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Alibaba Signs 12-Year TOP Sponsorship With IOC That Includes E-Commerce Category

The IOC’s first sponsorship deal in nearly two years marks a watershed moment for Chinese sports business and the commercial future of the Olympics. Alibaba Group Inc. and the IOC today announced a 12-year deal worth more than $800M, giving the retail giant exclusive rights to cloud services and e-commerce categories, but also obligating it to help the Olympics build a massive worldwide sales and media platform. In an era when many corporations are reconsidering the value of mega-sponsorships, the Alibaba tie-up shows how the IOC is recasting its global partnerships to be focused on collaboration rather than rights exploitation. If Alibaba is able to create and operate a global online sales platform for merchandise from national Olympic teams, Games organizing committees and sponsors, it could unlock hundreds of millions in new revenue for the Olympic movement. Execs also did not rule out eventually selling tickets on a global platform with Alibaba’s help, a potential fix to an often-criticized, inefficient and fragmented distribution system. The company will play a major role in launching the IOC’s customized digital Olympic Channel in China, the world’s largest market, and operate cloud computing services. But while the IOC is expecting big things from Alibaba, the company is expecting as much from the Olympics as it tries to expand its brand identity, Alibaba CMO Chris Tung said. “This is a mutually beneficial partnership. It’s not a client and service provider relationship at all,” Tung said. "I think from the IOC standpoint, they will leverage our expertise to be able to transform the Games experience and stage the Games in a much more effective way. But on the other hand, we will be able to support Alibaba’s continuous growth as a global brand by staging on this global platform."

LONG-DESIRED UPGRADE: IOC Managing Dir of TV & Marketing Services Timo Lumme said a global rights deal was the only way for a company to have such a comprehensive role in future initiatives. The Olympics has long wanted to upgrade its global licensed merchandise operation, Lumme said, and Alibaba expects to be able to reach 2 billion consumers by ‘20. "If you’re sitting in Atlanta in the future you’d be able to buy Team New Zealand apparel through this platform, and somebody sitting in Shanghai would be able to buy, for example, Olympic merchandise that might be available in Finland,” Lumme said. Alibaba becomes the first Chinese company to secure global IOC rights since Lenovo’s deal expired after the ’08 Beijing Games. Crucially for the IOC, it is also the first TOP deal extended through ‘28. The IOC had not renewed or signed any new partners in the TOP tier since Toyota in March ‘15. With Bridgestone joining a year before that, Alibaba is the third straight Asian company to join the program. The next three Games are in South Korea, Japan and China. Beijing winning the ‘22 Games was not the primary factor driving this deal, Tung said, though it will clearly be a key marketing opportunity in the company’s home country.

NICE BUSINESS PARTNER: The Olympics with Alibaba gets a trendy, high-profile marketing partner, said Dave Mingey, co-Founder of international sports marketing consultancy GlideSlope. “All the business world watches what (Alibaba Founder) Jack Ma is saying and creating, so to have him as a partner and promoting a shared vision is massive win for the Olympic movement,” Mingey said. The deal was borne out of a 90-minute meeting between Ma and IOC President Thomas Bach last January shortly after last year’s Davos World Economic Forum. They were scheduled to meet for 30 minutes, but they quickly found common ground. From there, it took another six months for the parties to get fully up to speed, said Shankai Sports Chair Li Hong, whose firm helped broker the deal along with former IOC Marketing Dir Michael Payne. But the deal came together rapidly at that point, and remained a strict secret until this week. “Less than five people at Alibaba knew, and less than four in my company,” Hong said. The bidding was competitive, Lumme said, though it is not clear who else bid and how serious their talks were. Hung said Alibaba board members were concerned about the company’s ability to deliver, not the price, she said. “It’s really amazing, as someone who’s Chinese and in sports, I’m very touched.”

REACHING ITS POTENTIAL: Payne said Alibaba can help the Olympics finally bring its listing and merchandise business up to the level of its sophisticated TV rights and sponsorship programs. “The licensing was something I always felt had incredible potential, but we never had the right partner to take it forward. It was the orphan of the overall marketing portfolio, now you’ve got a partner at a whole different level."

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