in 302 medal events, for which NBC and its affiliates plan a record 5,535 hours of television coverage — is an awesome spectacle. For the splendor of it, the world can thank not Baron de Coubertin, the avatar of amateurism who founded the modern Olympics, but capitalism.

The Athens example notwithstanding, after all, the money that funds the Olympics comes largely not from governments but from the private sector. NBC (not a Cuban or North Korean television company but an American one) agreed to pay a reported $4.38 billion for the rights to broadcast four Olympics, a sum that is itself made possible by NBC's sale of commercial sponsorship time to advertisers. Even "broadcast" is now a misnomer, as the games are streamed on the Internet and available on cable channels. Another nearly billion dollars in Olympic funding comes from worldwide marketing sponsors like GE, Coca-Cola, McDonald's, and Visa.

Critics will carp that by sponsoring the Olympics, companies like Coca-Cola and McDonald's are misleading their customers. Wash down enough Big Macs with enough Cokes and your body won't look like that of an Olympic athlete.

It's not just fast-food chains and soft drink companies that see golden opportunities in Olympic marketing, though. The Wheaties cereal box has featured medalists like Olympic decathlon champion Bruce Jenner, gymnast Mary Lou Retton, and swimmer Michael Phelps. The swimsuit manufacturer Speedo paid Phelps a $1 million bonus for winning eight gold medals at the Beijing games in 2008. Sportswear and athletic shoe brand Nike will reportedly sponsor the U.S. Olympic basketball team.

It wasn't always this way. The Washington Post reported the other day: "The monetization of Olympic athletes is a relatively recent phenomenon, said Prashant Malaviya, associate professor of marketing at Georgetown University. Until the 1970s, competitors were prohibited from accepting endorsements and payment for commercial advertising. Competitors were required to be amateurs. It wasn't until 1986 that professional athletes were allowed to take part in the Olympics."

Rather than corrupting the games, as some had feared — international Olympic documents still list as an objective "To control and limit the commercialisation of the Olympic Games" — the influx of advertising and sponsorships has led to games that engage and enthrall wider audiences as athletes perform at ever-higher levels of excellence. Sure, plenty of athletes from small countries in obscure sports do so with little if any hope of a big financial payoff. But surely, too, income from corporate sponsorships, or even the potential of such a jackpot, helps to make it financially possible, even enticing, for athletes to spend long hours training and practicing in pursuit of a long-shot dream.

Mitt Romney has been mocked for his role in organizing the 2002 Salt Lake City winter Olympics. Bloomberg News reported over the weekend that some Romney presidential campaign advisers balked at the Republican candidate's plans to attend the London games, fretting that his wife's horse "could draw more attention" to Romney's wealth. Romney reportedly decided to go anyway.

Good for Romney. The Olympics show Americans winning in global competition, they show individual and team achievements that are the result of talent and hard work, and they show that corporate money, freely spent, can benefit both athletes and spectators. These are all fine campaign themes.

If Romney were to show up in London and say that in President Obama's ideal Olympics, the gold medal winners would be taxed at higher rates so that some of the gold in their medals could be redistributed to non-medal winners, and that in this same Obama Olympics, corporate sponsorships would be banned via a constitutional amendment that reverses what the left calls the misguidedCitizens United decision, the former Massachusetts governor would probably be criticized for politicizing the summer games, a sin second only to commercializing them.

So let me say it, instead. When the Olympic telecast goes to a commercial break, don't get annoyed. And when it returns to show corporate logos on the shoes or outfits of the athletes, don't get mad, either. The multi-billion-dollar interaction between business and sports is a big part of the reason the show is so lively.

Ira Stoll is editor of FutureOfCapitalism.com and author of Samuel Adams: A Life.