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Volume 23 No. 17
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The IOC’s Rule 40 changes and the forecast for Rio 2016

The International Olympic Committee made headlines in late February when it announced plans to relax Rule 40 for next summer’s Olympic Games in Rio de Janeiro. Rule 40 prevents athletes from using their image, likeness or competition in advertising unless it involves an official sponsor. Rule 40 also essentially creates an Olympic blackout period, where athletes can be seen (in traditional advertising and on social media) only during the period before and during the Games supporting the official sponsors and partners of the Olympics as well as the national Olympic committees (NOCs).

For Rio 2016, if approved at the full IOC meeting this July, Rule 40 will be amended to “allow generic [non-Olympic] advertising during the period of the Games.”

As many who follow Olympic sponsorship and ambush marketing will recall from London 2012, Rule 40 became one of the most controversial ambush marketing provisions enforced by the London Organizing Committee’s “brand police.” Led by Team USA track athletes, among others, Olympic athletes ignited a social media firestorm of criticism about how the rule was being unfairly applied to them, using the Twitter campaign #wedemandchange. After Sochi 2014, the U.S. Olympic Committee announced plans to open a dialogue about ways to find more commercial opportunities for American athletes without ambushing sponsors. At the time, the USOC implied that it needed to find a way for athletes with long-term sponsorship relationships to be able to leverage those during the peak of their success.

The IOC’s newly announced Rule 40 changes for Rio seem to mirror the USOC’s more reasoned stance.

Candidly, Rule 40 gives the IOC a major weapon in its arsenal to address official sponsors’ concerns about ambush marketing, particularly in an increasingly digital age. While almost unheard of until Beijing 2008, when social media was still relatively new, Rule 40 has served as a contractual hammer for the IOC and NOCs to limit the ability of the athletes to “share” their Olympic experience while acknowledging relationships with their individual sponsors.

Rule 40, in effect, helps achieve the IOC’s brand protection measures by (in theory) eliminating brand exposure by nonsponsors during the Games. Under Rule 40 during London 2012, for example, Virgin Media pulled ads featuring Usain Bolt to avoid them appearing during the blackout period. Similarly, Michael Phelps found himself momentarily in hot water when unauthorized images of him that were part of an advertising campaign with Louis Vuitton were leaked during the blackout period, risking possible violation of Rule 40. As Phelps’ agent pointed out at the time, the key issue with Rule 40 is whether the athlete permitted the use of his image during the blackout period — which clearly Phelps did not.

Photos of Phelps in a Louis Vuitton ad were leaked during the Rule 40 blackout period in 2012.
Photo by: COURTESY OF LOUIS VUITTON
A relaxed Rule 40 will offer athletes increased commercial opportunities to promote their individual sponsorships as part of sharing their Olympic story. This makes sense and acknowledges the changing sponsorship landscape, as athletes have become much more active in their own brand-building through use of social media platforms. Furthermore, by announcing their plans with regard to Rule 40 enforcement 18 months before the start of Rio’s Games, the IOC appears to want to get ahead of this issue.

Setting aside the obvious public relations benefits for the IOC, a relaxed Rule 40 more properly balances the need (and commercial reality) for athletes and sponsors to be more visible during the peak of competition. To continue to strictly enforce a rule that favors just a handful of TOP global brands, and that even the most-ardent Olympic supporters would have difficulty defending, seems futile. The IOC’s move seems to be a reasonable shift in favor of athletes’ rights while still enabling official sponsors to activate their sponsorships through utilization of what they purchased: the protected trademarks, including Olympic logos and phrases, in order to make their affiliation with the Olympic Games clear to consumers.

What remains to be seen, however, is whether the IOC’s move to address concerns of one powerful stakeholder group (athletes) risks alienating another powerful Olympic stakeholder — particularly, TOP sponsors who pay a hefty price in exchange for brand exclusivity.

While guidance from NOCs is expected after July’s likely approval, how a relaxed Rule 40 will play out in the official sponsor vs. nonsponsor space will be worth watching. On the surface, it’s likely that a nonsponsor such as a car company will be able to post a 15-second advertisement on Facebook showing its athlete endorser driving the car. But in the world of (ambush) marketing, is it ever quite so simple? What if the athlete is shown driving the car around an iconic Olympic venue? What if the athlete tweets out the commercial with a message “Me & My Car … Going for the Medals.” Generic enough?

One area ripe for Rule 40 interpretation is the myriad contexts in something as simple as congratulatory messages posted by nonsponsors when their athletes win, as well as by athletes who post to thank their individual sponsors. This could include, for instance, a photo of the athlete with an Olympic venue in the background. Is this generic advertising? What about showing the athlete with a background shot of Christ the Redeemer, the iconic landmark that people associate with Rio? More generic? Can the athlete show his or her medal while thanking his or her sponsor? What will be made of a nonsponsor tweeting “Way to go(ld), Bailie Key,” a Rio 2016 hopeful for Team USA Gymnastics. Could they even say “go(ld”)? Or a nonsponsor creating a user-generated content promotion for fans to cheer on one or more of its athlete endorsers?

Since the athletes, in conjunction with their NOCs, bear responsibility to ensure compliance with the relaxed rule, the forthcoming practical guidance should clarify some of these marketing scenarios so athletes and their sponsoring companies know what can and can’t be done. (And trust that nonsponsors will still find the amended rule’s gray areas.) Among other issues, this change is likely going to necessitate the IOC’s rethinking of how it defines ambush marketing.

Whether Rio 2016 ultimately will prove to have the change that athletes demanded in London in terms of sponsorship freedom remains to be seen.

John Grady (jgrady@mailbox.sc.edu) is an associate professor in the Department of Sport and Entertainment Management at the University of South Carolina. Steve McKelvey (mckelvey@isenberg.umass.edu) is an associate professor in the Mark H. McCormack Department of Sport Management in the Isenberg School of Management at the University of Massachusetts Amherst.