Once a boon for sponsors, the Olympic Games are becoming a drag

FROM KITCHEN in automobile manufacturing, the Japanese method is meticulous. Yet with just over a month to go, the Tokyo Olympics remain anything but. Thanks to covid-19 and the slow pace of vaccinations in Japan, it is not clear whether the games, which were originally scheduled to be held last summer, will let spectators in, i.e. whether the event takes place. Organizers insist he will. It’s scary for those who hope to reach their peak at the right time: the athletes, of course, but also the financial muscle of the games, its corporate sponsors. While no support has withdrawn, some are privately asking for a further delay. Asahi Shimbun, the official media partner of the games, called the decision of the International Olympic Committee (CIO) to plow on “Pharisaic”. What was supposed to be a golden opportunity to spruce up brands has turned into a reputable minefield.

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Olympic commercialism has deep roots. Kodak advertised in the official results book of the first modern games of 1896. Then, in 1984, the Los Angeles Olympics ushered in a new era. It was the first to be largely funded by large corporations. Organizers have bet brands from McDonald’s to Buick will make waves for exclusivity in their product segments. And that’s what they did: the THE the games made a profit. Since then, the benefits have been scarce for host cities, which spend billions on sites and transport links.

For corporate sponsors, the financial gains are nebulous. Yet they keep coming back, so they must feel it’s worth it. They can display brands, bring new products to a global audience (3.2 billion people tuned to the Rio de Janeiro games in 2016) and be associated with a globally admired symbol, the Olympic rings. Tokyo organizers touted all of this plus a chance for national sponsors to be part of a celebration of Japan’s exit from decades of economic stagnation, just as the 1964 games marked its “release party” according to Japan. -war, says Andrew Zimbalist, a sports economist. Tokyo has raised more than $ 3 billion from 47 mostly national “partners”, more than double the previous Olympic record. He also gets around $ 500 million from the CIO‘s 14 “HIGH”Sponsors: global companies like Coca-Cola, Visa and Airbnb who sign multi-game agreements.

The involvement of companies always carries risks for companies. When people look back to Rio, they are just as likely to remember crime, white elephant plans and the Zika virus as they are sporting glory. But the disintegration of a mega-event is quite another thing. There are few precedents in sport; The collapse of Allen Stanford’s annual cricket Super Series in 2009, when he was accused of leading a Ponzi scheme, hardly compares (with all due respect to cricket fans) . This time, a last-minute cancellation, or a spike in covid-19 cases a few days later, cannot be ruled out. Parts of Japan remain under a state of emergency. More than half of the population opposes the continuation of the games.

This puts domestic partners, such as Japan Airlines and NTT, a telecoms company, at an impasse. What has been sold to them as a once-in-a-generation opportunity now risks alienating consumers in their home market. They doubled up last year, signing contract extensions and adding $ 200 million to the pot. Some, fearing a summer RP disaster, would offer even larger sums if the games are moved to October, when more people get hit and public concern may have diminished. the HIGH sponsors, whose contracts may span a few summer and winter games, may ignore a single Olympic misfire. Regulars like Coke and Visa are already looking beyond Tokyo. If the pandemic permits, the 2022 Winter Games will begin in just over seven months. Yet here, too, corporate funders face a problem: The choice of host, Beijing, has led to growing calls for a boycott of China’s human rights record. man.

Such calls are not new – they sounded ahead of the 2008 Beijing Summer Games. Businesses have mostly turned them down. They are more willing to withdraw support from misbehaving individuals (think Lance Armstrong or Tiger Woods) than to desert corrupt hosts and organizers, from China to FIFA, the governing body of football rife with corruption, due to the vast TV exposure they offer. It might not be that easy this time. Global outrage over China’s mistreatment of its Uyghur Muslim minority is growing, as is the pressure on companies to find a ‘goal’ – which, in practice, often means taking a stand on issues. burning questions.

As Beijing approaches, global brands will find themselves trapped between calls for disengagement and fear of reprisals from a huge market. Withdrawing from just one Olympics, let alone two, could rule them out longer, as companies from China and beyond will take their place. Undemocratic regimes are happy to shell out for the fees to host sports tournaments; Qatar hosts the 2022 FIFA World Cup. Local businesses are waving the money. Russian Gazprom is a sports advertising giant. Chinese companies are spending heavily to strengthen their global image: Hisense, Alipay and Vivo are among the top ten sponsors of the European Football Championship which kicked off last week. Alibaba is unlikely to be the only Chinese company in the market CIO‘s HIGH long list.

Champion prevaricators

Back in Tokyo, some sponsors hired consultants to assess the possible impact on their brands of sticking to the program or opting out. Marketing campaigns are “messy,” says one advisor. Without spectators, there will be no promotions on the venues or in corporate hospitality. Merchandise sales will be sluggish; mountains of Tokyo 2020 branded gear will gather dust. When it comes to advertising, sponsors are unsure of what the message should be or whether they should display their links to the Olympics. Just in case, many don’t, instead telling the stories of the athletes while emphasizing unity, resilience, and other admirable traits that involve pandemic awareness. Some sponsors are working on two campaigns, one more Olympic than the other. For Western brands, the ideal competition would always take place in a world of happy and healthy democracies. But most don’t hesitate to put on their face masks or hold their noses, if that’s what it takes to stay in the race.

This article appeared in the Business section of the print edition under the title “Track and minefield”

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