SBJ/March 25-31, 2013/Olympics

Visa cutting back on spending with U.S. Olympic sports

Visa is pulling back on its Olympic spending in the U.S.

The company, which made a name for itself in the Olympics by sponsoring and marketing heavily around sports like gymnastics, swimming and track and field year-round, recently offered USA Gymnastics, USA Swimming and USA Track & Field deals that were a fraction of what it paid in past years.

Visa has marketed heavily around Olympic sports like gymnastics.
Photo: GETTY IMAGES
The offers are the first indication of how Visa’s Olympic strategy will change following the departure last year of Michael Lynch, the company’s longtime global sports marketing head, and they have the potential to damage the national governing bodies’ bottom lines by cutting as much as 5 percent from their annual revenue.

Sources familiar with Visa’s proposal said the company was paying USA Gymnastics as much as $3.2 million over four years to be title sponsor of the organization’s national championships. After that deal ended last year, Visa offered USA Gymnastics a renewal of just $375,000 for 2013-16, or $75,000 in non-Olympic years and $150,000 in an Olympic year. The proposal was just 12 percent of what Visa previously paid, and USA Gymnastics rejected the offer.

The organization declined to speak about the proposal. In a statement, it said, “We appreciate everything Visa has done for gymnastics and the Olympic movement. At this time, we do not have an agreement in place with Visa for this quadrennium. USA Gymnastics remains on target to achieve its sponsorship objectives through other renewal efforts and additional partners.”

Sources said USA Swimming and USA Track & Field received comparable proposals. USA Swimming, which had a deal with Visa that sources valued in the low six figures annually, ultimately accepted the company’s reduced offer but dropped Visa from a sponsor alongside AT&T and BMW to a supplier alongside Got Milk?, Master Spas and Active.com. USA Track & Field, which has had Visa as a sponsor for more than 20 years, is still in negotiations with the company.

Visa declined to make an executive available to speak about its proposals, saying that the company doesn’t comment on ongoing negotiations. But Olympic marketers say the offers underscore a shift in strategy at the payment services company, which is a founding member of the International Olympic Committee’s The Olympic Partner program.

For years under Lynch’s guidance, Visa’s Olympic marketing in the U.S. centered on a mixture of athlete endorsements and national governing body sponsorships. The company sponsored USA Track & Field, USA Gymnastics, USA Swimming and the U.S. Ski & Snowboard Association because it believed that doing so helped connect Visa to the Olympics year-round and allowed it to avoid the trap of only having that connection during the 17 days of a summer or winter Games. It leveraged the relationships with the national governing bodies for tips on athletes it should endorse and has credited its ties with USA Swimming for helping it sign Michael Phelps when he was just 15. The deals also helped Visa block competitors MasterCard and American Express from tying themselves to major Olympic sports.

But in recent years and under the leadership of chief marketer Antonio Lucio and head of global sponsorship marketing Ricardo Fort, Visa’s Olympic strategy has taken on more of a global focus. The company used a single tag line, “Go World,” in 70 markets worldwide during the London Games and developed just 10 original creative spots that were adapted for the markets where they ran. It also worked with Facebook and Google on a social media application that ran in 36 countries.

Visa made a name for itself by marketing around gymnasts, swimmers and track and field athletes year-round.
Photo: GETTY IMAGES
Sources familiar with the company’s marketing strategy said it plans to continue to use the Olympics globally but made the decision to reduce its spending on national governing bodies because it wasn’t seeing the return on investment it wanted from those sponsorships. The company also is watching its bottom line because it may acquire its sister company, Visa Europe, which reports last week said could cost more than $3 billion.

The company’s decision could open the door to competitors at least in the world of gymnastics. USA Gymnastics is expected to open the financial services category and look for anyone from a competing payment services partner like MasterCard to a large financial institution like JPMorgan Chase to fill the void left by Visa.

USA Swimming ultimately accepted Visa’s offer but only if the company would agree to being downgraded from a sponsor to a supplier. The organization’s leadership saw value in keeping the company involved because it had a track record of activating at its Olympic trials, but it felt that it was only fair that its sponsorship status reflect the size of its financial commitment.

USA Track & Field, which sources said Visa paid more than $800,000 a year through 2012, will have to make a similar decision. As title sponsor of the organization’s Championship Series, Visa has one of the most visible assets in the sport. It receives signage during three major meets and broadcast exposure on NBC. Event winners hold up large Visa cards with $25,000 after races. The organization will have to decide to either take Visa’s reduced sponsorship offer for the same assets, negotiate a new sponsorship deal with other assets, or forgo a deal altogether.

The USSA is the only national governing body that will be spared by the cuts for now. The organization’s deal with Visa was up after the 2010 Vancouver Games and it signed an eight-year extension in 2011 before Lynch left the company. Sources valued the deal at roughly $1 million a year.

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