Going for Real Gold at the Rio Olympics

Thanks to a strong Brazilian economy and now the 2016 Olympic Games, Latin America is poised to become a gold mine for U.S. companies

1. Flying Down to Rio
One city's loss is another's gain.

After the highly anticipated and mildly shocking Oct. 2 announcement, Chicago won't be hosting the 2016 Olympic Games, thus forgoing a projected $20 billion in tourism revenues and related investment. Winner Rio de Janeiro budgeted $14 billion for the Games—far more than the other finalists—and expects to generate $2.8 billion in revenue, including $570 million in domestic sponsorships, from the event.

The International Olympic Committee's selection process proves that the Olympics are a bigger business than ever, a bellwether of global business developments. The nod for Rio is also a confirmation that the hundreds of millions of dollars American pro sports teams have spent courting a Latin American fan and sponsor base is money well spent.

Rio's receiving the Games is a clear signal that Latin America is an emerging market now mature. Many of the U.S.'s largest companies supported Rio's bid for the 2016 Olympic Games, and major sponsors looking to add the 160 million people in South America under the age of 18 to their customer base will be racing each other to get on board within the next few months. The victory gives South America its first Olympics, and shows that the IOC is confident that Brazil can not only execute the 2016 Olympics right on the heels of the 2014 World Cup, it can keep sponsors engaged enough in the territory to sign on for the Games as well as the premier football event.

According to economists, Brazil is leading Latin American countries out of the recession, registering flat to slight growth this year and looking to a 3.5% expansion in 2010. (By contrast, the U.S. economy is estimated to contract by 2.7% in 2009 and grow only 1.5% in 2010.) Factors in Brazil's resilience include 2009 auto sales predicted to reach a record 3 million vehicles; substantial government subsidies; and strong foreign investment including up to $25 billion in Brazilian stock IPOs in 2009 alone.

Selecting Rio was largely perceived as the second-best option for the IOC on the broadcasting revenue front, behind the U.S. Since Rio is one hour ahead of the East Coast, broadcasters can still air such marquee events as swimming and gymnastics live in prime time. The IOC is expected to open bidding for American TV rights to the 2014 and 2016 Olympics within the next year; U.S. TV rights currently account for half of all IOC revenue. (NBC is paying $2.1 billion for the rights to the 2010 and 2012 Olympics, for example.)

2. MLB Playoffs Are Under Way
Now that the Minnesota Twins have defeated the Detroit Tigers, Major League Baseball playoff rosters are set. Five of the eight postseason teams—the New York Yankees, Boston Red Sox, Los Angeles Dodgers, Philadelphia Phillies, and Anaheim Angels—started the season with a payroll above $100 million; at $67 million, the Twins are competing with a payroll $20 million less than the next lowest roster, the St. Louis Cardinals at $87 million. Yet, MLB Commissioner Bud Selig insists this high-end-of-the-scales success rate is an aberration, maintaining the league has the "best competitive balance we've ever had."

Not at all disturbed by this baseball imbalance are playoff broadcast partners TBS and FOX, who look forward to solid big-market ratings and ad sales. TBS reports that ads during its coverage of the Division Series and the National League Championship Series are more than 75% sold out, with takers including Anheuser-Busch InBev (BUD), BlackBerry (RIMM), and JPMorgan Chase (JPM).

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Brazil will truly experience an improvement in economy during the 2016 Olympics in Rio de Janeiro.