SBJ/Feb. 17-23, 2014/Olympics

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  • IOC reprices TOP deals at $200M

    The International Olympic Committee has set a new price point for TOP sponsorships, nearly doubling the cost of four-year global sponsorships from $100 million to $200 million.

    SBJ Podcast:
    From Sochi: SBJ Olympics writer Tripp Mickle and Tom Shepard, former Visa marketer and current 21 Marketing partner, discuss the Sochi Games and how partners are faring on the ground.

    Panasonic last week became the first TOP partner to sign an agreement beyond 2020. Sources familiar with the deal said the eight-year sponsorship, which runs from 2017 to 2024, is worth $350 million to $400 million overall.

    IOC TV and marketing services director Timo Lumme declined to discuss financial details but said that the IOC had secured an increase.

    “The last pricing [of TOP] was done in 2005 to 2010, so it’s appropriate for there to be a repricing, and the price increases are significant, which reflects the value of the TOP program,” Lumme said.

    Since 2005, four-year TOP sponsorships have been valued at $100 million to $120 million. (TOP prices vary from category to category.) The Panasonic deal has the potential to increase TOP prices to $175 million to $200 million over four years and could allow the IOC to increase its sponsorship revenue from $1 billion to as much as $2 billion for the 2021 to 2024 period.

    “We’ve always said the program has been undervalued the last five or 10 years, and if they’ve corrected the pricing, it’s long overdue,” said Rob Prazmark, founder of 21 Marketing, which evaluated the TOP program for the IOC in 2009. “Those numbers will be difficult for some companies to adjust to, but other corporations will step up and fill the void of those that decide not to keep pace because of the value there.”

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    The Panasonic deal, which was announced just before the Sochi Games opened, caught the IOC’s other TOP partners by surprise. At a workshop last year, the IOC had said it was considering changing the TOP program and didn’t plan to sign any deals beyond 2020.

    Coca-Cola, Dow, Procter & Gamble, Visa, GE, Omega, McDonald’s and Atos Origin had all signed deals through 2020. Only Panasonic and Samsung had deals that ended in 2016.

    Following the IOC’s selection of Tokyo as the host city of the 2020 Olympics, Panasonic was eager to sign a new deal. The IOC, which prefers to sign eight-year deals, took advantage of the company’s interest to secure a huge price increase and set the future value of TOP.

    Executives at Coca-Cola, which had always been the first TOP sponsor to extend its Olympics deal, were not happy about the extension, according to sources. Other TOP sponsors were frustrated by the IOC’s move.

    “They told us one thing and then did another,” an executive with a TOP sponsor said. “What changed?”

    At the IOC session in Argentina last fall, Lumme said the IOC was looking to increase prices and possibly reduce the number of global sponsors from 10 to 12 to five to six. He said last week the IOC could still change TOP’s structure and opt to have fewer partners, but for now, the plan is to preserve the status quo.

    The IOC is in extension talks with Samsung and plans to open negotiations with other TOP partners soon. It also is looking at adding one or two new sponsors in industrial and consumer categories.

    “We’re in the fortunate position where we could stop the program now, but we’re not going to,” Lumme said.

    Lumme said that the IOC is looking to deliver more value to the sponsors. It is exploring ways to have signage in future Olympic Parks, looking to create programs for sport development and hoping to develop an Olympic network that offers new media value.

    “The core proposition as a global program that gives exclusivity in a category across all Olympic stakeholders won’t change,” Lumme said. “What may change is what we put into the pot in terms of goodies (and) the way we allow partners to activate.”

    Print | Tags: Olympics
  • IOC to explore channel launch

    Five years after shutting down an effort to launch an Olympic channel in the U.S., the International Olympic Committee is looking to launch a network of its own.

    IOC President Thomas Bach received approval from IOC members during meetings at the Sochi Games to explore the viability of an Olympic channel. The IOC’s TV and marketing division and its production arm, the Olympic Broadcasting Service, will prepare a feasibility study for the IOC to evaluate at meetings in December.

    SBJ Podcast:
    From Sochi: SBJ Olympics writer Tripp Mickle and Sports Illustrated's Richard Deitsch assess the first week of the Sochi Games and NBC's performance.

