SBJ/July 18-22, 2011/Olympics

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  • TV broadcast money up 54 percent as Vancouver Games generates $1.6B in revenue

    The International Olympic Committee offset a decline in sponsorship revenue in 2010 with a major increase in TV rights money to generate $1.6 billion in revenue around the Vancouver Games.

    The revenue total, which was reported in the organization’s most recent tax filing, represented a 38 percent increase from the $1.2 billion in revenue generated around the previous Winter Olympics, the 2006 Torino Games. The IOC also increased its expenses between those Winter Games, spending $1.4 billion in 2010, up 40 percent from the $1 billion it spent in 2006.

    The IOC continued to stockpile money in 2010, increasing its net assets from $1.13 billion in 2009 to $1.4 billion in 2010. The 24 percent increase extends President Jacques Rogge’s push to shore up the IOC’s finances. He said early in his presidency that he wanted to increase the IOC’s reserves so that it could continue to operate if an Olympics were canceled due to political issues. Its reserves have increased fourfold since he arrived in 2001.
    GETTY IMAGES
    The bulk of the International Olympic Committee’s revenue came from broadcast rights, which totaled $1.28 billion.

    The bulk of the IOC’s revenue came from TV broadcasting rights, which totaled $1.28 billion, a 54 percent increase from the $830 million paid in 2006. It also received $247.9 million in sponsorship revenue from The Olympic Partner (TOP) program, which offers sponsors like Coca-Cola and Visa global rights to use the five-ring Olympic logo.

    The TOP revenue represents a 7 percent decrease from the $268.4 million the organization collected from sponsorship sales in 2006. The decrease reflects the loss TOP partners Kodak and Johnson & Johnson, which dropped their support before the Vancouver Games. The IOC later filled that gap by signing global sponsorships with Dow Chemical and Procter & Gamble.

    The IOC spent $874.8 million on grants supporting national Olympic committees, international federations and other members of the Olympic movement. The Vancouver Olympic Organizing Committee was the largest single recipient, receiving $414.4 million in broadcast money.

    The U.S. Olympic Committee was the second biggest individual beneficiary of IOC revenue. It received $28.4 million from the IOC’s worldwide sponsorship platform and $104.5 million from broadcast rights revenue. By comparison, the 204 other national Olympic committees received $200.1 million from TOP and $56.9 million from the IOC’s Olympic Solidarity fund, which was designed to assist the Olympic committees with supporting their athletes and coaches. The seven sports federations that participate in the Winter Games received $158.2 million in broadcast revenue. The tax filing doesn’t break down how the national Olympic committees or sports federations split their money.

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  • Auto deal could fetch at least $150M for Rio

    The International Olympic Committee plans to forgo selling a worldwide sponsorship in the auto category, allowing Rio de Janeiro 2016 organizers to sell the category locally at a price that should reach at least $150 million.

    The move is significant for both Rio de Janeiro 2016 and national Olympic committees worldwide. The auto category is typically one of the most lucrative that an Olympic organizing committee or national Olympic committee can sell. The IOC has never sold the category, and had it moved forward with plans to sell an auto manufacturer rights to its worldwide marketing sponsorship platform, The Olympic Partner (TOP) program, it could have cost organizing committees and national committees millions of dollars in revenue and the support of value-in-kind vehicles.

    Beginning at least a year ago, the IOC put a hold on the auto category and held talks with BMW and Volkswagen about becoming the first automotive partner to be a TOP program member. The conversations with BMW, which is a sponsor of the London Games, were held in conjunction with its sponsorship deal with the U.S. Olympic Committee. The IOC and BMW held several discussions about a TOP deal, but those conversations were tabled after the Munich-based company lent its support to Munich’s bid to host the 2018 Winter Games.

    The IOC typically halts conversations with a company that supports a bid to avoid the appearance that an Olympics can be bought with corporate dollars, and sources familiar with the IOC’s marketing approach said the organization planned to wait until after the 2018 Games were awarded to make a decision about whether to pursue a TOP deal with BMW or another auto manufacturer. When Pyeongchang, South Korea, won the rights to host the 2018 Olympics, the IOC decided to end its hold on the category.

    “It’s the right decision,” said Rob Prazmark, founder of 21 Marketing, a sports consultancy that the IOC used to analyze its TOP program two years ago. “It’s a very emotional category for countries around the world … because automobiles are still grounded in tradition in terms of country of origin.”

    Rio and Pyeongchang are the biggest beneficiaries of the decision, as both can now pursue sponsorships with an auto partner.

    Auto sponsorships are typically categorized as tier one deals, a designation Olympic organizers reserve for the most valuable and lucrative sponsorships. Rio already has sold two tier one deals. It signed telecommunications consortium Embratel and Claro as its official telecom partner in a deal valued at more than $150 million, and Bradesco as its official financial services partner in a deal valued at $320 million.

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