SBJ/Feb. 10-16, 2014/Olympics

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  • Heiberg leaves a legacy of trust with IOC sponsors

    When Gerhard Heiberg stepped in to replace Dick Pound as the head of the marketing commission in 2001, it looked like the International Olympic Committee’s troubled days were behind it. The organization was just coming out of a bribery scandal around the 2002 Salt Lake City Games, and though its brand had been damaged, its sponsor roster remained strong.

    Gerhard Heiberg, head of the IOC’s marketing commission, is stepping down.
    Photo by: GETTY IMAGES
    But the coming years brought unforeseen troubles. There were the human rights protests of sponsors before the Beijing Games, the recession that killed marketing budgets worldwide and, most recently, concerns about Russia’s anti-gay legislation that unsettled sponsors.

    Heiberg, who officially steps down as chair of the marketing commission after the Sochi Games, steered the organization through all of that, and he did it with a calmness and political sophistication that sponsors and IOC members alike trusted and appreciated.

    “It was reassuring to have him there as someone who got what the sponsors needed,” said Pound, his predecessor in the post. “He was reliable and trustworthy and willing to listen to what sponsors needed.”

    Heiberg, 74, said, “I wouldn’t say it’s been an easy ride. We’ve had our challenges, but I’m grateful for having the possibility.”

    Former IOC President Jacques Rogge tapped Heiberg, the former head of the 1994 Lillehammer Olympics, to lead the organization’s marketing efforts in 2001 because he trusted him. Rogge felt that Heiberg’s experience organizing an Olympics and his career as the CEO of cement manufacturer Norcem equipped him with an ability to balance both the needs of the Olympics and the needs of sponsors.

    Early on, Heiberg brought the IOC’s sponsorship sales effort back in house after years of having Atlanta-based Meridian Management run it. He also took an active role in the sales and renewal process.

    Former IOC marketing executive Davis Butler, who worked under Heiberg for nine years, said that the marketing team introduced Heiberg to executives of potential sponsors early. He often told them personal stories about the Olympics. One of his favorites was about the time the king of Spain used a peseta as proof of identity in Lillehammer.

    “He talked about how the Olympics can be such a motivating force for people,” Butler said. “After he wowed them, I would say, ‘Here’s what you do with TOP.’ They already had stars in their eyes.”

    One of Heiberg’s talents was balancing the demands of an organizing committee, which sells its own local sponsorships, with those of the IOC, which sells global deals. That was most evident when Johnson & Johnson began looking at a TOP deal for the 2008 Beijing Games. Beijing organizers had rights to the health care category and moved to protect it because they thought it would be a lucrative one for them, but J&J wanted global rights. Heiberg helped persuade J&J to do a local deal first, and then the IOC stitched together the global rights that J&J wanted afterward.

    “He had this way of navigating very difficult circumstances and producing a logical result that made everyone happy,” said Rob Prazmark, founder of 21 Marketing, which worked on the deal. “He’s very much a consensus builder.”

    Heiberg was particularly effective during the recession. Before it began, the IOC was in talks with Dow Chemical and Procter & Gamble about becoming partners. The recession forced both companies to walk away from potential deals, but Heiberg didn’t give up. He stayed in touch with Dow CEO Andrew Liveris and continued to talk with P&G CMO Marc Pritchard. The two eventually signed deals after the 2010 Vancouver Games.

    TOP revenue under Heiberg:

    TOP V (2001-04): $663 million
    TOP VI (2005-08): $866 million
    TOP VII (2009-12): $957 million
     TOP VIII (2013-16): $1 billion

    Source: International Olympic Committee

    The IOC’s TOP program had 10 sponsors and total revenue of $663 million when Heiberg took the job in 2001. It will have 10 sponsors and more than $1 billion in revenue when he leaves.

    The key to that revenue growth has been keeping long-term partners Coca-Cola, McDonald’s, Visa and others happy. Heiberg played a critical role in that over the years. Sponsors turned to him when they had problems, and he usually had a solution.

    When Coca-Cola ran into what it considered ambush marketing during the Beijing Games from a local Chinese sponsor named President, which was promoting tea in the market, Heiberg pushed Beijing organizers to ensure the company’s marketing was limited to its role as sponsor of the yogurt category. He also took a strong public stance on behalf of McDonald’s against Subway after the sandwich chain developed a commercial showing Michael Phelps swimming toward the Vancouver Olympics in 2010.