    “On the one hand, you’re looking at different type of product — a traditional linear channel, digital, there’s various iterations of it — and asking, ‘What would it be?’” said Timo Lumme, the IOC’s director of TV and marketing services. “After that, you’re looking at the market side of it. What sort of penetration and what sort of audience are we looking at. And there’s a revenue side. Will this create revenue and be sustainable?”

    Lumme said that the IOC won’t begin answering those questions until after the Sochi Games. Its findings and recommendations regarding a channel will be presented to the entire IOC membership for consideration at the end of the year.

    The IOC’s pivot in the last five years from opposing an Olympic channel in the U.S. to exploring one reflects the change in priorities between former IOC President Jacques Rogge, whose term ended last fall, and his successor.

    When the USOC’s planned Olympic channel was squashed, the IOC was preparing to negotiate its TV rights for the 2014-2020 Olympics. It also was in the middle of a heated, revenue-sharing dispute with the USOC.

    Both issues have since been resolved. NBC agreed to pay $4.4 billion for the rights to the 2014-2020 Olympics, and the USOC agreed to a revenue-sharing agreement that gives the IOC a greater percentage of Olympic sponsorship and TV money.

    Bach revived the idea of an Olympic channel during his campaign for presidency because he believes it can raise the profile of Olympic sports outside the 17 days of a Summer or Winter Games and help the organization reach new, young viewers.

    “This is not now a question about money,” Bach said before being elected president last September. “This is a question about addressing youth. If you do not see enough Olympic sports on TV and the Internet, then these other sports will lose more and more (participants) and young athletes.”

    Lumme said that the IOC also wants the channel to promote Olympic values like peace and active living.

    “That’s a pretty broad canvas,” Lumme said. “My objective is to see what’s the best way to deliver against those objectives on a global basis.”

    The IOC already has a YouTube channel that shows mostly highlights and archival footage of past Olympic Games. If it opts to create a digital Olympic channel, it could look to expand the on-demand offerings on YouTube. It also has two sponsors who make televisions, Panasonic and Samsung, who could pre-load their Smart TVs with an Olympic channel as an option alongside Hulu and Netflix.

    In the U.S., the organization could partner with its broadcast partner, NBC, and convert Universal Sports, a channel NBC co-owns with Intermedia Partners, into an Olympic channel.

    “At this stage, there’s no such thing as a bad idea,” Lumme said. “There’s not one way to achieve the objectives we’re talking about. There are lots of ways depending on the market, so I’m eager to hear NBC’s thoughts.”

    USOC Chairman Larry Probst offered his support for an Olympic channel at the IOC meetings in Sochi, but he encouraged the organization to focus on digital. Probst, who’s also the chairman of Electronic Arts, reminded IOC members that young people don’t watch TV anymore.

    NBC Sports Chairman Mark Lazarus also is supportive of an Olympic network.

    “I don’t think it would do any harm,” Lazarus said. “It could only help our business.”

    Lumme said the IOC is talking to other international broadcasters about the channel. Though he doesn’t know when or how the IOC would move forward on a network, he did say that the focus wasn’t on creating an asset that enriches the IOC.

    “This is not a college sports channel play or NFL channel play,” Lumme said. “This is about increasing the overall value proposition as part of our partnership for broadcasters, for partners, for our whole ecosystem.”

    Print | Tags: Olympics, Media
  • ‘New guard’ creates new feel with NBC

    Shortly after 4 p.m. last Wednesday, NBC Sports Group’s top executives gathered in a makeshift conference room within NBC’s massive Sochi compound.

    There was nothing remarkable about the meeting — it was similar to production meetings the group holds all 18 days of the Games.

    But the half-hour “whiteboard meeting” — where NBC executives of all stripes weigh in on that night’s prime-time show — reflected a more collaborative environment at the network and illustrated how different NBC’s Olympic operation in Sochi is from past Games it produced under the eye of the network’s longtime Olympics producer Dick Ebersol.

