S&P Global —15 August 2024
Daily Update: August 15, 2024
The Business of the Olympics
By Nathan Hunt
Start every business day with our analyses of the most pressing developments affecting markets today, alongside a curated selection of our latest and most important insights on the global economy
The torch has passed to Los Angeles. But before the Paris Olympics fades into memory, let us pause and evaluate the business impact of the Games. Money was spent on facilities, and money was made on advertising. Innumerable weekend warriors may feel motivated to buy a new pair of running shoes after watching the upset in the men’s 1,500-meter race. Insurers will be relieved due to the lack of major disruptions. Paris will find itself with bills to pay. And then there are the carbon offsets purchased to achieve the dream of an environmentally friendly Olympics. An event of this scale moves global capital.
Longtime US rightsholder NBCUniversal Media surpassed its previous record of $1.25 billion in Olympic ad sales. Linear and streaming viewership averaged 33.8 million people on a total audience delivery basis in the first four days, up 77% from the first four days of the Tokyo Games, according to data from Nielsen and Adobe Analytics. This growing audience attracted new and old advertisers to a rare contemporary example of must-see TV. S&P Global Market Intelligence Kagan's US Consumer Insights survey found that over 25% of internet adults reported they typically watch the Summer Olympics. Approximately $500 million of NBCUniversal’s advertising haul came from new advertisers, with airlines, beverages, retail and consumer product goods leading the growth.
Beyond media companies, sports apparel manufacturers typically benefit from audiences inspired by Olympic competition. According to S&P Global Market Intelligence, US imports of sports products increase an average 11% in Olympic years, versus a 3% average increase in non-Olympic years. In 2021, when the Tokyo Olympics were delayed by COVID-19, US imports of sports products peaked at $20.97 billion. So far, US and EU imports have been lackluster, buoyed only slightly by an influx of replica shirts for the Euro 2024 soccer championships. But imports of swimwear, bicycles and high-end running shoes are expected to increase. Vietnam, which produces many sporting goods and had a 13% share of the global sports footwear and apparel market in 2023, stands to benefit from this year’s anticipated spike in sports purchases.
Global insurers should also be thrilled by the outcome of the Games. The International Olympic Committee buys $800 million of event cancellation coverage for the Summer Games, with anticipated additional claims in the billions. As the Olympic torch boarded the plane to Los Angeles, insurers and reinsurers will likely be grateful that no major disruptions affected the event.
Of course, someone must pay. The total cost of the Paris Olympics is estimated at €8.9 billion, or 0.3% of France’s 2024 GDP. That total comprises €4.5 billion in venue costs and €4.4 billion in operating costs. One of the arguments used by advocates of Paris’ hosting bid was that the city was already well supplied with sporting venues. Indeed, 95% of the city’s Olympic venues were already in place and required only refurbishment. While there have been cost overruns, the budget for the Games is expected to be substantially offset by revenue generation from public transportation, ticket prices and value-added tax. Paris, unlike the Brazilian state of Rio de Janeiro after the 2016 Games, will almost certainly avoid a default.
Finally, there are costs associated with the goal of halving the Paris Games’ carbon footprint compared with previous Games. The estimated carbon footprint of the 2024 Paris Games is 1.58 million metric tons of CO2 equivalent, lower than the target of 1.75 MMtCO2e, the organizers said. The organizers have purchased 1.47 MMtCO2e of carbon credits from 13 different projects, but further offsets must be purchased to fully meet goals.
Today is Thursday, August 15, 2024, and here is today’s essential intelligence.
3 REITs Issue Green Bonds In H1 2024
Green bond usage by US real estate investment trusts started to ramp back up in the first half of 2024 with three REITs issuing green bonds that accounted for roughly 5.3% of the total bond proceeds for the half, according to an S&P Global Market Intelligence analysis. Total proceeds from green bonds by US REITs continually grew from 2018 through 2021, peaking in 2021 at $14.38 billion, or 18.2% of the total bond proceeds for that year. Bond issuance overall by US REITs dropped in 2022 as interest rates started to rise; however, green bonds remained a high proportion of bonds that were issued that year.
—Read the article from S&P Global Market Intelligence
Investors Extend Equities Sell-Off In July As Rally Fizzles
Institutions, hedge funds and retail investors continued to sell their stock holdings in July as the equities rally showed signs of fatigue. These three groups sold off a combined net $36.04 billion of stocks in July as the S&P 500 gained just over 1.1% from the end of June, compared to the more than 15.1% rally in the index during the first six months of 2024, the latest S&P Global Market Intelligence data shows.
—Read the article from S&P Global Market Intelligence
US Banks Downsize Balance Sheets In Q2 2024
For the sixth time in the last nine quarters, the US banking industry reported a lower level of total assets. As of June 30, total assets for US commercial banks, savings banks and savings and loan associations were $23.887 trillion, down about $71 billion, or 0.3%, from March 31, according to regulatory data compiled by S&P Global Market Intelligence. The industry had experienced sequential asset growth of 1.2% and 1.1%, respectively, in the previous two quarters.
—Read the article from S&P Global Market Intelligence
Tanker Markets Shrug Off Escalating Middle East Tensions
Mounting strain in the relationship between Israel and Iran has failed to lift tanker freight rates, as key buyers look to preserve calm markets and remain focused on bearish demand sentiment. There were fears that the assassination of Ismail Haniyeh, a top Hamas leader, in Iran, and of Fuad Shukr, a senior Hezbollah commander, in Lebanon, would portend a fresh escalation in geopolitical tensions in the Middle East and cause commodity prices to snap higher. However, oil markets have proved surprisingly stable as ships continue to avoid the Red Sea and traders have proved increasingly less reactive to brinkmanship from both sides of the conflict.
—Read the article from S&P Global Commodity Insights
Bullish European LNG Prices Pose Challenges For Arbitrage To Asia
LNG arbitrage to Asia has become increasingly challenging as European prices continue to stay bullish, though muted demand in Europe is keeping US volumes pointing toward Asia. "TTF has strengthened a lot recently and sellers are struggling to find buyers at elevated prices in Asia," said David Lewis, LNG analyst at S&P Global Commodity Insights.
—Read the article from S&P Global Commodity Insights
Listen: Next In Tech | Ep. 180 — Datacenters And Energy Utilities
The soaring estimates for energy demand are impacting utilities, datacenters and the companies that rely on both of them. Sustainability targets are taking a hit as power providers grapple with meeting technology-driven growth and Adam Wilson from S&P’s Commodity Insights team and Dan Thompson from 451 Research’s datacenter group join host Eric Hanselman to discuss where this is leading. Datacenter demand is real and new builds are kicking off that are fully funded. Power availability and cost have become a key criteria for site selection. Both datacenters and power generation investments are long term plans, often decades in the making, but the large shift in demand has upended those strategies.
—Listen and subscribe to the podcast from S&P Global Market Intelligence
Beyond ESG With Scaling Capital For The Energy Transition (Aug. 21, 2024)
Clean tech is key to scaling the energy transition, but its adoption remains stifled by the deployment of fossil fuel infrastructure far from the end of its economically useful life. How can investors and companies finance this shift, while the threat of early retirement of assets still looms large?
—Register for the webinar from S&P Global Sustainable1