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SBJ/Sept. 23-29, 2013/OlympicsPrint All
The International Olympic Committee plans to increase the price of sponsoring The Olympic Partner program, ending a decade-long period where official Olympic sponsorships averaged $25 million a year.
The price increases would kick in for the 2022 and 2024 Olympics, said Timo Lumme, IOC television and marketing services managing director. The organization has seven TOP sponsors committed to 2020 and will be working over the next year on renewals with Panasonic, Samsung and Atos Origin, which are all signed through 2016.
Lumme says the IOC would consider trimming the number of TOP sponsors.
Photo by:SHANA WITTENWYLER
The plan to increase pricing comes as the IOC completes its third review of TOP since the program was created in 1985. TOP was designed to give brands an opportunity to affiliate with the Olympics and promote their association with the property worldwide. The program has become one of the pre-eminent global sponsorship packages in sports, raising more than $3 billion since its inception and increasing in value by nearly 50 percent in the last decade, from $663 million for the 2001-04 quadrennium to $1 billion for the 2013-16 quadrennium.
But the price TOP sponsors pay, which is pegged at $100 million a quadrennium in just rights fees, has been scrutinized in recent years as the value of local organizing committee sponsorships for the Beijing, London, Sochi and Rio Games have soared. Local sponsors such as Volkswagen paid $100 million to sponsor the Beijing Games, and Nissan reportedly paid $250 million for its sponsorship of the Rio Games. Those sponsors receive rights to activate only in the host country of the Games, while TOP sponsors, who pay the same amount or less on average, get rights in the host country and exclusive rights to use the Olympic rings worldwide.
Lumme said the rising prices that local organizing committee sponsors pay is one of the reasons the IOC is looking at its pricing of TOP. He did not say how much the IOC would increase the fee. Ultimately, that will be a decision made by the organization’s new president, Thomas Bach.
“We have to present the TOP program and our thoughts on the future and future strategies to him and make sure he’s comfortable with it,” Lumme said. “I foresee we start having those conversations [with sponsors about new prices] if not in Sochi, shortly thereafter.”
21 Marketing founder Rob Prazmark, who helped create TOP in the 1980s and was hired by the IOC to evaluate the program in 2009, believes the IOC could charge TOP sponsors $200 million per quadrennium — double the current fee. The IOC will have to add more assets to justify that type of increase, such as TV media time, but Prazmark believes the price increase is feasible.
“The cost of TOP is a bargain for these global partners compared to if you had to go out and buy these rights individually,” Prazmark said. “There are only two [major] global sponsorship programs in the world. This and FIFA, and companies that get involved with TOP do it because of brand, not price. This is why I think going forward past 2020, it’s time to not only redo the program but redo the pricing.”
“If they were able to increase it to $200 million a sponsor, you could shrink the number of sponsors from 12 to six and increase revenue from TOP from $1 billion to $1.2 billion,” Prazmark said. “You’d be distributing the wealth across six companies and then be able to release the categories back to the national Olympic committees and organizing committees to let them raise more money on their own.”
Lumme said that contracting the maximum number of TOP sponsors from 12 to six is something that the IOC would consider.
“I would start with the default position that we would have 10, 11 or 12 [sponsors], unless actually the market drives us to having less,” Lumme said. “That means that if the market is willing to pay a premium, or the amount that would justify us having less partners, and if the IOC, national Olympic committees and organizing committees all feel we’re winners, then I would look at anything.”
But beyond that, the IOC has been reluctant to disclose any other changes it’s contemplating for TOP. During the 125th IOC Session earlier this month, IOC Marketing Commission Chair Gerhard Heiberg said only that the IOC will continue to cap the number of sponsors at 10 or 12 so that enough categories remain for the Olympic organizing committees and national Olympic committees to sell.
NBC showed 5.5 hours from the London Paralympics; live Sochi coverage will reach 50 hours.
