USOC enters Olympic year on strong footing
July 16, 2012 09:44 AM
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.