This is an audio transcript of the FT News Briefing podcast episode: ‘Does the Olympic business model still work?’
Marc Filippino
Good morning from the Financial Times. Today is Thursday, March 20th, and this is your FT News Briefing.
The Federal Reserve is still in wait-and-see mode. And tech companies are going public despite a tough market. Plus, the International Olympic Committee is voting for a new president today, and that might mean big changes for the games.
Josh Noble
There are a lot of questions about whether or not the Olympics business model has really been keeping up with the times.
Marc Filippino
I’m Marc Filippino, and here’s the news you need to start your day.
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The Fed chose to leave interest rates untouched yesterday, and chair Jay Powell said the central bank, quote, need not be in a hurry to shift rates because of elevated uncertainty. You see, the Fed also cut its economic growth forecast for the year, and it says that its progress on lowering inflation has stalled for now. Powell said that US President Donald Trump’s policies have affected the central bank’s outlook, but it’s unclear how much of the inflation pressures are because of tariffs. Even with higher inflation expectations, Fed officials broadly think the central bank will implement one or two quarter-point interest rate cuts by the end of the year. But a few members think there will actually be no cuts in 2025.
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Despite all the market turmoil in the US, a handful of tech start-ups are still expected to publicly list next month. It’s creating some cautious optimism for what some see as a window of opportunity to get the IPO market out of its slump. Here to explain is the FT’s Tabby Kinder. Hi, Tabby.
Tabby Kinder
Hi, Marc.
Marc Filippino
All right, Tabby. So, which companies are in the middle of an initial public offering push?
Tabby Kinder
Yeah, so there’s two companies that we are expecting to see IPO in the next few weeks, and they are CoreWeave, which is an AI data centre operator based in New Jersey, and Klarna, which is a Swedish fintech company that does payments processing.
Marc Filippino
And can you give us just some context about what the IPO market has looked like over the past several years?
Tabby Kinder
Yeah, so tech IPOs have had a really kind of rocky ride since the pandemic hit in 2020. There was a big IPO boom in 2021, but then since then, it’s been kind of a largely frozen period for big tech deals, for tech IPOs. And that was largely a response to inflation, rising interest rates, the war in Ukraine. All of this created a sort of uncertain and unstable market environment that just didn’t make it a, kind of, a good place to be if you were a start-up coming to market.
Marc Filippino
And what are the concerns now for companies thinking about going public?
Tabby Kinder
So a lot of investors and bankers were optimistic that, as we came into the end of last year, that there would be a kind of new stability in markets. We had the US election, interest rates started coming down, and so people thought 2025 would be a good time for companies that have been looking for a good window to list. Instead, what’s happened is we’ve had a continuation of uncertainty. Donald Trump’s trade tariffs have really rocked markets in the last month, and so there just hasn’t been the kind of stable market environment that bankers had hoped to see this year.
Marc Filippino
Yeah, and just for context, the tech-heavy Nasdaq Composite is down like 12 per cent over the past month. Given these conditions, what are these companies that are looking to IPO thinking?
Tabby Kinder
Yeah, I mean, a lot of them have reached a point where, if we aren’t going to have a kind of prolonged period of stability, then they may as well list now. Private companies have stayed private for much longer. They’ve raised huge amounts of capital on the private markets. They have capital needs. In some cases, their employees need liquidity. Their management have been unable to kind of realise the valuation of their shares for years now. And so, I think that some tech companies are coming to a point where they think, if not now, then when? And that’s certainly being fuelled by advisers like Wall Street banks, who have been really suffering from a lack of tech IPOs in the last few years and are really keen for some of their clients to kind of get out to market, list their shares. And hopefully some of these companies will give confidence to smaller companies to follow suit.
Marc Filippino
Yeah, and this window of opportunity that Wall Street has been talking about, why does the timing of these IPOs matter to the broader market?
Tabby Kinder
Yeah, so there’s a lot of psychology when it comes to timing an IPO, and people tend to like to get these things done at like the start of the year when budgets are being set, when companies’ new financial years are being decided and audits are being done. And so April’s kind of traditionally a good window. But people I spoke to, I mean, they really kind of cautioned that if we don’t see the flurry of IPOs that we’re expecting to see in April and May, that really the year will be a bit of a dud.
Marc Filippino
Tabby Kinder is the FT’s West Coast financial editor. Thanks, Tabby.
Tabby Kinder
Thanks so much.
