This article was originally published in the Brand Finance Olympics Journal 2024
Chair of BrandNewView
As the appeal of the Olympic Games endures, so does the appeal of affiliation with the Olympics brand, despite inherent challenges in measuring value. Here is how brands can maximise the benefits when signing on as a sponsor.
Milo of Kroton won 6 Olympic wrestling titles in the Olympic Games between 540 and 516 BC. He was known for his enormous strength, which legend suggests he gained by lifting a calf every day.
Milo also had a voracious appetite, evidenced by his rumoured devouring of a bull after he carried it around the Olympic stadium. His life ended less glamorously when he chanced upon wedges in a partially cut tree. While attempting to remove the wedges, his hands were caught in the tree, trapping Milo, who was subsequently eaten by wolves later that night.”
An excerpt from my book, The Olympic Games Effect, demonstrates that at its core, the Olympics are ever evolving stories. of triumph and tragedy. Although past successes are no guarantee of victory today, each new day represents an unwritten story to spur athletes forward. That unpredictability helps attract fans. Fans attract media. Media attracts sponsors. And, in the modern era, both media and sponsors fund a significant portion of the Games.
Each Olympiad produces stories that add new chapters to a remarkable 3,000-year-old history, stimulating continued interest in the Games.
As I write this, the Paris Olympics are in the second week and terrific stories have already been told. Saint Lucia’s Julien Alfred won the country’s first medal, Gold, in the Women’s 100m; Brazilian surfer Gabriel Medina was photographed in the air after a great wave ride, pointing his finger upward with his board floating behind him in an iconic image; Canada’s 17-year-old swimming phenom, Summer McIntosh, earned 3 Golds and a Silver, establishing herself as swimming’s newest star. UK skateboarder Andy MacDonald finished 18th, but at 51 years old, the moral of his story is that age is only a number.
Athletes have worked unfathomably hard just to qualify for the Olympics. While most do not rise to the very top at the right moment, their stories are no less meaningful. However, meaningful value does not always lead to measurable value. Host cities and sponsors seek the glow of the Olympic halo to burnish their reputations, despite meager or even negative financial returns.
While host cities make grand promises to local constituencies, there is little economic evidence justifying the massive investments they make, with one exception. The 1984 Los Angeles Olympics generated a $215 million profit, but the upfront investment was only $320 million, a paltry sum compared to the billions host cities invest today when sane decision making is left at the door and irrational extravagance takes over. Once the Games end, host cities too often neglect their Olympic venues, resulting in costly deterioration. Athens’ 2004 Olympics partly contributed to Greece’s subsequent financial crisis, while Montreal’s 1976 Olympics saddled Canada with debt that was not paid off until 2006.
There are efforts underway to resolve this issue of little or negative financial return on a hefty investment. Host cities are repurposing existing facilities (learning from the 1984 Los Angeles Olympics), as Paris did for 2024 and LA will do (again) in 2028. If changing host cities continues to be the business model, then city officials and organizing committees must develop better post-Olympics usage plans for their facilities. A viable alternative model may be the IOC establishing permanent sites for the Summer and Winter Games, enabling local leaders to also develop supporting infrastructure for post-Games activation, fostering ongoing economic returns.
What about TOP sponsors (The Olympic Partners)? Well, just the right to sponsor the Games costs these companies between $50 million and $100 million dollars.
That price does not include activation, such as setting up operations, promoting and advertising, ramping up production, which can double or triple the investment.
Sponsoring once also presents an expensive risk, as it can take sponsorship of multiple quadrennials, each containing a Winter and Summer Olympics, for companies’ investments to pay off. It’s also a small window for marketing, because once the Games end, public interest declines precipitously, and this is when most sponsors struggle.
They put in tremendous effort before and during-Olympics activation, only to drop it afterward. To reap long-term benefits, sponsors must have a post-Games plan that includes further leveraging Olympics-related stories. Both Visa and Coca Cola have been involved with the Games for decades, and part of their reputation gains are from deliberately leveraging the Olympic platform over multiple quadrennials to enhance their own brand stories.
Despite the risks and constraints, poor measurable value hasn’t killed enthusiasm from cities and sponsors to host and support the Olympics, yet. Albert Einstein is attributed with saying “not everything that counts can be counted, and not everything that can be counted counts.” While this sentiment may partially explain where value resides in the Olympics, true Olympic Gold will be awarded when meaningful and measurable value converge.
