Tokyo: The most vexing problem in sports
Tokyo 2020 was shaping up as one of history’s greatest sports business events, with unprecedented demand coming from fans, tourists, sponsors and advertisers alike.
Then the coronavirus pandemic upended the world, forcing organizers to delay the Olympics by one year. Last week, the Olympic community marked one year until the rescheduled Games, optimistically promising a big show while admitting there’s an extraordinary amount of uncertainty that won’t be resolved any time soon.
At least one global Olympics sponsor, Bridgestone, has already canceled a massive showcase display in the Odaiba Bay area of Tokyo — striking because it’s just a few miles from its world headquarters. The move reflects the fact that little can be planned with any degree of confidence as long as COVID-19 remains uncontrolled, and corporate budgets are shrinking.
The Olympics involve 11,000 athletes from 206 countries, and thousands more officials, staff, coaches and volunteers, plus the millions of fans who would attend, making the Games the most vexing pandemic problem in all of sports.
“This is 100% down to what the world looks like from a COVID perspective, and that is so variable, I can’t tell you what’s going to happen with my kid’s school in five weeks, let alone what’s going to happen with the Olympics in one year,” said Adam Lippard, chief partnership officer at GMR Marketing, which advises numerous corporate clients on Olympic strategy, activation and hospitality.
Like in the major pro leagues, confidence is reasonably high that the Summer Games will occur next year in some form or another. There’s been some small progress in recent weeks. Tokyo organizers announced July 17 that all venues had been resecured from their private or government owners, and that the competition schedule will effectively be the original one, just adjusted for the new dates.
The details, however, are largely unknown. Under normal circumstances, consultants and sponsors would know how many buses, hotel rooms and tickets they’d need. But with reduced capacity and other social distancing measures probable, those logistical questions are in a holding pattern.
That’s if guests are allowed at all into Japan, which has avoided the worst of the pandemic. Currently, Japan bars entry to Americans and residents of more than 100 other countries. Experts think it will be January, at least, before they have any good information about travel possibility. Barring some vaccine or other major breakthrough, the most likely outcome, several sources said, is a socially distanced Olympics for a domestic audience only.
In June, Tokyo 2020 CEO Toshiro Muto said his committee had found “200 items” that could be pared back to “simplify” the Games, though as Lippard notes, “there hasn’t been any specificity around what that looks like.”
In a vacuum, the logistical uncertainty for guests and sponsors can be addressed contractually. But the overlay of a global recession and resulting corporate retrenchment adds extra difficulty, said Nicholas Bruce, Nielsen Sports’ head of consulting and research for Asia.
“Nielsen still expects sponsor activity at the Games in 2021 to be at a reasonably high level,” he said. “We are unlikely to see the level of activity we were expecting pre-COVID-19 and budgets are still being finalized at this stage.”
In the U.S., Olympic officials are revamping their “Road to Tokyo” experiential tour with a heavy emphasis on digital programming, said Chris Pepe, chief commercial officer of U.S. Olympic & Paralympic Properties, the joint commercial venture of LA28 and the U.S. Olympic & Paralympic Committee.
After the postponement, the USOPP offered to extend every domestic sponsorship that had been scheduled to expire in 2020. It did not seek additional fees, only a promise that those sponsors would maintain planned activation levels. Adecco, Comcast, DeVry, Hershey and Mondelez have signed extensions to cover next year, Pepe said, and deals are done in principle with Deloitte and Eli Lilly. Kellogg and 24 Hour Fitness chose not to take the additional year.
Shortly before the pandemic, USOPP signed Delta Air Lines to an eight-year deal that was to take effect on Jan. 1, after longtime Team USA sponsor United was supposed to have finished its run. The postponement created a conflict.
Under a deal that was worked out, Delta’s rights as the official airline of LA28 will start on Jan. 1 as planned, but its rights to that category with Team USA won’t start until after the Tokyo Paralympics, allowing United to extend its longtime sponsorship of Team USA for an extra eight months. “No one was looking to get overly enriched or unnecessarily enriched by what was changing in the markets,” Pepe said.
The insurance category conflict wasn’t settled as easily. USOPC sponsors Liberty Mutual and The Hartford won’t be allowed to extend their rights beyond their original expiration date of this year, because the global rights of German insurer Allianz go into effect Jan. 1.
Another conflict still could be settled soon, Pepe said. The Milk Processor Education Program’s rights to Team USA were going to be overtaken by the China Mengniu Dairy, which signed a rare joint global sponsorship alongside Coca-Cola. But an extension for 2021, with the IOC and Mengniu’s approval, is done in principle. “We’re working toward a solution,” he said. USOPP is also still working with Smucker’s on a possible extension, Pepe said.
Internationally, the International Olympic Committee offered to extend any global sponsorship deal that expired in 2020 to include postponed Tokyo 2020.
Ken Hanscom, chief operating officer of Invite Manager, a corporate hospitality CRM software provider, tracks Olympic ticketing closely and says enthusiasm remains strong for those who had already committed to the Games. But it will be at least January before organizers know how capacity limits dovetail with ticket sales. One possible outcome is that the 4.5 million tickets already distributed will be the only ones available if capacity limits are enforced — and that’s assuming any ticket holders will be let in.
At their most optimistic, Olympics insiders paint an enticing picture for July-August 2021: The world’s first major post-pandemic gathering, a celebration of the enduring human spirit amid crisis. “We rallied,” after the postponement, said NBC Olympics President Gary Zenkel. “We got very excited about the prospect of bringing to the American audience an Olympics that is perhaps more meaningful than any in the past.”
Prior to the pandemic, NBC said it had already eclipsed $1.25 billion in ad sales. It continues to prepare for several scenarios to deliver the postponed Games if they happen, including keeping more production staff in the U.S. NBC had already planned for 1,500 workers to help cover the games remotely from U.S. locations, and that number could grow, though Zenkel declined to discuss details. For now, he said, the network still hopes to entertain high-end advertisers and other business partners in Tokyo.
Zenkel pinned his hopes on progress against the pandemic during the year still remaining. Even if that doesn’t come, he pledges the end result — the TV show — won’t suffer.
“We will bring the Olympic Games to the American audience in all of its glory,” Zenkel said. “Neither the quantity nor the quality and depth of coverage we had planned for July 2020 is being cut back.”