The Olympics: Bad for Business (expanded)

Small Business: Long Read

As shown in the Economics page, hosting the Olympics is an economic disaster for cities, leading to significant cost burdens and lasting debt. Paying off such costs requires either reduced services or higher taxes—both of which can damage small and local businesses, whether from the supply side or the demand side.

And, as shown in the Tourism page, promises of a boost in tourism from the Olympics frequently fail to materialize, and locals avoid downtowns and Olympic areas out of fear of overcrowding. We, in Boston, remember this well from the 2004 Democratic National Convention, as the city, particularly the North End, became a ghost town. Locals left, expecting to face overcrowding, and convention-goers largely stayed in their hotels when they weren’t at the stadium. The Olympics replicates and exacerbates this dynamic. For one, it is a multi-week affair, much longer than a party convention. Moreover, Olympic-goers get shepherded through long security lines, keeping them away from the local businesses nearby.

Moreover, with increasing commercialization of the Olympics, the top priority for the IOC is the protection of its corporate sponsors and its own brand, and restrictive trademark laws and prohibitions on “ambush marketing” help ensure this. Whereas large IOC corporate sponsors like McDonald’s and Coca Cola will be able to capitalize on Olympic tie-ins, small businesses face severe fines if they attempt to do so.

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Ghost Town London 2012

“London 2012 Olympics: Has West End Become a Ghost Town?” Telegraph, n.d., http://www.telegraph.co.uk/sport/olympics/picturegalleries/9443898/London-2012-Olympics-has-the-West-End-become-a-ghost-town.html. (Photographic essay)

James Chapman and Hugo Duncan, “Deserted London 2012: Shops, Theatres and Businesses All Empty as Visitor Levels Fall by a THIRD over Fears of Games Travel Chaos,” Daily Mail, July 30, 2012, http://www.dailymail.co.uk/news/article-2181313/Deserted-London-2012-Shops-theatres-businesses-visitor-levels-fall-THIRD-fears-Games-travel-chaos.html. (with photo essay)

“Incredibly, almost a third of the five million people employed in the capital are expected to heed official advice to work from home at some point over the fortnight to avoid disruption which has failed to materialise.”

Sophie Haslett, “London 2012: My Olympic Experience, Taxi Driver Steve McNamara,” Telegraph, August 2, 2012, http://www.telegraph.co.uk/travel/destinations/europe/uk/london/9446419/London-2012-My-Olympic-experience-taxi-driver-Steve-McNamara.html.

“The Olympic Games have been a complete and utter disaster. The shops are empty, the bars are empty, the restaurants are empty and the overall effect on London’s economy has been devastating. Cab drivers are anything between 20 and 40 per cent down on our usual income and this is the worst time for the cab trade since the recession of the 1990s.”

“I know August is traditionally London’s quietest month and I know that people usually go on their holidays at this time of year. But the Olympics being held in London means that the city is suffering even more. We’ve had months and months of Boris Johnson and TFL telling us not to come to work. They’ve re-engineered the traffic system to deliberately stop Londoners from getting into town. And the tourists – who are our usual supplementary customer base – aren’t coming to see Big Ben. Why would you when the Olympics are on?”

“Not everyone wants to have a month off this August. There are plenty of people who have to come to work. But there has just been too much negative imagery pumped out from the Games organisers – telling us to stay out of London and excluding Londoners from their own city. Everything outside of the Olympic stadium has been a disaster.”

Samantha Conti, “London’s Retail Whimper: Local Shops, Restaurants Bemoan Games,” Women’s Wear Daily, August 3, 2012, http://wwd.com/retail-news/retail-features/londons-local-shops-restaurants-bemoan-games-6137157/?module=hp-topstories.