    Six members of NBC’s production and executive team ringed four tables pushed together at the center of the room. Executive producer Jim Bell, who led the meeting, grabbed a sheet off the table and uncapped a blue marker. He scanned the sheet and began scribbling on the board, humming as he filled in slots numbered 1 to 22.

    “Do you want Russian pairs or Shani?” Bell asked the group about a specific afternoon slot on NBC. The choice was between a profile of a Russian pairs figure skating team or a profile of U.S. speedskater Shani Davis.

    Joe Gesue, NBC senior vice president of production, pushed for the Russian figure skating profile to be shown, believing it would be the best way to tease NBC’s prime-time programming block, which was slated to show the figure skating competition.

    LAZARUS
    But NBC Sports Chairman Mark Lazarus, standing behind the conference table, objected. He was OK with the tease, but he wanted to be sure that the figure skating competition wouldn’t air on NBC before prime time.

    “I’ve got an affiliate concern,” Lazarus said. NBC affiliates could be angry if the network showed clips of the figure skating competition before prime time. Showing the competition live on cable was fine; broadcast was not.

    Bell understood and nodded.

    These are the Games of Lazarus and Bell. There was no doubt that they were the ones in charge, with Bell focused on production and Lazarus on business. Tasked with replacing the legendary Ebersol as the Olympics’ producer for the London Games in 2012, they have developed a collaborative style that permeates NBC’s entire Olympic operation.

    SBJ Podcast:
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    Ebersol attended the London Olympics, spending his days in the NBC compound and participating in these types of production meetings. For Sochi, he is half a world away, staying in Hawaii as NBC produces the Games.

    Home base in Stamford, Conn., handles the
    digital effort behind the production in Sochi.
    Photos by: NBC
    The differences can be seen everywhere: whiteboard meetings that include both business and production executives; live daytime telecasts of figure skating on a cable channel; the streaming of every single winter competition.

    NBC’s Olympic strategy in Sochi presents a microcosm of the direction the network plans to take with the Olympics in the coming years.

    “There’s definite confidence in our strategy,” Lazarus said, shortly after the meeting. “There’s a sense we know what we’re doing,
    and we’re going to keep doing it.”

    ■ ■ ■

    The London Games were Lazarus’ first. From the start of them, he was under fire. There was criticism of the quality of NBC’s live streaming. There were complaints about the network’s tape-delay coverage. There was an entire social media movement: #NBCfails.

    Through the first week of the Sochi Games, things have run much smoother. Before the Games even started, Lazarus addressed NBC’s tape-delay, prime-time strategy with the press. He decided to put figure skating live on NBC Sports Network for the first time — potentially hurting the broadcast network’s prime-time ratings. And the quality of its video streaming online has been much better than it was in London.

    “We have a calmness,” Lazarus said. “We believed coming in that our plan would work. We’re more at ease.”

    The team around Lazarus, who oversees the business, and Bell, who oversees the Olympics production, has changed. Not only is Ebersol absent. So is Bucky Gunts, who directed prime-time Olympic broadcasts, and Molly Solomon, a longtime Olympics producer.

    In their place are longtime NBC employees who grew up in the Ebersol school of the Olympics but now are operating under the new regime. There’s Gesue, who is the production department’s second in command to Bell; coordinating producer Becky Chatman, a newcomer; prime-time director Mike Sheehan, who is new to his role; senior vice president of production Mark Levy; producer Brian Orentreich; and NBC Olympics President Gary Zenkel.

    “There’s a new guard,” Lazarus said. “Sitting in that control room is very different from the control room in London. Not better. Not worse. Just different. I feel very confident in that team.”

    ■ ■ ■

    Different is also a word NBC’s digital executives are using for these Olympics.

    It’s not just about NBC’s digital offerings (every event is being streamed live) or traffic numbers (digital growth is up 54 percent from Vancouver, NBC executives said last week).

    Rather, NBC’s digital executives have been given the mandate to have more fun. It’s a different mindset that highlights viral videos alongside live streamed events.

    “In the past, sometimes we’ve been accused of missing the quirky, cool stuff about the Olympics and being straight laced and focusing on the competition,” said Tom Seeley, vice president of editorial for NBCSports.com and NBCOlympics.com.

