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Published: February 28, 2007

 
 

A Gold-Medal Partnership

6. Create win–win deals. The Olympic franchise can continue only through carefully managed, long-term relationships. To nurture those relationships, the deals that form their basis have to be mutually beneficial. The Games’ financial success is important, but so, too, is the success of their business partners.

The 1984 Los Angeles Games, for example, were viewed by the public as a triumph: Traffic was manageable, smog didn’t hang over the stadium, the event made money, and U.S. track star Carl Lewis won four gold medals. The feedback from the business community was less positive. Several sponsors felt that they had been unduly pressured to provide extra money to prevent the Los Angeles Organizing Committee from going bankrupt. Peter Ueberroth later admitted he exploited the relationships: “Time and time again we went back to them and asked for more. They always gave. We had them. They knew it.”

The importance of mutually beneficial deals became abundantly clear to the IOC after the negotiations for the U.S. broadcast rights to the 1988 Winter Olympics in Calgary. Samaranch took direct control of the bidding procedure. The event took place in the IOC’s Lausanne headquarters rather than New York, and there were strict controls. Representatives of the three major networks, ABC, NBC, and CBS, gathered in a hotel on the shores of Lake Geneva and spent more than 11 hours bidding and counterbidding for the rights. Finally, ABC walked away the winner with a bid of $309 million, a 337 percent hike over what it had paid for the previous Winter Olympics in Sarajevo.

Yet this deal proved disastrous for ABC. The network lost around $65 million on the Calgary Olympics, the first time the network recorded a loss on its Olympic coverage. It took years for ABC to forgive the IOC for the manner in which the Calgary negotiations had been conducted — at one point a coin was tossed to decide who would make the next bid after NBC and ABC both made offers of $300 million — and to return to the Olympic rights market as an active bidder.

Today there is much greater emphasis on profitable long-term relationships than on opportunism. This is evident in the fact that, instead of buying rights to a single Games, broadcasters now sign on for a lengthier period with multi-Games agreements. In 1995, NBC agreed to the biggest broadcast deal in sports history, paying $2.3 billion for the U.S. television rights for the Games in Athens, Turin, and Beijing, and renewed the partnership a few years later to cover the 2010 Vancouver and 2012 London Games for an additional $2.2 billion.

Behind all this, there is an obvious tension between the idealistic and commercial principles that resonates with modern Olympic philosophy and the need to finance the world’s largest athletic and media event. More and more Olympic observers admit that this tension no longer connotes a conflict, but rather a dynamic balance between the identity of the Olympics and the interests of the sponsors. The Games are an independent forum for athletic achievement of the highest order, and commercial interests want to use that identity to sell their products. Neither side can succeed without respecting the mission of the other. And the Olympic Games’ public–private partnership enables that mutually beneficial relationship. The challenge for other such collaborations is to create an environment and culture that emulates that spirit of mutual respect and goodwill.

Reprint No. 07105

Author Profiles:


Michael Payne (michael@michaelrpayne.com) worked for the Olympic Movement for 21 years as a director of the International Olympic Committee, overseeing the marketing effort for 15 winter and summer Olympic Games. He is now a special adviser to Formula One Management and author of Olympic Turnaround: How the Olympic Games Stepped Back from the Brink of Extinction to Become the World’s Best Known Brand (Praeger, 2006).
Also contributing to this article were Stuart Crainer and Des Dearlove. 
 
 
 
 
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Resources

  1. Alain Ferrand and Luiggino Torrigiani, Marketing of Olympic Sport Organisations (Human Kinetics Publishers, 2005): Advice for marketers on working with the Games, with insight into the differences between for-profit and not-for-profit sports organizations.
  2. Mark Gerencser, Fernando Napolitano, and Reginald Van Lee, “The Megacommunity Manifesto,” s+b, Summer 2006: Describes how public, private, and civil leaders can develop their own Olympic-style mutual efforts. Click here
  3. Philip Kotler, Donald Haider, and Irving Rein, Marketing Places: Attracting Investment, Industry and Tourism to Cities, States and Nations (Free Press, 2002): How places can turn themselves into appealing “products” by cleaning themselves up, helping their industrial base, and marketing themselves more effectively.
  4. Michael Payne, Olympic Turnaround: How the Olympic Games Stepped Back from the Brink of Extinction to Become the World’s Best Known Brand (Praeger, 2006): An inside account by the first marketing director of the International Olympic Committee (and author of this article).
 
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