What Can We Learn From Olympic Fencing Stars?

Source: Sports Illustrated

As you watch the Olympics this week, take note of a few of the sports that receive much less attention.  For example, consider the sport of fencing.  You might notice something rather odd.  An unusually high number of athletes in the sport are left-handed.  Or, consider trap shooting.  As author David Epstein points out, "Half of the women in the final were left-handed, while fewer than ten percent of women in general are lefties."  Epstein cites fencing as an example of frequency dependent advantage.  Scholars use the term to describe the advantage left-handers may have in certain competitions because right-handers aren't well-equipped to face lefties and do not compete against them often at earlier points in their careers.  (The advantage in fencing seems obvious, but Epstein is not quite sure why such an advantage may exist in trap shooting).  

Jeff Haden, writing for Inc.com, points out that there's a lesson for all of us from these Olympic fencing competitors. He argues that we can CREATE a frequency dependent advantage in our careers. He writes, "Want to build a business? Be willing to do a few things your competition will not. Want to build a career? Be willing to do a few things the people you work with will not."  What terrific advice!  Haden has identified a key source of career success.  You can bet on your ability to do the same thing others are doing, but just better.  You might be successful, but that could be challenging.  Or, you could do things others aren't willing to do, or haven't chosen to invest time and effort into mastering to this point.  That might be a more fruitful way to propel your career forward at times.  

Does Hosting the Olympics Make Economic Sense?

Each year, we hear about the amazing construction programs embarked upon by countries and cities hosting the Olympic Games.  The cost of hosting the Olympics has skyrocketed.  The Beijing Olympics reportedly cost more than $40 billion!  No worries, claim the host cities... The economic benefits will be tremendous and long-lasting to boot!   Is that actually true?  Does hosting the Olympic Games make economic sense?  Is there a positive return on investment for host cities?   Most academics argue that hosting the Olympic is a losing proposition, from a purely financial perspective.  One or two cities have seen a positive return on investment, but most have not.   The research is abundant and quite clear.   Here's an excerpt from an NPR article describing one such study: 

Allen Sanderson, senior lecturer at the University of Chicago who specializes in sports economics, investigated that question. He and a student, Samantha Edds, compared cities that hosted the Olympics with similar cities in the same country or region that did not. The cities were also comparable in other ways — size, population and tourist appeal.

They compared Atlanta, which hosted the Olympics, to Charlotte, which did not. They pitted Olympic city Barcelona against Madrid, and matched up Sydney, Australia, against Melbourne. They checked for marked growth in construction, tourism and the financial-services sector over a nine-year period — four years before the games, and five years after.

"We couldn't find any difference in terms of building permits, tourism, anything before or after," Sanderson says. "If you masked the name of the cities, you would not be able to tell which of these two cities had the Olympics and which did not."

According to Sanderson, this doesn't mean cities should stop competing to host the Olympics; it just means they should stop claiming that the games make economic sense. "We do lots of things that don't turn a profit," he says. "We own dogs. We have boats. Those things lose lots of money, but we know it." So cities, go ahead and host the Olympics. It's a great party. It's just a terrible investment.

The Olympics Deliver a Blow to Netflix

Procera Networks reports that streaming traffic on Netflix has fallen by 25% in recent days (reported on CNN Money website here).  The company believes that the Olympics accounts for the decreased activity on Netflix.  Indeed, Netflix has admitted that the Olympics may have an adverse effect on the firm this quarter.  I'm curious as to the financial impact, as less streaming on the part of someone who still pays the monthly subscription fee doesn't have a negative impact on Netflix earnings.  On the other hand, if the Olympics slows new subscriber growth, then the company has a problem.

This report makes me wonder what other firms might be adversely affected by the Olympics.  Will Redbox take a hit as well?  What about movie purchases and rentals via iTunes?   Do people go to movie theaters less often during these two weeks?  Perhaps sporting events such as minor league baseball take an attendance hit as well.  What do my readers think?  Any thoughts on the firms that might have a nasty financial surprise this quarter due to the two-week Olympic effect?

Do Olympic Sponsorships Make Sense?

Knowledge @ Wharton has a special report on Olympic sponsorships this week.   Do these sponsorships make economic sense?   Some experts argue that sponsorships don't offer an immediate benefit, but they have a positive long term effect on brand equity.   That may be the case, but hopefully, firms would experience beneficial short term effects as well.  Unfortunately, that may not be the case. University of Nebraska-Lincoln Professor Kathleen Farrell and her co-author W. Scott Frame conducted a study of the impact of sponsorships on the market value of firms.  They found that stocks tended to fall slightly during the period in which firms announced that they were sponsoring the 1996 Olympics. 

Perhaps even more interesting are two reports by marketing firms.   Gallup and Robinson found that most people cannot identify the official Olympic sponsors.   Another report by marketing agency Jam found that Nike was the brand most mentioned by consumers as an Olympic sponsor, but the firm actually is not sponsoring the London Olympics! 

The Olympics: Who is Happier? The Bronze vs. the Silver Medalists

Stanford Professor Bob Sutton has a terrific blog post today about the Olympics.  He asks:  Are the bronze medal winners happier than the silver medal winners?   He cites a study by Vicki Medvec, Scott Madey, and Tom GIlovich.  They examined the emotions of medal winners at the Barcelona Olympics (using videotape).  Naturally, gold medal winners were ecstatic.  However, they found that bronze medal winners displayed more positive emotions than silver medalists.   According to Sutton,

"The researchers proposed that this finding is driven by what is called "counterfactual thinking," those thoughts of what might have been if something different had happened.  In particular, they proposed that silver medals did upward comparisons to the gold medal winner, while the bronze medalists did downward comparisons to people who didn't win medals"

Sutton also points out that expectations play a key role here.    Of course, a bronze medalist who expected gold won't be very happy.   However, a bronze medalist who wondered whether they would win any medal at all will be quite thrilled.  I'm intrigued by the research, and I'll be watching the emotions of the Olympians from here on out... watching to see if this research finding holds true in London.