    As an example, Seeley pointed to video of Shiva Keshavan, an Indian luge athlete who crashed during a training run on Feb. 7 and managed to get back on his sled to complete his race. The video went viral and brought a lot of traffic to NBCOlympics.com.

    “We really wanted to make sure that we got that clip out there and make sure that folks knew that we had it, and if you wanted to see it, this was the place to go,” said Seeley, who is working his fourth Olympics. “We want to make sure that we’re feeding into what folks are looking for on the Web. They don’t have to go find a second-rate version of it. We have the video, and we will make it available to the most folks possible, not try to pretend that’s something we wouldn’t touch because it was something that isn’t part of our high-brow coverage.”

    Seeley and a group of about 400 NBC Digital employees are working out of NBC’s new offices in Stamford, Conn. He credits the fact that the entire team is working under one roof for the first time with helping NBC take ownership of these types of viral clips.

    A group of 75 people make up what’s called a Highlights Factory, tasked with watching every piece of Olympics coverage and identifying key moments. When Keshavan’s run ended, someone from the Highlights Factory walked down the hall to the newsroom to let them know a clip was coming.

    “We were able to get it out there pretty quickly,” Seeley said. “That still would have happened in the old system. But it would have been a lot of emails and phone calls and added steps to that process.”

    ■ ■ ■

    NBC has 2,700 employees in Sochi, working on everything from the Olympics to “Nightly News” to the “Today” show. Many, including Lazarus, arrived in January to begin preparing for the Games, which began Feb. 6.

    Sochi is significant, as it’s the first Olympics deal that Lazarus negotiated. NBC signed a $4.4 billion deal for the 2014-2020 Olympics shortly after he arrived.

    Every afternoon in Sochi, Lazarus and the rest of his team wait for NBC’s report card. Overnight ratings arrive around 4 p.m. local time. Lazarus was in his office when the ratings update arrived for the Wednesday night show NBC sketched out on the white board.

    The show earned a strong 13.3 overnight rating. The production team had to rework the show because Davis failed to medal in speedskating that day, but a gold medal for Team USA in women’s halfpipe helped the TV number.

    Lazarus nodded when he heard the number. For him, it was more confirmation of the strategy put in place for the Sochi Games. Advertisers are happy — NBC is meeting its ratings guarantees to them.

    NBC was dominating prime time and posting numbers slightly lower than Vancouver, a North American Olympics. NBC Sports Network viewership had soared to record levels.

    “There’s a strange obsession with prime-time ratings,” Lazarus said. “To us, this is an Olympic business, not a prime-time schedule. Prime time is important and it’s a big revenue driver, but the story is Americans … are watching in many forms in all parts of the day.”

    This view marks another example of the collaborative mindset at work. NBC no longer is focused on just building up the prime-time block. Its all-encompassing multi-platform strategy brings a lot more people to the table.

    Four years ago, when Ebersol produced his last Olympic Games in Vancouver, the tablet had yet to be introduced. Now, more people are using tablets to watch the Sochi Games than PCs or laptops. NBC is seeing record numbers not only for digital, but also for its cable sports channel, NBC Sports Network.

    There’s a new regime at NBC with a new mandate that goes beyond broadcast prime time. For NBC executives, it’s a change that already looks to be paying dividends in Sochi.

    Print | Tags: Olympics
  • Hard work helps figure skating NGB rebound

    David Raith still remembers the day in 2007 that he learned ABC planned to end its 43-year relationship with figure skating. U.S. Figure Skating had anticipated it, cutting its expenses drastically in the final two years of ABC’s media contract, but the decision still hurt.

    Gracie Gold has secured deals with Visa and Smucker’s that help the sport’s exposure.
    Photo by: GETTY IMAGES
    “It changed our business,” said Raith, U.S. Figure Skating’s executive director. “We went from guaranteed [revenue] overnight to what we had to generate.”

    ABC had propped up U.S. Figure Skating for years. Its $12 million-a-year TV rights deal covered more than half the organization’s expenses. The media money also meant the organization didn’t have to sell sponsorships or need a commercial division. But without it, revenue plunged from nearly $20 million in 2007 to just over $9 million the next year.

