SBD/Issue 15/Olympics

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  • Rio De Janeiro Defeats Madrid To Become Of Host '16 Olympics

     
    Rio de Janeiro today won the right to host the '16 Olympics, following a first-round vote that eliminated Chicago, a second-round vote that eliminated Tokyo and a final vote that eliminated Madrid. The victory gives South America its first ever Olympics Games and offers the IOC a chance to expose an entire continent to the Olympic ideals. It also showed that the IOC is confident that Brazil can not only execute the '14 FIFA World Cup and '16 Olympics, but also keep the marketplace uncluttered enough for sponsors to derive value from associating with the '16 Olympics. Chicago's first round exit shocked U.S. Olympic insiders who considered it the best bid in the nation's history. Many took it as a sign that Anti-American sentiment is still strong internationally, especially within the ranks of the IOC. Olympic sources said that Chicago's early exit stemmed from a concerted effort by Madrid and Rio to steer votes to Tokyo in order to push Chicago out in the first round. There also was a lot of buzz inside IOC circles that working with a Chicago organizing committee would have been more difficult than it was worth. USA Track & Field CEO Doug Logan said, "If they decide to go with a different city, it will mean that the hate and distaste for our country and our arrogant manner of conducting business will have trumped a financial bonanza for all Olympic sports. It will not mean a vote for someone else but rather a vote against us." The decision also kills the USOC’s hopes of bringing the fourth Summer Games to the U.S. and the first since the '96 Atlanta Games. Had Chicago won, the '16 Olympics promised to be a boon for not only U.S. Olympic stakeholders but also the U.S. sports business industry. Chicago’s loss raises questions for everything from the future of IOC television rights to the future of the USOC.

    MISSED OPPORTUNITY: Chicago’s loss promises to leave both the city and the sports industry with a hangover. SportsCorp President Marc Ganis, who is based in Chicago, said, “I’m concerned the city is going to have a major hangover because expectations have been raised so high. It will manifest itself in people being down and depressed, optimism waning and government and business not having any great events to look forward to.” Rio expects to generate $2.8B in revenue, which includes $570M in domestic sponsorships. The sponsorship figure is half as much as Chicago expected to generate. Chicago’s bid team expected the Olympics to generate $3.8B in domestic revenue, including $1.2B in sponsorships. All of the sponsorship revenue offered an opportunity for sales and consulting agencies to provide corporate partners with sponsorship analysis and activation planning. But those opportunities will never come to fruition. As a developing country, Brazil still represents an intriguing sponsorship opportunity for global corporations. Helios Partner Chris Welton said, “Brazil is a growing economy and sponsors want to go places where they can grow their business. You’re not going to get a whole lot of money out of Brazilian companies, like in Russia (for Sochi) and China (for Beijing), which leaves you with a lot of opportunity for non-Brazilian companies that want to grow their business there.” Former USOC President Harvey Schiller said, "From some of the action in these past months, it's clear the IOC is showing more direction than they have in the past. It was clear to everyone that it was for Rio."

    FOR TELEVISION: The selection of Rio was the second-best option for the IOC on the TV front. The city is one hour ahead of the East Coast, which will allow broadcasters to air many of the marquee events, like swimming and track and field, in primetime. The IOC is expected to go to market with the U.S. television rights to the '14 and '16 Olympics within the next year. NBC is paying $2.1B for the rights to the '10 and '12 Olympics, and U.S. television rights currently account for half of all IOC revenue. Rio offers the IOC a chance to increase those rights in the next quadrennium. 21 Marketing founder Rob Prazmark said, “Everyone is worried about the next negotiations, but for television Rio’s almost as good as Chicago. You’re selling for U.S. television a great time zone.” Neal Pilson, president of Pilson Communications, said, “Rio’s an attractive location. It probably will be a costly Olympics because you have to bring a lot of equipment with you, but the time difference is very attractive to U.S. television.”