“The New West End Company — which represents businesses on Oxford, Bond and Regent streets — estimated earlier this year that retailers in London’s West End would make 16.6 million pounds, or $26 million at current exchange, in additional revenue as a direct result of the Olympics….But earlier this week, they were forced to take action to drive shoppers back into the town center…‘We have been working on measures to reverse the significant drop in retail spending and visitors into the West End,’ the company said in a statement that was sent to its member retailers, and which was seen by WWD. ‘The forecasts for this summer predicted a different trading pattern and the lack of London workers and domestic visitors has been quickly apparent as a result of Transport for London traffic demand management.’”

“London 2012: Traders Near Olympic Venue Bemoan Lack of Business (Video),” Telegraph, August 3, 2012, http://www.telegraph.co.uk/sport/olympics/london-2012/9445421/London-2012-Traders-near-Olympic-venue-bemoan-lack-of-business.html.

“Market traders and other businesses close to the Greenwich Olympic venue have complained that over-zealous spectator marshalling and a plethora of barricades and road restrictions have dissuaded Games visitors from browsing the shops.”

“Olympics Turn London into ‘Ghost Town,’” RT, August 6, 2012, http://rt.com/business/olympics-london-small-business-975/.

“Around one and a half million people – almost a third of the city's workforce – are staying away from the city to avoid traffic chaos in the middle of London.”

Emyre Ayilmaz, a sandwich shop owner: “During the Olympics we thought we would be really busy but actually it's gone down to 25 percent. We don’t see enough tourists around …They are all staying around Stratford and a lot of people have been working from home. It really affected us. I had to get rid of one of my staff because it's not that busy. We hope the Olympics finish by next week and we'll get back to normal.”

“Olympics 2012: Ghost town London searches for missing tourists,” Agence France-Presse, August 6, 2012, http://sports.ndtv.com/olympics-2012/features/194784-ghost-town-london-searches-for-missing-tourists.

Michelle Wade, owner of Maison Bertaux, a patisserie in Soho: “Compared to last year people are just not coming…It’s not just for this kind of business, it’s the pubs, even my friend – he’s a very well know hairdresser, but last Saturday he only had two clients. Normally it's about 24.”

“In an empty men's clothes store, manager Rob Grogan said there had been a 30 percent drop in customers in the week after the Olympics started on July 27, compared to the week before that…‘We were told by Transport for London, the local council and Westminster council that we'd probably see a shop increase in footfall and traffic and the resulting increase in sales as well -- that hasn't happened.’”

“‘It is rubbish, we don’t want this nonsense any more,’ said a woman who runs several souvenir shops and stalls on Oxford Street, what is normally Europe’s busiest shopping thoroughfare…Gesturing at an empty store, the woman, who asked not to be named, added: ‘The tourists should be here, we rely on them, but now they are not interested. They are not spending, they don't have a penny, this is the wrong crowd.’”

“Will Games Curse Leave 'Ghost Town' London out of the Gold Rush?” NBC News, August 7, 2012, http://worldnews.nbcnews.com/_news/2012/08/07/13146553-will-games-curse-leave-ghost-town-london-out-of-the-gold-rush?lite.

“Quiet restaurants, empty sidewalks and spare seats on the subway have left businesses in central London without an Olympic gold rush, despite Britain's medal success -- and have raised new questions about whether the world's largest sporting event brings any economic benefit to host countries.”

“East Londoner Dean Houssein, who usually works as a taxi driver, decided to sell coffee, drinks and snacks such as chocolate gold medals from the back of a van near Victoria Park. It seemed like a prime location -- big screens in the park show action from the Games to crowds of thousands and the Olympic Park itself is just a 5-minute train ride away….‘It’s been like a [expletive] ghost town ... deader than dead,’ Houssein said. ‘I've never seen the area like this. It's costing me money. It's really not happening. I need to go back to my normal job, I've got bills to pay like everyone else.’”

Peter Vlachos, a marketing expert at the University of Greenwich: "There are 23,000 people walking past (local shops) in the morning to get to the grounds, and at the end of the day the same 23,000 people rushing back to their hotels…The Olympics were sold to the business community as if it was going to be a huge windfall, and it hasn't materialized.”