    SBJ Podcast:
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    The organization, which traditionally fields the most popular team in the Winter Olympics, has spent the past seven years rebuilding its business. It has cut costs, developed its own sponsorship program, acquired media rights to figure skating events and overhauled the selection process for its marquee events.

    The result is a stable governing body that has increased its corporate revenue by $4.5 million over seven years and increased total revenue to about $15 million annually.

    “We’re pushing it back up with the successes we’ve had,” Raith said, “and we’re looking forward to growing it more.”

    Jay Ogden, senior vice president at IMG, who oversees the company’s figure skating events, said the organization has done “A-plus work” developing new talent, improving its TV coverage and landing sponsors.

    “We’re seeing a resurgence [of figure skating] in the U.S. on a number of levels over the last two years, and particularly the last 12 months,” Ogden said. “That’s a reflection of how U.S. Figure Skating has operated.”

    U.S. Figure Skating signed its lucrative TV agreement with ABC following the Nancy Kerrigan-Tonya Harding soap opera in Lillehammer in 1994. The sport was at its peak, regularly delivering more than a 10.0 rating for events. But ratings peaked in 1998 and began to steadily decline.

    The 1998 U.S. Figure Skating Championships ladies’ free skate competition, the sport’s most popular event, pulled an 11.5 rating, more than 60 percent greater than the 4.7 rating the same event delivered in 2006.

    Two things triggered the decline in interest. First, few female stars surfaced to replace 1990s stars Kerrigan, Kristi Yamaguchi, Michelle Kwan and Tara Lipinski. Then a voting scandal at the 2002 Salt Lake City Games caused the International Skating Union to overhaul the judging system. It did away with the 6.0 scoring system.

    “Hearing a score of a ‘6’ is theater; hearing he got a score of 294.5 is not,” said Dick Button, an Olympic gold medalist and longtime figure skating promoter.

    The sport’s struggles didn’t bode well for U.S. Figure Skating. The organization’s board doubted ABC would renew its $12 million-a-year contract and worried it might exit the sport altogether. It hired Raith, a former executive with USA Track & Field and Turner Broadcasting System, as executive director in 2005 and tasked him with coming up with a plan for the organization’s survival.

    “We were almost starting at ground zero,” said Ramsey Baker, U.S. Figure Skating’s chief marketer.

    Raith replaced the ABC deal with a revenue-sharing agreement with NBC that gave the sport nine hours on the network. He also worked with Baker to establish figure skating’s first commercial division.

    ABC had held U.S. Figure Skating’s marketing rights for a decade. As a result, the organization had never sold or serviced sponsorships, and few of the sponsors that ABC had signed stuck with figure skating.

    In 2008, U.S. Figure Skating hired Van Wagner to help with sales. But the agency started too late to find title sponsors for that year’s marquee events, Skate America and the U.S. championships, so they went unsold.

    It wasn’t until 2010 when figure skating signed a deal with AT&T to take over title sponsorship of the U.S. championships that the organization began to make some headway. It added Prudential, Hilton and Alka-Seltzer the next year in deals that ranged from the mid-six to low seven figures. It then closed out its last presenting sponsorship last year when it signed Procter & Gamble’s Puffs brand as the sponsor of the “kiss and cry” area where figure skaters wait for their scores, in a deal valued in the high six figures.

    “That was a big deal for us,” said Chris Pearlman, Van Wagner Sports senior vice president. “It gave us a feeling of, ‘Hey, we’ve arrived. We’ve sold every big position that we wanted to sell and we sold out of our inventory, too.’”

    The sellout gave Van Wagner and U.S. Figure Skating confidence that the corporate appetite for figure skating had returned. Since they were out of inventory on NBC, they last year partnered to buy the rights from the ISU to the World Championships and Grand Prix events.

    Sponsorship and advertising sales for the current fiscal year, which ends this summer, have surpassed $4.5 million, according to the organization. Baker said that’s a 70 percent increase over 2012-13, a quarter of which was due to the new inventory it picked up from the ISU.