    Baird Faces Tall Task Of Selling
    Sponsors On Another Non-U.S. Games
    FOR THE USOC: The IOC’s decision creates a new challenge for the USOC, which has been plagued by leadership turmoil and considerable economic pressure over the last year. The organization relies on sponsorship to fund the bulk of its operations, and it recently lost a host of key corporate partners, including General Motors, The Home Depot and Bank of America. The departures cost the organization more than $10M a year, and the USOC only managed to add Proctor & Gamble in a deal valued at $3.75M a year. The Chicago Olympics promised to be a magnet for new corporate partners over the next seven years. Now the organization will have to figure out how to sell sponsorships to three consecutive international Olympics where USOC partners won’t be able to activate on the ground. 21 Marketing Founder Rob Prazmark said, “They’ve got to reinvent themselves. Chicago would have been that reinvention tool. This is going to be (USOC CMO) Lisa Baird’s number one challenge.” But IMG’s top Olympics marketer, Kristina Schaefer, disagreed, saying, “To me, the value proposition is still about the Olympians, the athletes, their journey, the passion it takes to get there. That still rings true to consumers out there.” The decision will cost NGBs as well. A victory for Chicago would have delivered $10M in new revenue to USA Track & Field, said Logan. Instead, the NGB will have to look elsewhere to generate new revenue. USA Swimming CEO Chuck Weilgus said, “We have the right to be depressed for 24 hours, and then we have to pick ourselves up and figure out how we charge forward. On the business side, it doesn’t make things easier.” USA Gymnastics CEO Steve Penny added that his organization’s business won’t change. He added, “Our business is a 365-day-a-year business where we’re doing everything we can to promote our sports, to put athletes on the podium and grow our sports. Hosting the Games makes that job a little easier, but anyone in my position knows you have to come to the office every day to go to work.”

     
    BLAME GAME: Considering the bid was regarded as the best ever put forward by a U.S. city, Chicago’s loss also calls into question the degree to which the USOC might be to blame. The organization took several months to resolve a dispute with IOC members over the amount of revenue it receives from the IOC. It later faced heavy criticism and charges of arrogance when it announced its plan to launch a U.S. Olympic network. Though it temporarily resolved the revenue dispute and shelved the network proposal, both disputes elicited considerable criticism from IOC members and could have affected Chicago’s chances. Compounding those issues, the USOC made a leadership change earlier this year, as well, replacing longtime CEO Jim Scherr with board member Stephanie Streeter. A number of NGBs were critical of the change. Since then, Streeter’s compensation package has been reported by the Chicago Tribune to be valued at more than $1M, nearly twice as much as Scherr’s compensation before he left. Olympic sources say all of those issues could boil to the surface in the wake of Chicago’s loss. USA Triathlon CEO Skip Gilbert said, “They’re going to have to look internally to see what they might have been able to do to better support the bid. Good, bad or indifferent, there’s going to be a lot of finger-pointing at them. If they use it as a learning exercise to make the USOC better and stronger, I think it will be OK.” Schiller summed it up this way: “Tough times for USOC across the board. Lots of finger-pointing.”

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  • Lula's Passion, Geography Played Key Roles In Rio Getting '16 Games

    Lula's Passion Deemed
    Critical In IOC Presentation
    With the IOC Friday awarding the '16 Olympics to Rio de Janeiro, THE DAILY takes a look at the bid presentations for all four finalists and examines what may have pushed the Brazilian city over the top.

    A CASE FOR SOUTH AMERICA: Rio in its presentation continued to stress that it presents the IOC an opportunity to "make history by bringing the Olympics to a continent that has never hosted them before." Rio dared IOC members "to be bold and to open their movement" to South America. Brazil President Luiz Inacio Lula da Silva: "The opportunity now is to expand the games to new continents. Light the cauldron in a tropical country, in the most beautiful of cities." Rio 2016 Chair Carlos Arthur Nuzman insisted that Rio is an "emerging economy that has helped redraw the world's economic map" (WSJ.com, 10/2). The Rio bid "also tried to dispel worries about crime." Rio Gov. Sergio Cabral: "We know that some of you have questions about security. Changes have been made, happily as a result of sport" (NYTIMES.com, 10/2). Lula said, "I honestly believe that it is Brazil's time. Among the top 10 economies in the world Brazil is the only country that has not hosted the Olympics. ... Rio is ready, give us the chance and you will not regret it." In London, Paul Kelso in a live blog wrote, "It's stirring stuff, the equal of [President] Obama's set-piece earlier." Rio delivered "exactly what the members were expecting and made a powerful case" (TELEGRAPH.co.uk, 10/2). In Manchester, Burnton & Ronay in a live blog wrote, "Lula is nailing it. He's pushing all the buttons about the inclusivity of the Olympic movement and sending a message to the world. The logic is overwhelming. ... Exit to what sounds like much louder applause than either of the Obamas got. Really well done, that. Lula did the job" (GUARDIAN.co.uk, 10/2).

