SBJ/May 16-22, 2011/Olympics

Disney eyes TOP deal with ESPN bid

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Think Mickey Mouse with the Olympic rings. That’s what ESPN is considering.

In an attempt to sweeten its Olympic bid next month, ESPN is tossing around the idea of supplementing its TV rights offer with a marketing deal from its parent company. A deal being considered would make Disney a member of The Olympic Partner (TOP) program, the International Olympic Committee’s marquee sponsorship group, and grant the entertainment company licensing and intellectual property rights.

Disney and ESPN executives haven’t made a final decision about how such a deal would be structured, and it’s unlikely the company would pay the $100 million over four years that other TOP partners pay. But senior sources close to the company’s bid believe a Disney sponsorship would distinguish it from its broadcast competitors during rights negotiations by marrying the Olympic rings with Disney’s immense global entertainment assets and familiar content popular with youth across the globe.

“We are exploring a number of possibilities as part of this process to determine the plan that makes the most business sense for our company,” said Rob Simmelkjaer, ESPN’s vice president of international development.

Putting forward such a marketing proposal would help ESPN keep up with NBC’s Olympic offer.

In 2003, during the last Olympic rights bidding, NBC’s parent company GE agreed to a $200 million deal to become a TOP sponsor for the 2005-08 and 2009-12 quadrenniums. That $200 million commitment was added to the $2 billion NBC bid for the 2010 and 2012 Olympics, bringing the total value of the deal to $2.2 billion and dwarfing other bids.

Last month, GE said that it will be at the table with NBC again to renegotiate its TOP deal in conjunction with the network’s effort to retain the Olympic broadcast rights. GE’s proposal could sweeten NBC’s bid by adding more than $100 million in sponsorship fees to NBC’s bid.

GE has indicated it would pay more for a TOP
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ESPN believes the potential for combining the Olympic rings and Disney content could set it apart from other rights bidders.
sponsorship than Disney, but ESPN executives hope the IOC might find a Disney deal more attractive because of the company’s ability to connect the IOC with a younger demographic. The IOC is looking for ways to remain relevant with youth at a time when kids often spend more time on the computer or playing video games than participating in or following Olympic sports. Disney’s connection with youth — through its channels and movies, gaming division, theme parks and popular characters like Mickey Mouse — could allow the IOC to promote the value of sports to young people, in addition to marketing its five-ring logo.

There is no precedent for the IOC signing a TOP deal that includes licensing rights, so it’s unclear how a deal with Disney would work.

Currently, the IOC passes on licensing rights to local Olympic organizing committees that sign licensing deals for an array of products they plan to sell in the six years preceding an Olympics, as well as during the Games and afterward. Disney likely would be among those licensees that work with an organizing committee, Olympic licensing experts said.

The IOC plans to hold bidding June 6-7 in Lausanne, Switzerland, for the 2014 Sochi and 2016 Rio de Janeiro TV rights package. IOC leaders have said they expect to match or exceed the $2 billion that NBC paid in 2003.

The market for sports rights fees has been red-hot in the United States this year, with ESPN, Fox and NBC paying increasingly high amounts for the media rights to properties such as the Pac-10, NHL and Big 12.

In Lausanne, networks will be given two hours to make a presentation illustrating how they will present the Games. Then they will submit a sealed bid containing what they are willing to pay for the rights. The IOC will determine who wins the rights based on the presentations and the size of the bids.

NBC, ESPN and Fox are considered the most serious bidders. CBS and Turner have met with the IOC but have not shown the same level of interest in the rights to date.

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