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Olympic committees striking some unusual deals

Thu, 07/29/2010 - 1:13am
EDDIE PELLS - AP National Writer - Associated Press

COLORADO SPRINGS, Colo. (AP) — With the economy spiraling downward and sponsors running away faster than Usain Bolt, the Olympics needed money.

Big money.

And fast.

So, leaders of Olympic organizations started thinking outside the box, peddling their famous rings to new companies, selling multimillion-dollar sponsorship deals to pretty much anyone willing to pay the price.

In the past few weeks, the International and U.S. Olympic committees have announced a flurry of deals — a long-awaited sign that big-money sponsors are returning to the rings. The deals, however, have made for some strange bedfellows — a handful of partnerships that, at first blush, don't look like natural fits:

— The U.S. Olympic Committee signed a six-year, $24 million deal with BMW, making the German automaker the replacement for General Motors as the federation's automobile sponsor.

— The International Olympic Committee, which has long prided itself on sustainability and "green" initiatives, agreed to make Dow Chemical its official "chemistry company" in a deal believed to be worth $100 million or more.

— Officials at the IOC, USOC and the London 2012 Organizing Committee came out in strong support of continuing a relationship with BP, which previous to the Gulf Coast oil spill had signed sponsorship deals with the USOC to the tune of between $10 million and $15 million and with London 2012 worth $58 million.

The Olympic movement also receives sponsorship dollars from McDonald's, Coca-Cola and other companies that aren't always immediately synonymous with sporting, active lifestyles. Experts say that while deals like these, in many circles, have become so common they don't raise eyebrows, they also could leave the Olympic movement vulnerable.

"With the Internet and the ability of somebody or some group to create a stir or draw attention to these kind of things, you can get magnified so you are exposed," said Kevin Lane Keller, a marketing professor at the Tuck School of Business at Dartmouth. "If people think about them more deeply, the connections might cause concern, and they may not create a positive impression."

Ultimately, consumers decide whether they buy into, don't care about or actively question relationships between companies and the Olympic movement. IOC member Dick Pound, who used to handle the committee's sponsorship negotiations, said deals of these magnitude are all scrutinized internally before they're signed.

"We would look at any sponsorship from the perspective of, what this does for our brand and what it might do to it," Pound said. "You're always thinking, 'OK, what is the messaging here?' You can have this concern with almost anyone."

Pound said he found the USOC-BMW partnership a bit odd: "Not that it's not a great company. It is a great company," he said. "It's upscale. Good product. But it's not America."

In a news release touting the deal, the USOC emphasized BMW's 42-year history of selling cars in the U.S. market and the fact that BMW has 7,000 U.S. employees — all valid points, but certainly not ones that would need to be made if General Motors had continued on with the USOC. GM let its 24-year USOC sponsorship lapse after the 2008 Olympics. When the deal expired, it paid about $5 million a year and provided vehicles to the USOC.

Instead of focusing on BMW not being an American company, USOC marketing director Lisa Baird said, "It's more like, 'Wow, here's a global sponsor that's helping our team get to the Olympic Games, get to the greatest global stage there is.'"

In much the same way, the deal with Dow Chemical also doesn't seem like a natural fit at first glance. For nearly 20 years the IOC has made a major point of pushing environmentally friendly efforts, yet Dow has been a target of criticism by activist groups. Greenpeace USA says on its website the company "has done little to be a good steward of the environment."

In exchange for letting Dow use the rings, the IOC gets the money, not insignificant for a colossus that lost partners after the Beijing Games and needed two years to get its sponsorship portfolio back to where it was — in the $1 billion range with Wednesday's signing of Procter & Gamble. Dow, meanwhile, gets exposure and a connection with an organization that considers itself green.

"A lot of people out there will say, 'It's not about the bottom line, it's about buying credibility,'" said Simon Chadwick, a sports marketing expert at Coventry University in England. "It's accentuating the value of your brand through association. It's also making a statement about yourself and your market strength. It's saying, 'We've got lots of money and can afford to buy these deals.'"

IOC marketing director Timo Lumme said the Olympics and Dow might have more in common than you'd think, calling Dow a company that thinks a lot about sustainability and "has very strong beliefs that what it is doing has to be for the betterment of mankind."

"Every industry has it's challenges and any area of life has its challenges," Lumme said. "But ultimately, what's important is that you look at where companies want to get and what positive contributions they want to make."

That was, in some ways, the intent of the USOC and the London Organizing Committee when they signed separate deals with BP. The LOC had good reason to bring on a big-money sponsor with headquarters in its hometown.

And when the USOC was scrambling for sponsors after a rough 2008, it welcomed an alliance with BP, as well. Petroleum companies — most notably, Chevron — had a history of sponsorships with sectors of the Olympic movement. Luc Bardin, BP's chief sales and marketing officer, said the USOC deal was a chance to become a "natural member of the Olympics. There is a lower-carbon, greener dimension to this."

Then came the Gulf oil spill.

While BP's investment in Olympic sponsorship is insignificant compared to the expenses it will incur for the spill's clean-up, the accident has left the Olympic movement exposed — to possible protests, to the possible loss of the funding if BP goes belly-up and to the loss of an active partner.

Since the disaster unfolded, Olympic executives have shown effusive support for BP and refused to speculate publicly on possible problems that might come up.

"British Petroleum are our partners. They supported us during the bid. They have a pre-eminent track record particularly in supporting the creative arts in the U.K. They are our premier partner in the delivery of the Cultural Olympiad," said organizing committee president Sebastian Coe. "We have a world-class business that shares our vision, are a fabulous partner and will be our partner right the way through."

Meanwhile, with the relationship nearly six months old and the Summer Olympics less than two years away, Baird of the USOC said there still were no plans to come up with a marketing campaign or message for the sponsorship.

When and if BP does take action, what kind of message can it put out?

"At this point, it's going to take a very careful activation strategy to make sure people don't become incredibly cynical about BP and the way it does business," Chadwick said. "There's a fine balance. If they overemphasize their environmental credentials at this point, they could confuse customers and create an unworkable contradiction."

Of course, in the world of big-money sponsorships, contradictions abound. The Olympic movement is one of many examples — though certainly one of the biggest.

"Hey, there's nothing I like better than sneaking in, in dark glasses, and having a Big Mac every once in a while. It's a guilty pleasure," said Pound, of the IOC, about one of the organization's biggest sponsors, McDonald's, which gets key sales locations inside the Olympic villages.

When Dow signed its deal, vice president Heinz Haller bragged that his company was now in business with the owners of the Olympic rings — "the only medium that we have in the world that is recognized by 95 percent of the global population."

Yes, Dow Chemical and the Olympic rings, together at last.

Whether it makes sense or not.

"As a general rule, people aren't going to put two and two together," Keller said. "There's so much marketing and commercial projects out there. But it's a valid thing to raise. In 'Sponsorship 101,' the cardinal rule is, event organizers want to pick sponsors that fit. At some level, the ones we're talking about don't fit."

___

AP Sports Writers Stephen Wilson in London and Rachel Cohen in New York contributed to this report.

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