The Cost of Chasing Olympic Gold: The Economics of Doping in Sport

By Ethan Walker and Cassi Ainsworth-Grace

The average annual salary of an NFL player sits at a comfortable $2 million. For an NHL player, a nice $3 million. For those competing within the NBA, it is $6 million. But for Olympians, pay is pitiful.

The Olympic Games, the multi-national athletic battleground of sports, retains a grandeur and spectacle which has ebbed away in most major sporting competitions. With nations from across the globe sending athletes at the peak of their physical ability and fans swarming host nations, consuming, contributing and celebrating, the Olympics occupies a position of huge income potential. The postponed 2020 Tokyo Olympics is expected to bring in revenue of $5.9 billion if it goes ahead.  According to a 2016 Oxford University paper, the cost of hosting these games is hovering at an average of over $5 billion, with a steady increase year on year. And the Tokyo Games are expected to be the most expensive yet. Such copious amounts of money flowing in and out of the Olympics would suggest the competitors, the stars of the show so to speak, were in a similar if not stronger financial position than their counterparts in major national sporting leagues.

Whilst the top A-list athletes can earn over $10 million in endorsement deals, for most of the athletes participating in the Games, their income is not sourced via multi-million dollar sponsorship deals, nor is it paid by the teams to which they belong. Instead, government stipends and employment outside the sporting world make up the bulk of their yearly income. Far from the professional sporting leagues capable of paying their athletes huge salaries, most Olympic athletes are paid very little, with most American Olympic athletes earning less than $15,000. Stipends vary dramatically, and change based on performance. USA Weightlifting’s stipends range from $750 to $4000 per month. But for most athletes, it’s up to them to secure the funds necessary to compete.

For many, especially those from countries without the sporting infrastructure capable of paying the millions some have come to expect, the Olympics exists as a lifeline. Rewards for medals, sponsorships and the publicity that comes with competing at this level are the sole reasons that so many athletes can afford to devote their lives to their sport. As of 2018, the International Olympic Committee (IOC) provides $37,500 for a gold medal, $22,500 for silver and $15,000 for bronze. Even with these large sums, medal winners tend to lose around 39% of this in taxes. And the IOC also curtails sponsorship money by ruling that athletes backed by non-official Olympic sponsors may only be part of generic advertising that does not explicitly mention the Games, or the event’s intellectual property.

It is no wonder that athletes desperate for funds and for the limelight cross legal boundaries through the use of performance enhancing drugs (PEDs). Higher prize money and endorsement deals increase the incentives for athletes to consider doping. Professor Dr. Wolfgang Maennig of Hamburg University has written extensively on the topic, arguing that athletes that use PEDs, or doping, expect a net gain in rewards as compared to a more honest strategy. This changes with age as well – the older the athlete gets, the greater the incentive to take PEDs to compete with younger, fellow athletes for the prize money. Additionally, the impact of punishment of taking PEDs for older athletes diminishes as they near retirement. With such significant financial stakes, athletes and teams benefit from doping if they can increase their chances of winning.

Doping is more widespread than we realise. It has been estimated that the actual rate of doping has been approximated at 14-39% of athletes, compared to the 0.5-2% level of positive doping control tests. When surveyed on the matter, coaches’ and athletes’ estimations of doping rates are even higher. If more athletes are abusing PEDs, it worsens the chances for fellow competitors. As a consequence, professional athletes who would not necessarily use PEDs feel pressured to dope in order to keep up with the competition.

High estimations of illegal substance usage within the sporting community leads to an environment of suspicion, where athletes assume that their competition must be doping. To keep up, they too most dope. This can trap athletes in a cycle, where athletes dope to ensure they do not fall behind the competitors they believe are cheating. As more athletes and organisations are exposed for doping, this only increases the suspicion and assumption of cheating between athletes, accelerating the cycle.

Under current sporting regulations, doping of individual athletes also damages the reputation of others. Following the bombshell that Russian athletes and agencies were involved in widespread doping, the nation was banned from participating in the postponed Tokyo Olympics and the 2022 World Cup. Without state support, and being forced to compete flagless has left many Russian athletes in a difficult situation, with gold medallist athlete Yelena Isinbayeva deriding the decision as a human rights violation. Human rights violation or not, the punitive actions of the Court of Arbitration of Sport have rendered a generation of athletes lost, confused and ostracized by their peers.

