A lot is riding on the success of the Summer Olympics, which starts July 23 in Tokyo.
Billed as the largest sporting event in the world, the Summer Olympics are expensive to stage, with this year’s Tokyo event expected to cost a record $15.4 billion. The one-year delay caused by the Covid-19 pandemic pushed the cost up 22%.
However, a well-run Olympics can return healthy dividends to host cities and countries. The 2016 Games in Rio de Janeiro pumped $9 billion into the local economy. And there are many spin-off benefits. It’s been estimated that the value of the host country’s major stock index rises an average of 75% during the month in which the Olympic and Paralympic games are held.
The Olympics are also the biggest sponsorship event in the world. The Tokyo Games attracted a record $3.3 billion in sponsorship dollars as companies line up to advertise and sponsor events during the global spectacle that attracts a worldwide audience of about 3 billion.
As 11,000 athletes from 205 countries descend on Tokyo, we look at four stocks hoping for gold with the return of the Summer Olympics.
- Comcast (NASDAQ:CMCSA)
- Ralph Lauren (NYSE:RL)
- General Mills (NYSE:GIS)
- Sega Sammy Holdings (OTCMKTS:SGAMY)
Stocks for the Summer Olympics: Comcast (CMCSA)
One of the biggest beneficiaries of the Summer Olympics are the companies that broadcast the games. And in the U.S., that winner is Comcast, parent company of NBCUniversal.
Comcast paid $7.62 billion to broadcast all of the Summer and Winter Olympic games from 2020 through 2032. NBC has been the official broadcaster of the Olympics in the U.S. since 1964, which was the last time the games were held in Tokyo.
While broadcast rights are undoubtedly expensive, they can pay off over the course of several Olympics. NBCUniversal’s advertising sales for the last summer games held in Rio totaled $1.2 billion across broadcast, cable and digital platforms, which was at that point a record for any U.S. media event.
Under its current contract, NBCUniversal will broadcast a total of six Olympics, summer and winter events combined. For this year’s Tokyo games, NBCUniversal has already secured more than $1.25 billion in advertising commitments, and counting.
CMCSA stock is up 8% year-to-date at $56 a share. A boost from the Tokyo Games this summer wouldn’t hurt.
Ralph Lauren (RL)
The Olympics version of a red carpet event, few things attract as much buzz and commentary as the outfits worn by athletes at the opening and closing ceremonies. The company that designs the athletes’ uniforms can get a lot of attention and word-of-mouth advertising.
For the upcoming Tokyo games, Ralph Lauren has designed the outfits to be worn by the American contingent. The iconic fashion company unveiled its uniforms in April, touting their environmentally friendly design (they were made with plant-based materials and a sustainable dye process).
As is always the case, the Team USA wear generated polarizing responses. However, Ralph Lauren, which has been outfitting Team USA since the 2008 Games in Beijing, gets a lot of publicity for its role as the official designer and that ultimately helps the brand. For this reason, the company doesn’t mind shelling out big bucks to outfit the American athletes.
Each outfit worn at the opening ceremonies of the Rio games reportedly cost $1,512. RL stock is up 17% year-to-date at $121 per share.
Stocks for the Summer Olympics: General Mills (GIS)
Few products are as associated with the Olympics as General Mills’ own Wheaties cereal, which calls itself “the Breakfast of Champions.”
Invented exactly 100 years ago, Wheaties has associated itself with athletes as a way to tout its health benefits since 1927, when it became a major sponsor of professional baseball. Wheaties’ association with the Olympics began in 1935 when it featured American track star Babe Didrikson, who won gold medals in the hurdles and javelin at the 1932 Los Angeles Games.
Over the years, America’s most decorated Olympians have graced the box of Wheaties, including track and field star Jesse Owens, decathlete Caitlyn Jenner (formerly Bruce Jenner), gymnast Mary Lou Retton and swimmer Michael Phelps. Vintage Wheaties boxes featuring Olympic athletes are collectors’ items and are bought and sold online, often for hundreds of dollars.
Many athletes agree to be on a Wheaties box for free or for a fraction of their usual endorsement fee because they consider it an honor.
How much Wheaties and General Mills benefits from their Olympic association isn’t clear, but the cereal could use any boost it can get. Wheaties share of the cereal market today stands at about 1%, down from a peak of 12% in the 1990s. GIS stock is up 7% year-to-date at $63.
Sega Sammy Holdings (SGAMY)
Sega Sammy Holdings is the Japanese company that owns the Sega video game properties, and the upcoming Tokyo Olympics is a very big deal for the company as it has regained the rights to produce video game titles based on the event.
The company won the video game rights back from Ubisoft, which had them for the last Winter Olympics in 2018. Sega famously develops licensed video games based on the Olympics, most notably its Mario and Sonic series.
Mario & Sonic at the Olympic Games Tokyo has already been released for the Nintendo Switch, as well as the newest Xbox and PlayStation consoles. Sega also has a version of the popular videogame set for release on smartphones and in arcades.
Mario the Plumber and Sonic the Hedgehog continue to be two of the most popular videogame characters in the world. Sega Sammy Holdings has published figures showing that its Sonic video games continue to be among its best-selling titles. A Sonic the Hedgehog movie released in 2020 grossed $320 million worldwide.
SGAMY stock is down 17% year-to-date at $3.25 a share.
On the date of publication, Joel Baglole did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.