McDonald's The Latest U.S. Company To Forsake Olympic Sponsorship
McDonald’s "ended its decades-long sponsorship of the Olympic Games," becoming the latest U.S. company to "pull support and marking the latest financial blow to the body that runs the world’s biggest sporting event," according to Murad Ahmed of the FINANCIAL TIMES. On Friday, the IOC and McDonald’s announced they "mutually agreed" to end their sponsorship deal with immediate effect. The financial terms of the separation have been "kept confidential." The U.S. fast food group’s deal as one of the IOC’s principal global sponsors was due to run until '20. The restaurant chain becomes the latest U.S. brand to "abandon its Olympic sponsorship in the past two years," following Budweiser, Citi, Hilton and AT&T. In response, the IOC has "looked elsewhere for major sponsorship deals, particularly Asia." In January, it announced that Chinese ecommerce company Alibaba would sponsor the next six Olympics, in a deal expected to deliver at least $600M for the IOC’s coffers (FT, 6/16). In London, Ben Rumsby reported the IOC announced it had "no immediate plans to appoint a direct replacement in the retail food operations sponsorship category," which it said would be subject to review. McDonald's Global CMO Silvia Lagnado said, "As part of our global growth plan, we are reconsidering all aspects of our business and have made this decision in cooperation with the IOC to focus on different priorities." He made no reference to the IOC’s handling of the Russian doping scandal, "nor the likely simultaneous award of the next two summer Games forced upon it by a lack of interest from potential hosts" (TELEGRAPH, 6/16).
HOLDING DOWN COSTS: REUTERS' Baker & Grohmann reported McDonald's has been "trying to hold down costs as it invests in improving food quality, restaurant service and online ordering to woo back U.S. diners." Intense competition has "gnawed away at sales." Despite pulling out with immediate effect, McDonald's "will continue" at next year's PyeongChang Olympics as a domestic sponsor. The company's move "may also reflect a rising view among consumer brands that exclusive Olympics sponsorship deals do not offer the marketing impact they once did." Some companies find it is "much cheaper to work directly with athletes or specific countries than the IOC." Moreover, in a trend that began after the 2008 Beijing Games, shrinking TV audiences for the Games "could be diminishing the value of sponsors' ads." The IOC is "not planning a direct replacement for McDonald's," but a new global deal with Intel is expected to be announced this week. Intel did not immediately respond to a request for comment. Peter Land, a partner at communications firm Finsbury, said, "Companies with a deep focus on technology are barging in while others migrate out" (REUTERS, 6/17). The AFP reported one marketing expert suggested that the split "was logical given the emphasis on health-conscious diets." British sports marketing expert Patrick Nally said, "The scale of obesity and diet-related disease around the world is alarming, and although we can't put this at McDonald's door they must be aware that sponsoring the Olympics has now become 'illogical' and even in many ways 'counterproductive'" (AFP, 6/17). AD NEWS' Rosie Baker reported McDonald's Australia is also a partner of the local Australian team. It is "not yet clear exactly how the move affects this partnership," but it is likely to also come to an end. It is not clear what the end of the deal "will mean for McDonald's marketing budgets and whether the previous budgets flagged for Olympics activity will be funnelled into other areas or cut from the bottom line" (AD NEWS, 6/17).
Click here to read SportsBusiness Journal's Ben Fischer's analysis of the implications of the news.