Allowing competitors to perform under neutral conditions is definitely a positive improvement to the ban Russia faces. Yet, there is still a clear reduction in the participation of Russian athletes within the Games, which first and foremost impacts the individual athletes who had their opportunity for success grounded. Some of these athletes were too young to compete when the doping scandal initially broke, and are now have seen their dreams squandered. We need a more efficient system to control the use of PEDs.

The severity of the sentencing has been a hot topic of contention since the ruling, and the full impact of such harsh sentencing for the actions of agencies and individuals on innocent athletes and on nations themselves is yet to be seen. Russia has taken the centre-stage when it comes to doping within sports, but the issue is a worldwide one, with most nations having fielded athletes who have benefited from PEDs at competitions at some point or another. The International Association of Athletics Federation have highlighted Kenya, Ethiopia, Belarus and Ukraine as the countries most at risk of doping in the upcoming years.

Ethiopia and Kenya have in particular been highlighted as having issues regarding inequality in sporting contracts. Boasting some of the best track and field athletes, including all-time greatest marathoner Eliud Kipchoge who runs for Kenya, the sponsorship and reward money these athletes receive is largely disproportionate to less successful athletes in nations such as the US and the UK. Across the board, athletes from all 4 of these nations make considerably less from their sport than those representing most other successful nations at the Games, including the athletes of Russia, and so have come to rely on their continued exposure and success at the Olympics. There is a fear that if these nations are similarly caught and punished for doping infringements at some point in the future, competitors will be disproportionately affected, and will financially struggle to compete under neutral banners.

The idea of athletes from banned nations still being allowed to compete is also under heavy criticism from major athletic regulatory bodies. The United States Anti-Doping Agency (USADA) has raised concerns of not being able to properly monitor athletes operating under no flag, citing difficulties in arranging a framework for non-national representatives to ensure testing requirements are met and are as transparent as other nations.  If the next major incident incorporates these concerns into the punishments handed out, the athletes reliant on government funded athletic stipends, sponsorship money and prize money will undoubtedly suffer. For most athletes at the games, a ban from competing, regardless of personal culpability in any rule-breaking would be a social and financial catastrophe. 

Several alternatives to reduce doping have been suggested. Maennig argues that athletes should be paid a high starting bonus that is cut if they test positive for doping substances. His example of this system would be paying each ‘clean’ Olympic Games participant a starting bonus of $50,000, which is taken away when testing positive for PEDs. However, he observes that this may only displace PEDs activity to lower-level competitions, the ones that would decide an athlete’s eligibility for the participation in the competitions that offer that starting bonus.

La Trobe University’s Dr Liam Lenten suggests what he calls ‘conditional superannuation’. This is a system based around incentives. Athletes sign a contract whereby they forego a certain percentage of their earnings and prize winnings, which they only recoup at a later date. And only if they continue to test negative for PEDs. However, individuals may respond differently to this incentive. For example, younger athletes who can be short-sighted may see this future benefit as too distant, and may be willing to sacrifice this for short-term winnings. This may be mitigated if a context-specific approach was taken to each athlete’s contract, although this could be costly.

Significant press coverage on those athletes that have been caught has also been discussed as an effective punishment. As much of an athlete’s earnings are dependent on winning sponsorship deals and endorsements, a bad reputation may be enough to keep them from doping. Eugen Dimant and Christian Deutscher writing for the Edmond J. Safra Center for Ethics argue that if the media is largely uniform and extensive in its negative media coverage, the cost for the athlete would rise significantly. Perhaps this would be enough to discourage doping activity.

With the eyes of the sporting world fixed steadily on the use of PEDs, the near future holds a great risk of further punishments handed down to offending nations. In order to maintain sporting equity and ensure athletes are not punished for the activity of others, there must be a fair, but effective, system of reprimand. Just as Russia’s athletes have suffered from the punishments laid down in the past few years, there remains a risk of fresh scandal, where doping brings sporting bodies in direct conflict with individual competitors. While doping continues to erode the integrity of professional sports, the response taken should be well-measured and efficient, and it is vital there is a solid line drawn between the appropriate punitive response, and the impact on the individual athlete. 

“The views expressed in this article are the authors’ own, and may not reflect the opinions of The St Andrews Economist.”

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