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IOC, Dow Chemical Formally Announce 10-Year TOP Partnership
Published July 19, 2010
The Dow Chemical Company and the IOC officially announced a 10-year, worldwide partnership Friday in N.Y., making the company the 10th Olympic TOP partner and the first new TOP partner since '07. The deal gives Dow rights to use the Olympic rings until '20. Sources valued the agreement at $140-$170M over 10 years. Dow Chair & CEO Andrew Liveris said the company, which has historically limited its sports spending primarily to golf, decided to invest in the IOC partnership because the Olympics offer a chance to improve Dow's brand recognition internationally, highlight its work on products designed to improve sustainability, and ultimately generate as much as $1B in product sales at Olympic venues and in Olympic host markets. Earnings from product sales to Olympic host cities and markets could top $180M before interest, taxes, depreciation and amortization, Liveris added. He said, “All things that go into making the equipment, we can be a big part of that. You can be guaranteed that nothing gets approved by the board of the Dow Chemical Company unless it creates shareholder value.” Dow also was interested in the opportunities presented by upcoming Olympics in emerging markets like Sochi, Russia, and Rio de Janeiro. Dow Exec VP Heinz Haller said, “The Dow Chemical Company is around two-thirds outside the U.S., and the Olympic rings offer an opportunity to present it as a truly global company. If you look at Brazil and Russia and growth in those two countries, and also the needs these regions have and the role we can play in them, that was definitely one of the major criteria.”
HOW IT STARTED: Conversations between Dow and the IOC began during the '08 Beijing Games. The recession cooled talks but discussions were rekindled earlier this year. Dow has bought hospitality at the Olympics through the agency Jet Set Sports for more than a decade, and it tapped Jet Set Sports' executive team to assist it in negotiations with the IOC. The deal makes the company the official chemistry partner of the IOC. It expands on the Michigan-based company's history of supporting the Olympic movement by sponsoring teams like USA Luge and USA Cycling. IOC President Jacques Rogge said, “Dow will benefit from great exposure. The Summer Olympic Games generates an audience of 3.8 billion viewers.” Dow has not decided if it plans to hire an agency to assist it in marketing and promoting its sponsorship. It does not use an agency to support its sponsorship of the PGA Tour. Dow Dir of Meetings & Customer Events Robert Long said, “You never say never, but we've studied this long and hard enough that we know what needs to be done. If implementing things in a timely fashion requires having an agency, then we'll look at that.” Long said he expects Dow to support its sponsorship by advertising with NBC and other Olympic rightsholders worldwide. Unlike many properties, the IOC does not require sponsors to advertise with rightsholders, and the last TOP partner the IOC signed, Acer, did not advertise on NBC during the Vancouver Games.
REVENUE SHARING: The USOC is still poised to collect a portion of the money generated from the Dow Chemical partnership, said IOC Marketing Commission Chairman Gerhard Heiberg. He added, “The USOC always gets a part of revenues from a TOP sponsorship as do all the other 204 national olympic committees. The USOC will have its part as will the rest, so there is nothing special in this.” The USOC is contractually entitled to 20% of any TOP agreements the IOC signs. The Chicago Tribune reported that in the case of the Dow deal the USOC would forgo approximately $20M as a peace offering to the IOC. Olympic sources did not rule that out but said nothing had been finalized yet. Should the USOC give up a portion of what it's entitled to from Dow, its goal would be to assuage international critics who have claimed the USOC receives too much money from the Olympics.
IOC TV: The IOC remains undecided about when it will open the bidding process for television rights in the U.S., IOC Dir of Television & Marketing Services Timo Lumme said. The organization's leaders plan to wait until global economic conditions have stabilized and the pending Comcast-NBC merger has received government approval. Lumme said, “We want to wait for the right time. The market will speak to that. For right now, we'll wait.”