    “We’re starting to get to the point where we’re going to maximize the revenue we can get off our events,” Baker said.

    U.S. Figure Skating also overhauled the way it awards its marquee events in order to boost event revenue. Before Raith arrived, it rotated its championships from the East Coast to the West Coast to the Midwest. It now holds an open bidding process with a minimum site fee. The changes have made the process more competitive and helped deliver $500,000 to $1 million to its bottom line annually, Raith said.

    The organization continues to look for other ways to boost revenue. It partnered with IMG this year on a post-Olympics tour. USA Gymnastics ran a similar tour after the London Games and raised more than $15 million. Baker hopes U.S. Figure Skating has similar success.

    Raith also is focused on increasing membership from 170,000, where it’s been flat for years, to more than 200,000.

    All of that will help U.S. Figure Skating continue to boost its bottom line, but nothing will drive interest in the sport more than competitive success. Figure skating experts like Ogden say the sport has fielded one of its more competitive teams in years.

    Meryl Davis and Charlie White are considered gold-medal contenders.
    Photo by: GETTY IMAGES
    This week its ice dancing pair, Meryl Davis and Charlie White, are expected to contend for gold, and Ashley Wagner and Gracie Gold are considered to be the first podium contenders in female figure skating since Sasha Cohen won silver in 2006.

    Particularly encouraging is the recognition this year’s star female figure skaters have received. Gold, who has deals with Visa and Smucker’s, was one of a half-dozen Olympians featured on the cover of Sports Illustrated, and Wagner signed deals with Nike and CoverGirl.

    Exposure like that won’t help the sport return to the height of popularity it enjoyed during the Kerrigan-Harding years, but it should help it recapture lapsed fans.

    “You won’t have another Nancy-Tonya thing, but it would help to have some female success in the Olympics,” said Steve Disson, who organizes figure skating events. “The biggest impact comes when a female skater wins the Olympics.”

    Raith understands the value of success. Now that the organization has stabilized its finances, he feels like it’s in a position to focus on that.

    “We want to grow this organization in a structured way,” Raith said. “We want to achieve podium placements in all disciplines. When we structure our finances, we may push more money in certain places to achieve that.”

    Print | Tags: Olympics
  • USSA putting time buys behind it with new NBC agreement

    The U.S. Ski & Snowboard Association is finalizing a new TV rights agreement with NBC, and for the first time, the national governing body will not pay for the broadcasts of its events.

    The USSA and NBC have agreed to terms on a five-year, revenue-sharing deal that will see total ski and snowboarding coverage increase from 12 hours to 18 hours on NBC and 24 hours to 32 hours on NBC Sports Network.

    Since the late 1990s, the USSA has bought time and covered production costs for coverage on NBC. This year’s deal for 12 hours on NBC and 24 hours on NBC Sports Network cost it $5.1 million. Under the new deal, total costs will drop to $3.2 million, and its share of advertising inventory should offset that.

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    “We go from losing money on TV to profiting, and that allows us to invest in infrastructure and support our teams,” said USSA chief marketer Mike Jaquet, who negotiated the deal.

    The agreement gives NBC rights to show the 2015 and 2017 FIS Alpine World Championships, which USSA acquired in the U.S., and the 2019 FIS World Championships in freeskiing and snowboard. Those and every other event the USSA hosts, roughly 160 hours, will be aired live on NBC or NBC Sports Network or streamed on NBC Sports Live Extra.

    “If you look at Sochi, the U.S. has 250-plus athletes here, and in excess of 40 percent of them come from U.S. Ski & Snowboard,” said Jon Miller, NBC Sports president of programming, who handled the deal for the network. “It’s important people become familiar with the athletes, the sports and the disciplines.”

    USSA will keep some advertising inventory for its sponsors, and it will be able to protect some categories, including automotive, wireless, financial services, men’s care, household items, medicines and apparel.

    It will collaborate with NBC to sell the rest of the inventory. Miller said that will allow NBC to include sponsorship assets in its media packages and USSA to include media in its sponsorship packages.

    “That’s something we both find attractive,” Miller said.

    Print | Tags: Olympics, Media
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