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Shuffling Deck Chairs on the Olympics?


There was a time, not that long ago, when the Olympic rings were considered the gold standard for sports marketing. No other event (with the possible exception of World Cup Soccer) could touch the global reach and excitement of the Games.

As the influence of the Games increased, the Olympic Rings became an emblem of success for sports marketers. Those companies that could afford the 8 figure rights fees (and at a minimum equivalent activation expenses) achieved the corporate equivalent of "Citius, Altius, Fortius". In other words, there were sponsors, and then there were Olympic sponsors.

But the times? They're a-changing.

After 40 years of involvement in the Games, McDonald's just announced they're terminating their Olympic sponsorship early to "focus on different priorities". At the USOC level, Budweiser recently ended their sponsorship after 32 years, despite the company's "America" re-branding effort. Citi, AT&T, Hilton and others have also punted on their USOC sponsorships, leading to much hand wringing among Olympic organizers.

Sponsor are reconsidering their Olympic investments faster than swimmers leaving the platform at the sound of a starter's pistol. (Sorry. Olympic articles demand Olympic analogies...) So what's up? Consider the number of issues the Games are dealing with:

  • Financial Disaster for Host Cities: The 2016 Rio Summer games are just the latest financial debacle to beset the Games: $13 billion spent on new venues that are already in a state of disrepair and decay. The Tokyo 2020 Games have already doubled their budget projections. But that's the rule rather than the exception: every Games since 1960 has gone over budget by an average of 156%.

  • Potential Hosts Abandoning Bid Process: Cost over runs, an increasingly wary (and vocal) public, and dubious economic benefits have led to multiple potential hosts (Boston, Rome, Budapest, Oslo, Toronto, Krakow... the list goes on) withdrawing their names for consideration. The 2022 Winter Games bid process was such a disaster that the IOC had to pay potential hosts just to keep the process alive.

  • Ongoing Drug Scandals: Nearly the entire Russian delegation was prevented from competing in the Rio Games due to systematic cheating.

  • Aging and Declining Viewership: Today's Olympic viewer is about 53 years old, or 8 years older than they were during the 2000 Athens games. TV viewership is down as well: NBC's Rio Games were down 17% compared to London 2012, despite being in a favorable time zone. The coveted 18-49 age group, so coveted by advertisers was worse, down 25%.

Unsurprisingly, in the face of economic ruin, scandal, increased skepticism, and declining and aging viewership, the once unassailable Olympic brand has hit an iceberg. And their sponsors are lowering the lifeboats.

But wait, you might say. (Go ahead, say it. I'll wait.) Just as McDonald's started paddling away from the foundering Olympic ship, Intel pulled up along side and threw the Games a life ring by becoming a TOP sponsor. Sure, the Games lost a major sponsor, but they gained one right back.

"You could see the younger generation had no interest in the Games anymore. They were not there." - IOC President Thomas Bach

Here's the thing, though: while there might be a 1-for-1 sponsor exchange, it's highly doubtful there was an equivalent financial one.

Refer back to the final bullet point in the earlier list. The graying of Olympic viewership is a huge concern to both organizers and sponsors. The audience for the Rio Games was the oldest since 1960, the fist year the Olympics were televised in the U.S. This is largely attributed to the Games failure to attract younger viewers, of which IOC president Thomas Bach commented: "You could see the younger generation had no interest in the Games anymore. They were not there."

Into this maelstrom of panic steps Intel. Fear not, says Intel (I'm paraphrasing...) Our bleeding edge technology (3-D! Virtual Reality! 360-Degree Video! Drones!) will ensure the return of those easily distracted younger viewers. It'll be a perfect win-win: our technology and expertise will relaunch the Games for a Millennial audience, and the Olympics will provide a showcase for our capabilities. Now about that TOP sponsorship fee...

Intel positioned themselves as a solution provider to the Olympics' aging viewership problem. (The viability of that point is worth a separate blog entry...) In doing so, they unquestionably sought a significantly reduced TOP sponsorship fee from the IOC. That's all well and good, and is a smart strategy for Intel.

The problem, however, is that this exacerbates the Olympics other problems (listed above). For example, taking less money for a sponsorship ensures less financial support to host committees, which means they'll be deeper in debt. That in turn ensures fewer cities will bid to host the Games in the future.

So what to do? Can the Games be rescued, or are they beyond repair? Some humble suggestions, most of which have been offered elsewhere:

  1. Change how games are hosted. A common suggestion has been to assign the games to 1 or 2 permanent locations. An alternative (which we have written about before here) would be to spread the competitions of a single games out over different sites. For example, swimming, diving, and synchronized swimming events in Tokyo, boxing, wrestling, and judo events in Montreal, track and field events in Budapest and so forth.

  2. Alter the events in the Games. There is a painfully long , politically laden process to changing the sports and events featured in the Games. To speed this process, the Games should borrow the idea of relegation from soccer: the least five rated sports in terms of television and online viewership would be immediately jettisoned, with online voting determining what sports take their place.

  3. Fixed term limits for IOC officials. The lack of faith in the IOC isn't unique: the organizing bodies of nearly all major global sport organizing bodies are seen as brazenly corrupt (World Cup soccer, F1 Racing, and so on...) Part of this has to do with the quasi-authoritarian nature of these organizations: IOC members serve for 8 year terms that can be "renewed." Implementing firm term limits on leadership would be a first step to decreasing the iron grip on power that these organizers have.

Until the IOC considers making serious changes to the Games, sponsors will increasingly cast their eyes to different opportunities, and the slow, steady decline of what was once a global movement will continue unabated.

#sponsorship #sports #marketing #municipalities

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