SBJ/June 18 - 24, 2007/This Weeks News

Chicago bid could cut USOC deals short

Having the 2016 Olympic Games awarded to Chicago would be a marketing boon for the U.S. Olympic Committee, but putting the city forward as a candidate comes with significant sales risks, as well.

The International Olympic Committee established new rules in 2002 requiring national organizing committees to absolve all sponsorships six years in advance of a candidate city’s Olympic Games.

USOC Chairman Peter Ueberroth’s sales
staff has a tricky sales pitch.

That means the USOC, which is in the midst of a sales cycle for the next quadrennial, has to pledge in June 2008 that all of its sponsorship contracts will be terminated at the end of 2010 if Chicago is awarded the games. Those partners’ categories would be re-opened for negotiation and former partners would not have right of first refusal, according to the IOC.

Officials from the USOC and Chicago 2016 declined to comment on the issue, but sources close to both groups said they have discussed the scenario. USOC marketing executives have met with at least three sponsors over the last month and have more meetings scheduled this summer.

Sponsorship experts said the USOC will have to draft contracts with a clause that terminates the contract prematurely and then open that category up for a new sales cycle that would run from 2011 to 2016.

Because that subsequent contract would likely be sold by a joint-venture group representing Chicago’s organizing committee for the Olympic Games (OCOG) and the USOC, it would cover rights to both the 2016 Games and the USOC. As a result, it would be considerably more expensive, sales experts said.

The IOC rule is designed to prevent sponsors from getting free association with an upcoming games, which is considered a far more lucrative and beneficial property. The existing contracts can be renegotiated or worked with, so long as sponsors go on to become OCOG partners.

That way there’s not a situation where, for example, one bank sponsors Britain’s Olympic association and one sponsors the London Organizing Committee for the Olympic Games.

When the USOC bid for the 2012 Olympics in New York, it ignored the IOC’s rules, according to sources, electing to sell sponsorships for the full 2004-08 quadrennial. As a result, the IOC wrote in its review of the New York bid that its joint marketing program agreement with the USOC “does not fully comply with the standard form … provided by the IOC.”

It’s unlikely the USOC will do the same as it puts Chicago forward. The USOC has made a concerted effort to align itself more closely with IOC regulations in the last year, hiring Robert Fasulo to focus on international relations and following the IOC’s bid-book process in order to select a city for 2016.

The USOC also will have to convince sponsors to buy into a four-year contract that could end prematurely, and some Olympic sales and marketing experts say that could be difficult.

“Partners will have to weigh whether or not they want to be in a situation where a sponsorship is opened for competitive bid,” said Rob Yowell of The Bonham Group. “I won’t say it’s a tougher sell, but you’ll just have to get into the sales cycle ahead of time.”

Others say the scenario offers upsides, as well, because being connected to the USOC if Chicago is awarded the 2016 Games could make it easier to become a partner for that event.

“Having that opportunity is extremely attractive and might make a sale easier,” said Gary Pluchino, senior vice president of Olympic sales and marketing for IMG.

“But will a corporation like a four-year deal with a two-year termination?” Pluchino said. “No, but they’re only going to cut it short if something better comes along like Chicago being awarded the games, which is a positive.”

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