Nico Hines, “Congrats, Tokyo, Now Meet the Olympics Curse,” The Daily Beast, September 7, 2013, http://www.thedailybeast.com/articles/2013/09/07/the-curse-of-the-olympics.html.

“As the owner of a small business, Joe Stillion, thought the construction of the 2012 Olympic Park in the middle of his neighborhood was bound to be a money-spinner. The Games would cost Britain more than $14 billion but the projected boost to local businesses and the regeneration of East London was said to comfortably justify the price tag. Four days before the spectacular closing ceremony, however, the security cordons and closed train stations had taken their toll; the 26-year-old café-owner was forced to shut down his business for good.”

Secretary of the Treasury Stephen Timms: “I think businesses in the area, and not just immediately around the Olympic Park, were thinking that they would get a boost from all the people coming for the Games but really that did not happen.”

“According to Peter Vlachos, the principal lecturer at the University of Greenwich’s business school, over 90 percent of businesses in Greenwich, where the equestrian events were held, said they saw no improvement in income. Many said their businesses had suffered. ‘Picture the image: there are 22,000 people walking past your restaurant at 9 a.m. and being told by the volunteers to ‘keep walking, keep walking.’ Then at 5 p.m., the same 22,000 walk past again to go back to their hotel. You are sitting there wondering what happened.’”

“It was the same story for Joe Stillion, whose café and event space was about 100 yards from the main Olympic Stadium. He didn’t even see the crowds walk past as the local train station was sporadically closed and people were discouraged from wandering around. ‘It was really bizarre, like operating in a minor police state,’ he said. ‘We had the police coming in every day but none of our regular customers could reach us.’”

Oxford University economist Alison Stewart: “Even just looking at the period of the Games, if you include the businesses that have been negatively affected and the people that leave the country to avoid the Games, there doesn’t seem to be any benefit.”

“The roads around Stillion’s old premises in Hackney Wick are scarred by broken ambitions. There are restaurants that folded, some even before the Games began, while a handful of newly built office blocks and residential developments stand virtually empty. Even inside the busy Westfield shopping mall, one of the undoubted successes of the Games, there is a series of empty stores along the walkways where millions passed through on their way to the Olympic Park one year before.”

“Outside of that development, which is owned by an Australian company and dominated by international brands, local businesses are even more disappointed by the Olympic legacy. David Tucker, 56, who runs a market stall near Stratford station, said he experienced no benefit from the billions of dollars spent in the neighborhood.”

Brand Policing – Case Study: London 2012

“Great Exhibition ‘Faces London 2012 legal Action,’" BBC News, June 14, 2011, http://www.bbc.com/news/uk-england-london-13761074.

“An art event called the Great Exhibition 2012 says it has had legal action threatened by Olympics organisers over its use of ‘2012’….The exhibition is due to take place between the Olympic and the Paralympic Games, next August…..Julie Benson, founder of The Great Exhibition Company, based on the Isle of Wight, said she has spent the last 12 years planning the art event, including going through the trademarking process.”

Emma Hall, “London Outdoes China in Brand Crackdown at Summer Olympics,” Ad Age, June 4, 2012, http://adage.com/article/global-news/brand-police-full-force-london-olympics/235136/.

“LOCOG’s demands are all clearly laid out on its website. To protect sponsors, a 35-day, one-kilometer Brand Exclusion Zone will be enforced around all Olympic venues, inside which no brands that compete with official sponsor brands can advertise. It's not just ads -- spectators trying to pay with the wrong credit card, will not be welcome….For road events such as the marathon and some of the cycling, the exclusion zone extends to two meters on either side of the track.”

Martin Hickman, “Britain Flooded with ‘Brand Police’ to Protect Sponsors,” The Independent, July 16, 2012, http://www.independent.co.uk/news/uk/home-news/britain-flooded-with-brand-police-to-protect-sponsors-7945436.html.

