Organizers of next year’s summer Olympics in Rio de Janeiro are roughly $200M short of reaching their sponsorship target of R$3.5B ($1.2B), according to a local organizing committee official. Rio 2016 Exec Dir of Communications Mario Andrada told SBD Global that organizers are currently preparing the ground work to close the remaining deals during the second half of the year. “We are confident but not comfortable,” he said. Andrada identified airline and mining as the main categories still available, adding that negotiations with potential partners in those areas are already taking place. However, Brazil’s recent economic crisis is hampering the search for partners as the market’s first reaction is to close down on sponsorships. “We do believe and we expect that the economy will pick up during the second half of the year,” said Andrada. “Therefore, we are going to have opportunities during the second half of the year.” Organizers are confident they will hit their local sponsorship target, with deals amounting to 85% of the target already secured. The Games’ most recent deal with Airbnb in the accommodations category shows the LOC’s willingness to think outside the box. This mentality can not only be found on the company side but also on the category side, said Andrada. “If there isn’t any category left or if someone creates a new category or designs a new system or creates a new product, we create new categories. They are not set.” The same is true for sponsorship rates. Part of the reason prices are not easy to preset, said Andrada, is that cash deals represent less than half of the partnerships organizers have signed so far. “It is worth noting that 40 percent of sponsorships we sold came to us in cash, 60 percent of what we got in sponsorships came in VIK [value-in-kind],” he said. Additionally, factors such as exposure, space and sales proposition contribute to the value of a deal. Last year’s FIFA World Cup provided a significant boost to sponsorship sales as it proved the country’s readiness to host a big sporting event. “After the World Cup, several companies that were undecided came back to us and said, ‘This is going to be all right,'” said Andrada. With 16 months to go until the opening ceremony, Games organizers have inked deals with 25 partners. Michael Lynch, head of U.S. consulting at Repucom, wrote in an email, "With it being almost one year out, it is time for Brazil's companies to step up and support Brazil and South America’s Olympic Games."
DIFFERENCE MAKERS: Local sponsors, which are expected to contribute 51% to the Games’ total budget of R$7B ($2.3B), are one of two revenue streams where the organizers “can make a difference,” said Andrada. The second one is licensing. Rio organizers executed a soft launch of the Games’ official online store this week and plan to further expand their offerings and increase their presence. “We are quite bullish about our prospects in licensing,” he said. “It’s an open-ended front. The more we sell the more we make.” Rio 2016 merchandise will be available at retail stores across the country. In addition, organizers will open an official store at Rio’s int’l airport in a couple of weeks. On the ticketing side, the mission is very clear and simple: sell out the tickets, and organizers are on track to do so having received 1.2 million ticket applications during the first week. The remaining revenue streams -- IOC contribution and int’l sponsors, which make up 30% of the total budget -- are not controlled by the local organizers.
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Source: RIO 2016
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Source: RIO 2016
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