    “When we’ve had unique problems, he’s always the voice of reason to go to, and when it’s possible, he’s always found solutions,” said Scott McCune, longtime Coca-Cola global sports and entertainment executive. “He’s professionally and politically savvy in a good way and capable of working to find a business solution for everyone.”

    Heiberg also has impressed Olympic marketers over the years with his integrity. Prazmark, who helped create the TOP program, was advising a client on a potential sponsorship of the Beijing Games when he discovered what he considered to be “questionable procedures” in the tender process and contacted Heiberg.

    “Gerhard and [IOC member Hein] Verbruggen were on the next plane to Beijing, meeting with the most senior people of the organizing committee and central government calling for an investigation at the highest level,” said Prazmark, who declined to offer specifics because of the sensitivities of the issue. “He understood that integrity was the cornerstone of the Olympic movement. Needless to say, corrections and changes were made.”

    Heiberg hired 21 Marketing to assist the IOC in reviewing the TOP program in 2009. The program hadn’t changed in more than 25 years. Suggestions for improvement ranged from scrapping the program altogether to shrinking the number of partners and charging each sponsor more.

    Heiberg said it would be up to his successor, who will be selected by IOC President Thomas Bach, to decide what to do.

    “Are there other opportunities?” Heiberg asked. “Are there other ways of doing this to keep the income of this in a different way? Should we have layers of sponsors? For the new person, it’s good to come in and discuss other possibilities.”

    After traveling from Athens to Beijing and Russia to Rio over the last decade, Heiberg plans to spend more time with his family and take a less active role in the IOC. His advice for his successor is simple.

    “He should keep a very open mind.”



    What is your approach when a sponsor comes to you and says, “I have an issue”?

    HEIBERG:
    It depends on the size of the issue. If it’s a small issue, we have an organization in Lausanne. Some of them are big ones and challenging. I felt this is my job. I felt this is what I’m supposed to do to see to it. When we have people coming out with ambush marketing, we have to stop that.

    What sponsorship deal are you most proud of?

    HEIBERG:
    That is a difficult question. I am proud of all of them. Maybe the one that we have really made something out of is Samsung. They started from a big minus, and being a sponsor of the IOC, they show what this can mean to them. They have really worked on it, and we have had excellent communication on what to do and not to do and how to learn from other sponsors. We developed some good programs that have been of great importance to Samsung.

    Having said that, I have worked well with all of them. I remember going into Lenovo trying to convince them to become a TOP sponsor. They were not willing at all. They said it was too much money. Why the hell should we invest in this? I succeeded in convincing them.

    You often address the entire IOC membership and relay the concerns of sponsors. How do you approach those statements so that you make sure members understand sponsor issues?

    HEIBERG:
    It’s a question of being honest and open. There are people that think differently and that’s fine, but let’s get it out in the open. Openness. Transparency.

    This job we’re doing is important for the whole Olympic movement. There are 204 [national Olympic committees], 35 [sports federations]. They need our resources and money, and I feel proud of having this job. It comes from my heart when I’m up there and I tell everyone what’s happening.

    Do you have a favorite memory from your time as marketing chair?

    HEIBERG:
    Maybe the signing with Coca-Cola through 2020 at the Great Wall in China. That was a nice, interesting moment. I felt great. It was through 2020. I thought, “We will get all the others as well to sign until 2020. We will have some buffer.”

    — Compiled by Tripp Mickle


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  • NGBs, having met the challenge of recession, looking to grow

    Headed into the Vancouver Games, U.S. Winter Olympic national governing bodies were reeling from the recession. Most lost sponsors. Many cut staff. But over the last four years, they’ve had a chance to rebuild.

    Signs of improvement can be seen across all the winter national governing bodies. USA Bobsled added three new sponsors, the U.S. Ski and Snowboard Association increased its staff, and USA Hockey increased its corporate revenue by $500,000 a year.

    USA Bobsled has new deals; USA Hockey, led by Dave Ogrean (below), has a bigger budget.
    Photo by: GETTY IMAGES (2)
    The gains have been steady enough to restore lost revenue and give executives confidence that they can begin to increase revenue in the future.

    “It’s taken a long time to get back to where we were,” said Bill Marolt, CEO of U.S. Ski and Snowboard. “For [national governing bodies], it’s always a challenge to find the resources. We’ve met that challenge, and we’ll get through this year in OK shape.”