    MADRID'S PRESENTATION: In N.Y., Juliet Macur noted Madrid, the last presentation, "focused on the mantra, 'Sport makes us equal. It makes us better,' and emphasized that Madrid enjoys more support among its residents than competing cities." Spain Prime Minister José Luis Rodríguez Zapatero said, "Our candidacy is reliable because it is united politically and united with the feelings of the population and because it has shown that it could learn and improve." Former IOC President Juan Antonio Samaranch during the presentation "went as far as asking the IOC members for a personal favor when he addressed the crowded room." Samaranch: "I’m very near the end of my time, I’m 89 years old. I ask you to consider granting my country the honor and also the duty to organize the Games and Paralympic Games in 2016" (NYTIMES.com, 10/2). REUTERS' Kevin Fylan wrote Samaranch "made an emotional appeal to the hearts" of IOC members (REUTERS, 10/2). AROUND THE RINGS' Mark Bisson noted Spain King Juan Carlos "produced what could be a game-changing performance for Madrid," delivering a "fiercely emotional plea to IOC members." The city's bid "gathered momentum and ended with a flourish" (AROUNDTHERINGS.com, 10/2). The TELEGRAPH's Kelso wrote, "Madrid is clearly pitching to be the no-risk option, hoping to inherit the 2016 Games after Rio and Chicago kick each other to death" (TELEGRAPH.co.uk, 10/2). The GUARDIAN's Burnton & Ronay wrote, "Maybe they'll get the 2020 games, eh, because they've got a bogglingly small chance of getting this one" (GUARDIAN.co.uk, 10/2).

    Hatoyama Touted Environment
    Benefit Of Tokyo Games
    TOKYO'S PRESENTATION: Japan Prime Minister Yukio Hatoyama in Tokyo's presentation vowed to "provide total government support and a lasting legacy." Hatoyama addressed his "recent pledge to slash greenhouse emissions by 2020, which would contribute an environmentally-friendly Games," during his five-minute speech that "included mention of financial guarantees and the support of a nation." Tokyo's presentation, including the Q&A session, finished 10 minutes short of the allotted 70-minute time, and presenters "ramped up their emotion and passion in a slickly delivered pitch to the IOC" (AROUNDTHERINGS.com, 10/2). The WALL STREET JOURNAL's Matthew Futterman noted Hatoyama's comments were "brief and rather unemotional compared with the high-minded, inspirational language that laced President Obama's speech" that preceded Tokyo's presentation. Tokyo 2016 Chair Ichiro Kono, "perhaps sensing how tough an act Tokyo had to follow," asked the IOC to "judge Tokyo on the strength of its bid, which won solid reviews from the IOC earlier this year for its compact design" (WSJ.com, 10/2). The London TELEGRAPH's Kelso wrote, "Hats off to Tokyo for coming up with a distinctive campaign. ... Tokyo was the surprise package, hitting home with the sheer effort and enthusiasm of their presentation" (TELEGRAPH.co.uk, 10/2).

    Obamas Delivered The Excitement, But
    Rest Of Chicago Bid Deemed Flat
    CHICAGO'S PRESENTATION: The TELEGRAPH's Kelso writes Obama's "most telling comments came in response to a question" from Pakistan IOC member Sayed Shahid Ali, who "sought assurance that foreigners attending the Olympics would not face the 'harrowing' experience at immigration familiar to many visitors." Obama said, "One of the legacies I want to see coming out of Chicago from 2016 is a reminder that America at its best is open to the world. ... Over the last several years sometimes that fundamental truth about the United States has been lost. One of the legacies of this Olympic Games would be the restoration of that understanding of what the United States is all about and a recognition of how we are linked to the world." Kelso notes Obama's response "drew spontaneous applause from IOC members, many of whom have resented American attitudes towards the movement" (TELEGRAPH.co.uk, 10/2). Kelso wrote Chicago's bid was the "big disappointment, Michelle Obama aside." The presentation was "flat, they failed to make a powerful case for what a Chicago Games would mean" (TELEGRAPH.co.uk, 10/2). In Chicago, Lewis Lazare wrote Michelle Obama "without question ... provided the most gripping, unforgettable moments in the 45-minute presentation," but President Obama's delivery was "devoid of the emphatic charm he has employed so effectively in many previous talks" (SUNTIMES.com, 10/2). Also in Chicago, Philip Hersh wrote the presentation "seemed to lack an overarching theme, touching on many aspects." Some media "felt that, with the exception of the Obamas, much of Chicago's presentation was a bit flat" (CHICAGOBREAKINGNEWS.com, 10/2).

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