Photo by:GETTY IMAGES
The deal, which NBC is making in partnership with the U.S. Olympic Committee, will result in 50 hours of coverage on NBC and NBC Sports Network, a major increase in broadcast coverage from the 5.5 hours of tape-delayed coverage the network offered during the London Paralympic Games last year. Additionally, NBC Sports Group has agreed to provide live streams to all Paralympic events that include American athletes for USParalympics.org. Unlike the Olympic Games — where broadband users have to be authenticated to download streams — anyone with a computer connection can stream these Paralympic events.
The deal has been close for the past month. The main deal terms have been agreed upon, but there are some minor issues that have needed to be ironed out. A formal announcement is expected soon.
“We look forward to announcing a new partnership with the USOC soon that will provide unprecedented coverage of the Paralympic Winter Games,” NBC Olympics President Gary Zenkel said.
NBC was criticized by disability groups and the International Paralympic Committee last year for not broadcasting more of the 2012 Paralympic Games. Though the company paid the International Olympic Committee a $1.2 billion rights fee for the London Games, the deal didn’t include Paralympic rights, and NBC did not acquire those rights from the IPC. The USOC did and sublicensed a 90-minute special to NBC and a four-hour cable package to NBC Sports Network.
IPC President Philip Craven last year criticized NBC’s lack of interest in the London Paralympic rights, saying, “I’m very disappointed for the athletes and I’m also very disappointed for the hundreds of millions of people who live in North America who don’t have the opportunity on a very easy basis to access what will be amazing images. Some people think that North America always leads on everything, and on this they don’t.”
A team of USOC and NBC executives traveled to the IPC’s headquarters in Bonn, Germany, over the summer and pitched the IPC on a rights agreement. The partners are paying a rights fee, but financial terms of the agreement weren’t available. The deal is expected to be completed early next week.
The coverage plan from Sochi is much more extensive than previous Paralympics. NBC offered only a 90-minute recap of the Beijing Paralympics and 5.5 hours of tape-delayed coverage from London. For Sochi, it has committed to carry around 3.5 hours on its broadcast network and 46.5 hours on its cable channel, NBCSN.
Coverage starts March 7 with the opening ceremony and runs through the closing ceremony March 16.
The Winter Paralympics is made up of five sports: alpine skiing, biathlon, cross country skiing, sled hockey and wheelchair curling.
The U.S. Olympic Committee has doubled the number of sponsors that will participate in its third pre-Olympic, 100-day-out celebration.
Twelve sponsors will activate during the event, which will take place Oct. 29 in Times Square. The USOC charged sponsors to be part of the program, but financial terms weren’t available.
The USOC expects to more than double attendance from the London event last year.
“It’s grown and people now understand what it can be,” said USOC chief marketer Lisa Baird.
Liberty Mutual signed on to title sponsor the event and the Road to Sochi Tour, which will take Olympic sports exhibitions and interactive elements to 12 more stops between November and February. The company will use the series of events to launch and showcase its Olympic advertising campaign in an experiential booth.
“Given its national footprint, our presenting sponsorship of the Road to Sochi Tour provides Liberty Mutual Insurance the opportunity to expose the brand to millions of Olympic fans across the country leading up to and through the Olympic Winter Games, while also engaging thousands of our employees,” said Paul Alexander, Liberty Mutual’s senior vice president of communications.
The other sponsors participating are Coca-Cola, AT&T, Budweiser, Chobani, Folgers, The Hartford, Hilton, Jif, Kellogg’s, United and Smucker’s jams.
Each sponsor receives activation space in the 100-days-out footprint in Times Square. They also are a presenting sponsor of one of 12 interactive sports elements that visitors can try. For example, Budweiser will be the presenting sponsor of a hockey slap shot contest. The company, which is participating in its first 100-days-out event, also plans to bring the Clydesdales to Times Square.
Rendering shows activation space for the 100-day-out celebration Oct. 29 in Times Square.
“The first time we were just hoping sponsors came on board and tried this out,” Baird said. “Now there’s a lot more value built in for sponsors looking to connect it to [return on investment].”
The USOC has secured 12 billboards in Times Square on Oct. 29. It will use the billboards to show USOC logos and branding and footage of Pilobolus, a performance company that will be doing a show as part of the event.
Team Epic helped the USOC plan the event.