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Marc Filippino
Turkish police detained President Recep Tayyip Erdoğan’s main political rival yesterday. Ekrem İmamoğlu is Istanbul’s popular mayor. His arrest is part of an intensifying crackdown against Erdoğan’s opponents. İmamoğlu is seen as Erdoğan’s most serious challenger in elections that Turkey will hold before 2028. He was already facing a bunch of probes, mostly for political speeches. The arrest sent the Turkish currency and markets tumbling.
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The International Olympic Committee will vote today for a new president, and whoever wins will need to make some big decisions on what some consider an outdated business model. The two big moneymakers for the games are changing. Sponsors want more bang for their buck, and the media landscape is looking very different. I’ve got with me the FT sports editor, Josh Noble, who’s watching the IOC vote today. Hey, Josh.
Josh Noble
Hey. How are you doing, Marc?
Marc Filippino
I’m doing well. So first off, tell me a little bit about this Olympic vote today. What’s it about, and who are some of the people who are up for the job?
Josh Noble
So we’ve got seven people in the running. Most IOC watchers think there are realistically three who might win. You’ve got Zimbabwe’s sports minister Kirsty Coventry. She’s a former gold medallist swimmer. You’ve got Sebastian Coe. He was chair of the London 2012 Games, and he’s also a former gold medallist. And then the other one that people think might win is Juan Antonio Samaranch. For IOC watchers, that name will be very familiar because Juan Antonio Samaranch Sr was president of the IOC for 20 years up until 2001. This process will whittle that group from seven, ultimately down to one, who will then take on one of the most powerful, if not the most powerful, job in global sport.
Marc Filippino
Let’s back up for a second and talk about the challenges the incoming president will have to face.
Josh Noble
Well, I mean, there are a few things that are unavoidable. On the business side, there’s been a lot of debate over the Olympics business model, and whether it’s still fit for purpose, because a lot of the things the Olympics does to raise money hasn’t really changed a huge amount in probably 20, 30 years. About 60 per cent of the revenue comes from TV.
The IOC owns the broadcast rights to the Olympic Games, winter and summer, everywhere in the world. And it sells those rights to broadcasters and increasingly, streamers in each different media market, in each different jurisdiction. Then you have another 30 per cent, which comes from sponsorship, and that has been one of the most successful sports marketing programs in history. Those two things, the TV and sponsorship, have really been 90-odd per cent of the Olympics revenue line now.
Marc Filippino
All right. So, what might change under a new president?
Josh Noble
We’re already seeing some signs of change. Even just last week, NBC extended its deal to air the Olympics. But for the first time, we saw the deal broadening significantly beyond just handing over rights in exchange for cash. Some of these things had to do with advertising. Some of those have to do with media production about distribution, helping the Olympics’ video streaming player. It’s not simply a rights deal. These are now strategic partnerships, partners, sort of, corporate phrase, but it’s a much more kind of give and take on both sides.
The IOC can’t simply sign over rights and expect money in return. And I think a similar thing is gonna happen with sponsorship. We’re gonna see a loosening up of the way that the IOC allows brands to interact with athletes, to interact with the games. What we did see in Paris was the beginning of sponsorship activity on the podium. So medallists were handed the medals in boxes provided by LVMH, a sponsor. And I think the next president is gonna have to decide sort of how far to push things, because it’s quite controversial in IOC circles, even what’s happened so far.
Marc Filippino
OK, so the IOC needs to basically loosen their grip so that these broadcasters and sponsors can get more bang for their buck. Josh, what does this election tell you about the state of the Olympics and the IOC more broadly?
Josh Noble
Well, I think a lot of it depends on who you ask. If you talk to the outgoing administration, the answer is that there’s really nothing wrong with the IOC in its current state, and that a lot of the sort of so-called issues that have come up during the campaign are simply sort of smart politics. But then you talk to the candidates and they talk about, yes, things have been fine in the past, but a real sense that unless things do change quite quickly and quite significantly, these conversations that may now just be sort of quite light-hearted campaign conversations actually become real crunch issues down the line when sponsorship revenue dries up, broadcasters aren’t as interested any more, and suddenly the whole thing looks on very shaky ground.
Marc Filippino
Josh Noble is the FT sports editor. Thanks so much, Josh.
Josh Noble
Thanks, Marc.
Marc Filippino
You can read more on all these stories for free when you click the links in our show notes. This has been your daily FT News Briefing. Check back tomorrow for the latest business news.