“Hundreds of uniformed Olympics officers will begin touring the country today enforcing sponsors' multimillion-pound marketing deals…Almost 300 enforcement officers will be seen across the country checking firms to ensure they are not staging ‘ambush marketing’ or illegally associating themselves with the Games at the expense of official sponsors such as Adidas, McDonald's, Coca-Cola and BP.”

“Wearing purple caps and tops, the experts in trading and advertising working for the Olympic Delivery Authority (ODA) are heading the biggest brand protection operation staged in the UK. Under legislation specially introduced for the London Games, they have the right to enter shops and offices and bring court action with fines of up to £20,000.”

“Olympics organisers have warned businesses that during London 2012 their advertising should not include a list of banned words, including ‘gold’, ‘silver’ and ‘bronze’, ‘summer’, ‘sponsors’ and ‘London’, if they give the impression of a formal connection to the Olympics. See examples of banned and allowed advertising below.”

“Publicans have been advised that blackboards advertising live TV coverage must not refer to beer brands or brewers without an Olympics deal, while caterers and restaurateurs have been told not to advertise dishes that could be construed as having an association with the event.”

“At the 40 Olympics venues, 800 retailers have been banned from serving chips to avoid infringing fast-food rights secured by McDonald's.”

Jeré Longman, “Where Even Sausage Rings Are Put on the Chopping Block,” New York Times, July 24, 2012, http://www.nytimes.com/2012/07/25/sports/olympics/2012-london-games-even-sausage-rings-alarm-marketing-police.html?_r=0.

“When London was awarded the 2012 Summer Games, Dennis Spurr got into the spirit at his butcher shop. He put a sign outside, featuring the five Olympic rings made of sausages….Eventually, the Olympic marketing police showed up. Remove the sign, Spurr was told. His store in Weymouth, England, where sailing will be held, was not an official sponsor. A law governing the use of Olympic words and images was being violated. He faced a fine up to $30,000 for referring to the Games using kielbasa, blood pudding or any of the more adventurous organ meats….The sign came down. Then another one went up, featuring five squares made of sausages. The Olympic brand police came back. More legal action was threatened…‘They’re called Olympic rings, not Olympic squares,’ Spurr retorted. The Olympic police were not amused. The sausage sign came down again.”

“The sausage case has come to symbolize the imperious way in which London organizers have attempted to protect the Olympic brand from ambush marketing. Until an outcry ensued, workers preparing for the opening and closing ceremonies could eat fish and chips but not sausage and chips or burgers and chips or just plain chips, unless they were served by McDonald’s, which holds exclusive French fry rights at the Olympic stadiums.”

“Even the parents of Kate Middleton, the Duchess of Cambridge, and their party supply company came under scrutiny. According to news reports, organizers asked for amendments to a Web site that featured an Olympic torch and a woman throwing a javelin under the headline ‘Let the Games Begin.” Much to everyone’s relief, the Union Jack Essential Party Kit passed muster.’”

“The Middletons got off lightly compared with the cafe in Plymouth, England, that was forced to quit serving its flaming torch baguette. The House Cafe in south London was ordered to remove interlocking Olympic rings made from bagels. And La Rose Florists in Stoke-on-Trent also had to dismantle affronting rings fashioned from tissue paper.”

Brand Policing in the US

Melissa Allison, “U.S. Olympic Panel Bristles at Peninsula Winery’s Name,” Seattle Times, January 11, 2008, http://www.seattletimes.com/business/us-olympic-panel-bristles-at-peninsula-winerys-name/.

“A lawyer for the U.S. Olympic Committee (USOC) wrote to the winery [Olympic Cellars Winery] last fall saying its name infringes on the committee’s turf…. ‘I was in shock,’ said co-owner Kathy Charlton. The winery is on Washington’s Olympic Peninsula, has a view of the Olympic Mountains and has used the Olympic name since 1992.”

