The U.S. Olympic sports sponsorship market is showing signs of weakness as the Tokyo 2020 hype season approaches, industry sources say.
Two primary factors are to blame: The ongoing, unpredictable fallout of the Larry Nassar-USA Gymnastics sex abuse scandal, and the wholesale uncertainty around the post-2020 Olympics commercial landscape.
Five global sponsors’ deals expire after Tokyo and haven’t yet been renewed, including Coca-Cola Co. and Procter & Gamble, an unusual amount of flux at that level. All 20 U.S. Olympic Committee sponsorships were designed to expire after the 2020 Games to give the joint venture of the USOC and Los Angeles 2028 an open selling field. The JV has not yet detailed its offerings or pricing for packages including the lucrative domestic Olympics.
Both buyers and sellers insist there has been no general rejection of the Olympic movement by corporate America, and they still believe Tokyo and future Games, including Los Angeles, are valuable assets.
But right now, with less than 18 months until the Tokyo opening ceremony, brands find themselves trying to balance the urgency of developing a strategy for 2020 with their desire to wait for more clarity on the legal, regulatory and commercial situation facing the American Olympic movement.
“There’s a huge brand reputation piece that’s a problem right now, but also, they really want to be part of LA28,” said one strategic consultant to Olympic sponsors. “So what’s the middle ground? What do I do right now? It’s really awkward.”
At the moment, this is mostly a problem for the national governing bodies, which traditionally depend on global or national Olympic sponsors to extend their play through domestic sport-level deals during the run-up to a Games. Toyota made a big splash by signing seven sports bodies in January, including USA Track & Field and USA Swimming, but the automaker appears to be a notable exception so far, industry experts say.
There’s a huge brand reputation piece that’s a problem right now, but also, they really want to be part of LA28. So what’s the middle ground? What do I do right now? It’s really awkward.
Current sponsors have kept their heads down in light of the USOC’s exposure to the sex abuse issue. There’s also little need to activate in the off year. When Sports Business Journal asked all 34 global and U.S. sponsors in December if they still had confidence in the USOC, 32 did not respond at all. Just one, United Airlines, provided a substantive response: “We support what is in the best interest of the athletes, and we expect the USOC to implement reform and initiatives to ensure a safe environment for all athletes.”
If those sponsors want to activate in 2020 — and most experts believe Tokyo shapes up as an especially good opportunity — planning and negotiating should be happening now. But marketers who want to commit budget, in the form of splashy campaigns or new NGB deals, must be prepared to answer their bosses’ questions about how much risk there is in associating with the U.S. Olympic team right now.
That’s a difficult question. Multiple criminal investigations are ongoing. USA Gymnastics is a toxic brand, but swimming, figure skating and taekwondo have all seen sex abuse headlines in recent months — how exposed are the others? Until December, most experts believed that the worst of the fallout was contained to USA Gymnastics, but that changed as soon as the Ropes & Gray report, released last December, disclosed new details about the USOC’s culpability.
Two sources said brands are likely seeking more market research than normal to determine how severe the damage is, and how long it might last.
“The Olympic movement hasn’t been getting a lot of positive buzz in the U.S. these days,” one industry expert said. “The dialogue has not been a pretty sight, and do you want your company brand to be in the middle of that conversation?”
However, that expert said, the environment could have some upside for brands that manage to be seen as champions of athletes, and governing body deals — if negotiated and activated properly — can be effective conduits to individual athletes.
There’s a contrarian school of thought about the brand risk. Some believe that in an era of lightning-fast news cycles and fragmented media consumption, the Nassar story still doesn’t register with the greater mass audience and it certainly won’t by next year.
In those experts’ minds, the far bigger issue is commercial uncertainty: Who will be in the global sponsorship tier in 2021? What will it cost for current USOC sponsors to stay on board once their rights include the hyper-valuable domestic 2028 Games? Who will they have to compete with? What categories are available domestically after 2021?
Take Procter & Gamble, for instance. P&G decided against renewing deals that expired recently with U.S. Ski & Snowboard and U.S. Figure Skating. Like all other former sponsors of USA Gymnastics, it’s stayed away from that sport as well.
P&G doesn’t want to sign new sports-level deals until it is extended with the International Olympic Committee, according to minutes from Ski & Snowboard’s November board meeting. “Beyond the Tokyo 2020 Olympic Games, we are in discussions about P&G’s involvement with and sponsorship of the Olympic movement globally, and we will assess our NGB partnerships in the U.S. as a part of our overall negotiations going forward,” said Janet Fletcher, director of Olympic marketing for P&G.
Brands not currently involved in the Olympics have the luxury of waiting for more detail to emerge, with no commitment to Tokyo. Some NGBs have been successful selling sponsorships to unaligned companies, telling them they can still build a valuable association with the sport apart from the Games.
Vacancies in top sales positions also could be slowing the deal flow. Former USOC CMO Lisa Baird left in August and will not be replaced in light of the formation of the joint venture with LA28. Also, the three biggest summer NGBs — USA Swimming, Track & Field and Gymnastics — have had vacancies. Kathy Carter, CEO of the USOC-LA28 joint venture, started in October and is still developing its go-to-market strategy.
“I don’t think things are slow because of a lack of interest, I think things are slower because things are more complicated,” said Ramsey Baker, CMO of U.S. Figure Skating. “Having the Olympics in the U.S. in 2028 is a great thing, it will raise tides for everyone, but it does make things more complex.”