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Worldwide sponsors avoiding future games
Question of the Day
Sponsor interest in the Beijing Olympic Games reached staggering heights, but organizing committees for the Vancouver and London Games said they remain on target to reach their own lofty goals despite the loss of several key partners.
Organizers of the 2010 Winter Games and the 2012 Summer Games said they don’t expect a revenue shortfall, although both have scrambled for new sponsors after at least four companies listed as “worldwide partners” of the Beijing and Turin games failed to renew.
Kodak and Canadian bank Manulife have dropped their sponsorship, and Johnson & Johnson is reconsidering it for the Vancouver and London Games. Acer, meanwhile, replaced Chinese computer maker Lenovo. All worldwide sponsors must sign a four-year agreement that includes the Winter and Summer games.
Domestic sponsorship also has lagged behind Beijing, where a record 21 companies signed on as “top-tier” sponsors, each of which paid more than $20 million. With its share of worldwide sponsorship factored in, Beijing raised a combined total of more than $1 billion.
While there is still time for sponsors to be added, analysts said it is unlikely the sponsorship figures from the Beijing Games will be matched.
“Beijing set the bar very, very high,” said Jerome Fontaine, CEO of the London-based Fournaise Marketing Group, which tracks the effectiveness of sponsorships. “London is a bit behind at the moment. I don’t think they’ll be able to reach the same level.”
London organizers downplayed reports of a slowdown in sponsor interest, insisting the 2012 games are on target to raise $1.3 billion, more corporate money than any games in history.
London has secured seven major domestic sponsors, including British Airways, British Telecom and Lloyd’s TSB, and hopes to attract at least two more. That total would be fewer than half of the number of major local sponsors at the Beijing Games, but it appears organizers hope to achieve similar revenue by charging more. Companies in Britain have been asked to pay between $90 million and $150 million to become a top-tier sponsor, according to newspaper reports in England. It is unclear how much the Chinese charged for domestic sponsors, but the 2004 Summer Games in Athens averaged only $21 million a company.
Lesa Ukman, the chairman of sponsorship consultancy IEG, told British newspaper the Independent that London organizers were “looking for numbers that are impossible to justify.”
“The price of the games is going through the roof based not on the value potential that is extractable but on the committee’s ideas of what can be charged - which has nothing to do with what you can get as a return,” she said. “It is absurd.”
There is some pressure to raise money in London. The estimated cost of hosting the games has risen above initial estimates to more than $18 billion, by far the largest budget aside from the Beijing Games.
Organizers in Vancouver, meanwhile, said they expect to meet sponsorship projections in time for the Winter Games in 18 months. The host committee has raised just under $695 million in domestic sponsorships - 94 percent of its target of about $730 million. Vancouver has six major national sponsors - Petro-Canada, RBC, General Motors of Canada, RONA, HBC and Bell - and expects to add at least seven more. Organizers also hope to pull in an additional $200 million from worldwide partners.
“To be honest, we’re thrilled with where we are,” said Dave Cobb, vice president of revenue marketing and communications for the Vancouver Organizing Committee. “We’ve been getting calls from out of the blue from companies we never talked to inquiring about sponsorship.”
But while Vancouver and London may meet their goals for domestic sponsorship, the loss of major worldwide sponsors is glaring.
Worldwide partnerships are based on a four-year cycle that includes both the Winter and Summer games and gives companies the right to use the Olympic logo in global advertising. For Turin and Beijing, 12 worldwide partners paid a total of $866 million, an average of $72 million, with about half that money going to the host committees and the rest distributed among the more than 200 national Olympic committees. The IOC has set a goal of more than $1 billion from worldwide partnerships for Vancouver and London.
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