“Jason Bausher in Quinault, Grays Harbor, said he hasn’t heard from the USOC since May, when he notified its legal-affairs office that it was none of its business if he used the term ‘Best of the Olympic Peninsula’ for commerce….That’s the name of a guidebook he compiled last year, which prompted a letter from the USOC suggesting he could not market his book on the Internet because that could attract clients from outside Western Washington.”

“Olympic Peninsula businesses have been getting letters from USOC lawyers for years…‘The whole thing is so incredibly unfair and unjust....,’ said Ned Schumann, owner of the Internet provider OlympusNet in Port Townsend…He tangled with the USOC in the mid-1990s over his company’s trademark application but won the committee’s blessing when his lawyer sent a letter saying his company wouldn’t use the Olympics’ five rings mark or offer sports events.”

Jeremy Gorner, “'Olympic’ Trademark Leaves Businesses in a Bind,” Los Angeles Times, October 16, 2009, http://articles.latimes.com/2009/oct/16/nation/na-olympics-name16.

“The Olympics movement has passed over Chicago, but it has left a lasting and unpleasant mark on George Tsoukas' business….He has owned a butcher shop for about 40 years. But a year or two ago, Olympic Meat Packers Inc. had to be renamed Olympia Meat Packers Inc. because federal law gives the U.S. Olympic Committee a trademark on the word ‘Olympic.’

“Charna Halpern, founder of the comedy club iO Theater, which has locations in Chicago and Los Angeles, said the USOC told her several years ago that her original business name, Improv Olympic Theater, was causing confusion…‘Nobody was coming here to learn the javelin throw or the discus throw,’ said Halpern, whose theater helped launch the careers of such celebrities as Amy Poehler, Mike Myers and Stephen Colbert. ‘Nobody came here thinking they were seeing the Olympics.’…But to avoid a lawsuit, Halpern changed the theater's name to iO.”

Rebecca Rosen, “Online Knitting Community Receives Take Down Notice for ‘Ravelympics,’” The Atlantic, June 21, 2012, http://www.theatlantic.com/technology/archive/2012/06/online-knitting-community-receives-take-down-notice-for-ravelympics/258805/.

“Every two years around the Olympics, knitters around the world band together to push themselves beyond their comfortable knitting know-how and try to master tougher techniques and projects. People who meet their goals receive ‘Medals of Glory,’ and the proceeds from sales of Medals-of-Glory pins are donated to the Special Olympics. They call this excitement the Ravelympics (their online home is a website called Ravelry) and this week they received a rather humorless letter from the US Olympic Committee warning that the Ravelympics were infringing on US Olympic Committee's intellectual property.”

Anna Pan, “Reading Terminal Shop Gets Olympic-Sized Reprimand,” Philadelphia Daily News, July 12, 2012, http://articles.philly.com/2012-07-12/news/32633390_1_usoc-lunch-counter-olympic-sports.

“Three decades after it burst from the starting block, the Greek eatery Olympic Gyro has received a cease-and-desist email from the USOC, the nonprofit corporation responsible for training and funding U.S. teams. The June 7 notice demanded deletion of the word ‘Olympic’ from the food shop's title, claiming copyright of the word under a 1978 law…He estimates that changing the name of his lunch counter will cost at least $6,000, because he'll have to design and order new employee uniforms and signs. He asked the USOC if it would reimburse him, but he was denied.”

Erin DeJesus, “Olympic Provisions Changes Name After Olympic Games Cease-and-Desist,” Eater, February 20, 2015, http://www.eater.com/2015/2/20/8070699/pdxs-olympic-provisions-rebrand-after-cease-and-desist.

“In just six years, Portland, Oregon's Olympic Provisions has gone from a small restaurant with an attached charcuterie facility to a major brand complete with Portlandia immortality and an upcoming cookbook. And now it has to change its name, thanks to a cease-and-desist notice from the International Olympic Committee, the organization that coordinates the Olympic Games.”