    The organizations have had that success despite the challenges associated with the Sochi Olympics. The Games have been overshadowed by media coverage of terrorist threats. Reaching the host city takes almost a full day of travel, making it a less appealing destination for corporate clients than the 2006 Torino or 2010 Vancouver Games. NGB executives say hospitality programs, which include donors and sponsors, are smaller than years past. US Biathlon, for example, will go from hosting 30 guests in Vancouver to just 10 in Sochi.

    “It’s expensive and complicated and it’s a big commitment of time,” said Max Cobb, US Biathlon’s executive director. “We scaled way back.”

    But an improving economy has allowed most NGBs to overcome that. USA Bobsled signed new deals with BMW, 24 Hour Fitness, Century 21 and Putinka, a Russian vodka brand. The U.S. Olympic Committee helped facilitate the BMW and 24 Hour Fitness deals. The BMW deal has been big for the team. It bought them six two-man sleds and made a documentary about the sleds that gave the team 30 minutes of exposure on NBC.

    “It lends credibility that we have those premium brands interested in partnering with us,” USA Bobsled CEO Darrin Steele said. “As you add more of those, the narrative gets easier.”

    USSA has had similar success adding sponsors from the USOC’s partnership ranks. It signed deals with Chobani, Kellogg’s, Liberty Mutual and Procter & Gamble, which are both featuring USSA athletes in promotions. The addition of freeskiing to the Olympic program also helped the organization as it was able to add The North Face and expand deals with existing partners, helping it push total sponsorship revenue back to the levels of 2008.

    But Marolt said that while the sponsorship marketplace has rebounded and deals have been signed, the financial commitment from each individual sponsor hasn’t rebounded. As a result, USSA has more sponsors than ever.

    “Sponsorship pricing was restructured [after 2008],” Marolt said. “Going forward from that time, we’ve had to deal with a corporate marketplace that has been good, but a different pricing structure.”

    USA Hockey Executive Director Dave Ogrean agreed, saying, “Because of their economic pressures, sponsor companies are trying to get as much as they can for the dollars and get as much as they can out of that dollar.”

    USA Hockey was one of the few organizations that increased its budget during the recession. The NGB secured a commitment from the NHL valued at more than $8 million a year before the Vancouver Games. That’s provided a big lift to its annual revenue, and increases in membership, where it added 35,000 new members the last four years, and corporate revenue, which rose from $2.2 million to $2.7 million annually, have put it in the most stable financial position it’s been in years.

    US Biathlon attacked the challenges that followed Vancouver by developing a fundraising program. It created a trustee program for its foundation and put together fundraising events that raised $160,000 toward its $2.4 million annual budget. It also added TD Bank’s former CEO as chairman, and he helped the NGB land a sponsorship with State Street Financial.

    US Speedskating took a different approach to restoring revenue it lost following the recession. The organization’s revenue fell from $4.6 million during the 2009-10 fiscal year to $3.1 million in 2010-11. But it created its first Olympic trials competition and secured broadcast coverage for the event on NBC. The move helped the organization land three new sponsors — BMW, TD Ameritrade and Liberty Mutual — and it was profitable. Revenue this year is projected to be $4.3 million.

    “We’ve righted the ship in a lot of ways,” said Ted Morris, US Speedskating’s executive director. “We have the ability to go out now and talk to partners about the value we can offer them.”

    U.S. Figure Skating made headway in a similar fashion. The organization sublicensed the rights to the International Skating Union’s Grand Prix competitions and secured more than seven hours of broadcast time on NBC. The media inventory it added since Vancouver helped it land new deals with Procter & Gamble’s Puffs brand, Alka-Seltzer and others that pushed total corporate revenue to $4.5 million this year.

    USA Luge is the only organization that failed to restore revenue lost after the recession. USA Luge lost a $1 million sponsorship from Verizon. Its new executive director, Jim Leahy, is restructuring the board and looking for ways to generate new revenue.

    Executives at every NGB believe that will be easier to do over the next four years than it was over these past four years. The economy continues to improve, and there’s a real sense of optimism that corporate interest in South Korea, which will host the 2018 Olympics, will be greater than Russia.

    “There are companies investing in the Russian market, but there are more companies investing in the Korean marketplace,” Steele said. “My gut says we’ll be able to make an easier pitch for Korea.”

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