As Olympic athletes at London 2012 take to Twitter to complain about Rule 40 ruining their sponsorship deals and the taxes they pay on gold medal rewards, Daniel Farr looks at how sportspeople support themselves
As Olympic athletes at London 2012 take to Twitter to complain about Rule 40 ruining their sponsorship deals and the taxes they pay on gold medal rewards, Daniel Farr looks at how sportspeople support themselves
WITH THE HIGH cost of competing as an Olympic athlete offset by lucrative sponsorship deals, it is no wonder American athletes have this week taken to Twitter to complain about the International Olympic Committee’s Rule 40. Rule 40 tries to protect the interests of key Olympic sponsors who have splashed out millions for the privilege of advertising on the world’s biggest billboard.
The rule claims to ‘prevent ambush marketing’, so athletes are banned from wearing the logos of non-sponsors. Dwight Phillips, former world and Olympic champion in the long jump, tweeted about the importance of sponsorship: ‘Rule 40 is wack [sic]. The only time Oly athletes r acknowledged. Most athletes after they win their medals are back working 9 to 5.’
And when Sanya Richards-Ross stood on the podium to receive her gold medal for the 400m, her interlocking-C Chanel earrings were conspicuous and eyebrows were raised.
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What the riled athletes claim is that the rule limits their potential income from sponsorship deals, something they claim as necessary to decrease the financial burden that they must shoulder in order to compete for a gold medal. From running shoes to javelins, top coaches to competition entry fees, all in addition to the general cost of living, the outgoing money for an athlete can easily reach tens of thousands annually. According to Forbes, an aspiring archer would be set back $25,000 a year and a gymnast would be lucky to stay below the $15,000 mark.
SO WHAT OPTIONS are there for an Olympic athlete to actually cover those costs? Is it even possible for any to make not just a living but a well-earned fortune?
Corporate sponsorship is where the real money is made for Olympic athletes and sportspeople in general. From Dr Dre handing out personalised versions of his latest headphones to top athletes for a little easy marketing to the plastering of Jessica Ennis’ focused face on newspapers, billboards and even petrol stations across the land, Olympic athletes are sought out and fought over to become mascots for the world’s most famous brands.
Widely dubbed the ‘golden girl’ of the Games in the media, Ennis is expected to see her annual income from advertising contracts rise from an estimated £1.25 million to around £3 million come the next Olympic according to Marketing. Another athlete whose success in London will bring him more than just a fancy gold necklace is Mo Farah: the 10,000 metre runner’s win is projected to quadruple his earnings from £500,000 to £2 million by the time he and Team GB touch down in Rio.
Sponsorship is not always so forthcoming, however, and British 100 and 200-metre sprinter James Ellington had to resort to offering his sponsorship to bidders on eBay when he realised that his estimate of £30,000 in costs would be impossible to cover without help from an outside party. Despite being born and bred in the competition’s host city, Ellington found the burden of equipment and accommodation costs too much to bear.
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Numerous false bids and hoaxers later, King of Shaves founder Will King stepped in to rescue Ellington’s dreams of a home Olympic chance, but the event showed the struggle that athletes must go through to enter the games, a clear show of the true cost to individuals that sponsorship is needed to cover.
DESPITE RECEIVING BILLIONS in sponsorship revenue, the IOC does not fund the athletes, however winning a gold medal can bring lucrative rewards from their countries. These rewards vary wildly.
At London 2012, for instance, Singapore is the nation who value a gold most highly, pledging to give £515,000 to whoever is skilful enough to stand atop the podium. Such motivation seems not quite enough, though, as Singapore have only managed to muster a duo of bronzes in Table Tennis thus far.
This a world away from the USA, whose much smaller pledge of $25,000 for a first-place finish has led them to spend $750,000 so far. However, the American government and the United States Olympic Committee are currently coming under fire themselves as American tax regulations mean that even reward money earned in Stratford will be taxed back home in the United States.
This campaign has taken to Twitter too. Ronda Rousey, an Olympic medal-winning judoka, tweeted about an article which said that gold medals carried a $9,000 tax bill. This has proved as contentious, if not more so, than the Rule 40 restrictions, and having staged ‘lockouts’ in both their national football and basketball leagues in recent years, American sportspeople are no strangers to taking a stand in the interest of pay.
Noting the prevailing winds of sporting fervour and patriotism, President Obama has said he may be planning to drop the tax.
You can completely forget about such financial bonuses if you choose to represent Great Britain. Unlike the Malaysian gold-mine owner who pledged to give one of his gold bars to any Badminton winners, we Brits have gone for a somewhat less glamorous option, producing commemorative stamps and painting a postbox gold in the winning athlete’s hometown. Clearly, given Team GB’s record medal haul, a financial incentive isn’t always required.
THIS IS NOT to say that Team GB athletes receive absolutely no financial assistance from the government or the Great British people. Since the disastrous British performance at the Atlanta Games in 1996, National Lottery funding and money from the Exchequer have been the key to improving British medal hauls, with funding rising to around £265 million by the 2012 Games and the games-on-games medal count rising at an equally considerable rate.
The allotted money is used to improve infrastructure and facilities for all athletes, whether that is a new bike for Chris Hoy or a training programme for a group of young 100-metre runners with high potential. The funding is spread fairly across the sports in order to improve all parts of the team, as can be shown by the unprecedented success of athletes such as judoka Gemma Gibbons, who claimed a silver medal in a sport that no Brit had achieved a podium place for in over a decade.
Another of the most beneficial types of investments that athletes can receive comes from philanthropists who are willing to invest their funds, and quite often their time, into some of the most promising athletes that Britain has to offer, whether individually or as part of a larger campaign.
One example is in insurance-expert and businessman turned sports investor Barrie Wells, who pledged an extremely beneficial £2 million to a sports athletics fund that funds future athletes. This fund will provide an excellent basis for current and future athletes, but one of Wells’ other traits is his passion to maintain a personal role in his philanthropy, offering help on a one-to-one basis when needed.
Beth Tweddle, for example, would probably not have competed in her final Olympic Games this year, having suffered a potentially career-ending knee injury back in March. The only way that Tweddle could have been able to take her final opportunity to win a first Olympic medal would be an unaffordable treatment programme, at which point she made a call to Wells, her ‘knight in shining armour’, as she told the Daily Telegraph. With his cash commitment she was able to compete in the Games, eventually tearfully winning a bronze gymnastic medal.
Philanthropic support for these athletes can take many forms: John Amaechi is another keen Olympic and Paralympic investor, holding basketball events in conjunction with his chosen charities and sitting on the LOCOG diversity board, overseeing all aspects of the 2012 Games.
With superstar sprinter Usain Bolt the only athlete in Forbes’ highest paid Olympic athletes list who is not a professional tennis or basketball player, there is clearly an funding discrepancy between those sports which only grab attention every four years for the Olympics and those which dominate the media for ten-or-so months every single year.
The conflict between maintaining their expensive career and obeying the IOC’s restrictive rules shows no signs of abating for athletes. They have to take money where they can find it – but hopefully not by melting down their gold medals.
Read more from the current and previous Wealth Wednesdays here
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