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Chinese E-Commerce Firm Alibaba Partners With IOC For Next Six Olympic Games

Chinese e-commerce company Alibaba has become a major sponsor of the Olympic Games after signing a deal with the IOC that runs until '28, the two parties said, according to Karolos Grohmann of REUTERS. Alibaba, which becomes the official e-commerce and cloud services partner, joins 12 other companies -- including Coca-Cola and McDonald's -- as top Olympic sponsors. The Alibaba deal comes as Asia prepares to host three consecutive games, with South Korea's PyeongChang staging the 2018 Winter Games, Tokyo the 2020 Summer Olympics and Beijing the 2022 Winter Games. The IOC hopes the deal "will make the Olympics movement more technologically efficient and secure," while also creating a platform for promoting licensed products and "extending the reach" of its newly-created digital platform, the Olympic Channel (REUTERS, 1/19). BLOOMBERG's Panja, Wang & Satariano reported the deal is "said to be worth" $800M, according to a person familiar with the matter (BLOOMBERG, 1/19). In London, Murad Ahmed reported the top tier of Olympic sponsors "has previously been dominated by western groups and has only once before included a Chinese company" -- PC maker Lenovo during the 2008 Beijing Games. But the IOC "has been seeking to build ties with Asian sponsors to help promote its events worldwide." One person briefed on the negotiations said that the IOC secured new deals with recent sponsors such as Bridgestone and Panasonic worth at least $200M over a four-year Olympic cycle, with the Alibaba deal "likely to be in excess of the sums paid by those groups." According to forecasts from the IOC, its top 12 sponsors provided revenues of a little more than $1B for the 2014 Winter Games in Sochi and the Rio Olympics. Overall revenues from broadcasting rights and other commercial deals netted the organization $5.6B over the same period. Over the past two years, Chinese groups have invested billions in sports companies, European football clubs and media rights agencies. Last year, Wanda Group, controlled by China’s richest man, Wang Jianlin, signed a sponsorship deal with FIFA covering the next four World Cups (FINANCIAL TIMES, 1/19).

WATERSHED MOMENT: 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. 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." Alibaba CMO Chris Tung said, "This is a mutually beneficial partnership. It’s not a client and service provider relationship at all. 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." IOC Managing Dir of TV & Marketing Services Timo Lumme said that a global rights deal was the "only way for a company to have such a comprehensive role in future initiatives." The IOC had not renewed or signed any new partners in the TOP tier since Toyota in March ‘15. Beijing winning the 2022 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." The deal was borne out of a 90-minute meeting between Ma and Bach last January, shortly after last year’s Davos World Economic Forum. 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." Hong: "Less than five people at Alibaba knew, and less than four in my company." The bidding was competitive, Lumme said, though it is "not clear who else bid and how serious their talks were" (Ben Fischer, Staff Writer).

FIGHTING COUNTERFEITING: The AP reported Alibaba Chair Jack Ma said that he hopes the partnership will "help fight counterfeiting, as the e-commerce giant seeks to repair its image" after being deemed a "notorious" market for fakes by the U.S. government. Ma said that the partnership can help find out "exactly" who authorized vendors are. He said that Alibaba has "the largest anti-counterfeit team in the world." Bach said that having a centralized platform "could help fight counterfeiting." The U.S. Trade Representative last month said that Alibaba's online marketplace, Taobao, "sells many counterfeit goods" (AP, 1/19).

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