July 16, 2012 09:44 AM
Entering an Olympic year, the U.S. Olympic Committee has added two new sponsors, announced two corporate renewals and seen none of its partners end their support, putting the organization well ahead of its sales efforts over the same periods prior to the 2004 Athens Games and 2008 Beijing Games.
At the start of 2012, the USOC has signed new sponsorships through 2016 with Kellogg’s and DeVry and renewed its sponsorships with BP and Nike. Those deals have contributed to the organization’s success in securing more than $38.8 million in domestic sponsorship revenue, about 25 percent of the $150.3 million in domestic sponsorship it generated for the 2009-to-2012 quadrennialThat performance contrasts with 2004 and 2008. By January 2004, the USOC had announced the signing of two new sponsors, 24 Hour Fitness and Nike, and the renewal of one sponsor, Home Depot. By January 2008, the organization had added one supplier, lost the sponsorship support of General Motors and announced no renewals.
“We’re where we want to be,” USOC chief marketer Lisa Baird said. “We’re closing some deals early, which is pretty exciting, but we have work to do.”
When the recession hit in 2008, the USOC reacted by reducing some of its sponsorship prices during the 2009-12 period. As a result, it signed more sponsors to keep its domestic sponsorship revenue on par with and eventually surpass previous quadrennials.
The USOC previously offered three sponsorship tiers. The high-level corporations, known as partners, paid $20 million to $35 million over four years; the second level of companies, known as sponsors, paid $10 million to $15 million over four years; and the lowest level of businesses, known as suppliers, paid $3 million to $10 million.
Anheuser-Busch’s current deal is the best example of how the USOC’s pricing changed. Between 2005 and 2008, Anheuser-Busch reportedly paid $20 million for its partner-level sponsorship of the USOC, but it renewed that agreement for closer to $10 million for the 2009-12 period.
Looking ahead, the USOC has already signed two of its four existing partner-level suppliers to deals through 2016. It brought on BMW in 2010 with a six-year deal valued at more than $20 million, and it renewed its agreement with BP last year through 2016 in a deal valued at more than $15 million. The only two partner-level sponsors it has to renew are AT&T and Anheuser-Busch.
It’s at the supplier level where the USOC will have to do most of its work. The organization signed one new deal at that tier with Kellogg’s, which extends through 2016, but five others at that level — Allstate, Deloitte, Hilton, United and 24 Hour Fitness — are all up for renewal.
The USOC has renewed a supplier-level agreement with Jet Set Sports and added DeVry as a sponsor at that level, but it still has one to renew with Oroweat.
“The overarching view of how we look at renewals is, first, what is the market like?” Baird said. “No. 2 is, in our contracts we have certain contract provisions in terms of when we can talk to them. Then clearly there is that subjective factor of momentum. We have London coming up and it’s going to be a great Games, and then we have Sochi and Rio, which we’re excited about and want to capitalize on.”
Baird said that the USOC’s strategy in approaching renewals called for the organization to renew its licensing partners first because they need to be able to develop product for 2013. That’s why it focused on renewals with Nike, Oakley and TeamFanShop, its online retailer. It is working on a renewal with its other major licensee, Ralph Lauren.
In addition to that area, the USOC also has to renew agreements with Citi and TD Ameritrade. It sold those sponsorships, which were hybrid sponsorship and media rights agreements, in partnership with NBC. Baird said that the USOC will wait until after the London Games to begin renewal discussions with those companies so that they have a chance to evaluate the results of their sponsorship.
July 16, 2012 09:44 AM
The U.S. Olympic Committee is rewriting the rules of its media rights agreements with national governing bodies.
Four years ago, as it was preparing to launch a TV network, the organization bought the media rights of 17 NGBs for $70,000 a year. The deals gave the USOC control over the NGBs’ websites and initial rights to any media content the NGBs produced. It allowed the USOC to create an umbrella site, teamusa.org, that operated as a league site for the NGBs’ team pages.The new agreements, which will cover the 2013-16 quadrennial, will see the USOC pay NGBs $25,000 to $150,000 annually based on their total traffic. The NGBs will retain rights to their event content, control production of events and distribution and retain full editorial content on their own website. The USOC will provide free website hosting, AP news feeds and free mobile Web platforms.
The USOC hopes to have all 35 Olympic NGBs agree to the new terms. It wants to build a total audience of 1 million monthly unique visitors.
“I’m hopeful we made a really appealing business proposition to them and more NGBs will migrate to our site under these terms,” USOC chief marketer Lisa Baird said.
The USOC is completing work on a new website, with WPP agency VML leading the development, and expects to roll it out in the first quarter of this year.
Baird said the USOC is creating a digital revenue model that will see it incorporate its digital offering into sponsorships. It also plans to offer some subscription services and hire employees with digital sales experience who can assist in selling advertising.
“Our mandate [from the USOC board] is to turn this into a revenue-generating entity,” Baird said. “We’ve generated revenue, but we haven’t looked at it as a revenue play. We’ve looked at it more as a brand and information play.”
The proposal has led some larger NGBs to give the USOC’s Web platform a second look. USA Swimming didn’t sign a media rights agreement with the USOC in 2007 because it was launching a swimming website with Wasserman Media Group. It subsequently brought those rights in-house and now manages its own digital operations. But USA Swimming chief marketer Matt Farrell said he liked the USOC’s new proposal both financially and in terms of what rights USA Swimming would retain.
“It’s a very prudent approach based on traffic and performance designed to reward performance and figure out how to monetize it going forward,” Farrell said. “We’re evaluating it and we like how they’ve approached this.”
The agreement has created some unease among smaller NGBs because it will bring another cut in what the USOC contributes to their organizations in the future. Many of those NGBs that generate the least traffic are the same NGBs that are expecting a cut in funding as the USOC begins to base its contributions to NGBs on their Olympic performance.
USA Bobsled and Skeleton Federation CEO Darrin Steele said he understood why that might upset some NGBs but added that each NGB has the chance to increase its traffic and get more money from the USOC. Plus, what the NGBs give up in money, they gain in flexibility.
“It’s a more dynamic arrangement,” Steele said. “It reflects the change in time and how media works now.”