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Commercial development of the Olympic Games


Commercialization

The encroachment of commercialism into the Games began in the late 1960s with the first athletic shoe war between the German sport shoe companies Adidas and Puma. The companies gave free shoes to track and field athletes in Mexico City in 1968 and expanded their feud to swimmers such as Mark Spitz at the Munich Olympics in 1972 (Guttman, 2002). Many had suspicions that athletes were receiving payments under the table, thus violating the code of amateurism outlined by the eligibility requirements to compete in the Olympics at that time. IOC president Avery Brundage and others in the IOC fought hard to preserve the notion of amateurism but struggled to reconcile the presence of quasi-professional athletes from the Soviet bloc, who began to dominate certain Olympic sports. But these were not new issues for the Olympic Games. The first commercial sponsor of the Olympics was a Greek shipping magnate who was willing to underwrite the first Olympic Games in Athens in 1896. U.S. track athlete Jim Thorpe was the first athlete to be ruled ineligible for allegedly being a professional and thus was stripped of his gold medals in the pentathlon and the decathlon in Antwerp in 1912.

Karl Schranz, reigning World Cup and World Champion alpine skier from Austria, was ruled ineligible for the 1972 Winter Olympics in Sapporo because he admitted that he was not a “pure” amateur athlete, having allowed his photo and name to be used in an advertisement and TV commercial in his native Austria. During the period from 1948 to 1972, international sport governance was managed by a small group of wealthy men who controlled the key international sport federations that were focused on maintaining their own brand of hegemony over international amateur sport and the Olympic Games (Guttman, 2002).

Despite the protests and best efforts by IOC president Brundage (1952–1972) to rebuff the incursions of commercialism into the Olympic Games, the dominance of athletes from the USSR, East Germany, Cuba, and other countries from the Soviet bloc, who were decried as professionals, supported Samaranch’s request noted earlier and accelerated eventual changes in the Olympic Charter in 1983 to allow each international sport federation to define its own eligibility rules. This landmark decision opened the door to professional athletes and teams in both the Summer and Winter Olympic Games and served to help level the playing field between the state-supported athletes of the Soviet bloc and their Western counterparts. One result was the dominance by the first Dream Team at the 1992 Barcelona Olympic Games (Pound, 2004).

The foundation on which the Olympics have evolved from a quadrennial event organized by volunteers for some of the world’s best amateur athletes into an extravaganza staged by host organizing committees and staffed by highly trained professionals for some of the world’s best professional athletes was built on an ever-expanding and technologically enhanced media and broadcasting platform. Some of the world’s largest multinational corporations have chosen to showcase their global marketing and promotional strategies on this platform. The media and marketing numbers are so staggering that it is not hard to understand why the IOC so fiercely protects its brand and trademarks.

Broadcast Rights

The era of Olympic broadcast television began with the sale of the first-ever broadcast television rights to U.S.-based ABC-TV for the Winter Olympic Games in Squaw Valley in 1960 for US$50,000. Since then spending on broadcast rights has steadily climbed, as shown in table 10.2. The first Olympics to be broadcast in color followed at the Winter Olympic Games in Grenoble in 1968. These developments occurred nearly 30 years after the introduction of television to a localized audience in Berlin for the 1936 Summer Olympic Games. The decision to split the Winter and Summer Games into an offset two-year cycle has been attributed to the needs of the U.S. Olympic broadcast rights holder to be able to leverage its investment with respect to selling advertising space on its broadcasts. These early events and technical advancements culminated in NBC’s astounding US$2.201 billion bid in 2003 for the rights to the 2010 (Vancouver) and 2012 (London) Olympic and Paralympic Games (Mickle, 2010c, 2010h, 2010i; Mickle & Durand, 2010b).

One of the issues facing the IOC after the 2012 London Games is whether to forego its practice of hiring a media consultant such as Neil Pilson to help manage the bidding process for the U.S. media rights or try to sell them on their own. With the conclusion of the 2008 Beijing Olympic Games, the IOC began to shift its strategy away from its dependence on predominantly U.S.-centric media rights to a more global and diversified platform of broadcast and digital rights, including Internet and mobile rights sold to other broadcasters (e.g., Eurosport, China Central Television). This move also affected its strategies to sign non-U.S.-based companies as TOP sponsors (Mickle & Durand, 2010a; Mickle, 2010e, 2010f). Another change is the inclusion of the Paralympic Games as part of this package beginning with NBC in 2010. This arrangement was made possible by the signing of a mutual agreement in 2001 between the IOC and the IPC that committed these two governing bodies to a joint bidding process, joint games management, joint media and broadcast relationships, and joint marketing and sponsorship relationships under the auspices of the IOC (Legg & Steadward, 2010).

Corporate Sponsors

Given the high stakes involved, the IOC, its host Olympic organizing committees, and various national Olympic committees have been able to extract many millions of dollars from companies seeking to cobrand themselves in exchange for exclusivity in a given product or service category. Traditionally, sponsorship in the Olympic Partner Programme (TOP) has been limited to about 10 companies based on constantly escalating rights fees over the past 40 years (Mickle, 2010e, 2010f, Rosner & Shropshire, 2011). These fees do not include the costs of activation and fulfillment, which effectively double the cost of Olympic sponsorship over a typical quadrennial period. Some companies like Coca-Cola and Panasonic have been Olympic sponsors since the inception of the TOP program in 1984, whereas others such as UPS, Fed Ex, John Hancock, and IBM decided to drop out of the global Olympic marketing game after 2004 and 2008. They decided that they were not receiving adequate value and return on investment (ROI) to their core businesses by their sponsorship investment, estimated at US$100 million for rights fees alone for one Winter and one Summer Games (Rosner & Shropshire, 2011). Table 10.3 shows sponsor totals and revenues from the TOP program since 1984.

Ambush Marketing and Sponsor Conflicts

Other companies have decided to play a different game by developing and executing ambush marketing strategies to position themselves as being related to the Olympic Games at a fraction of the cost of an IOC or NOC sponsorship. One way that companies have engaged in successful ambush marketing campaigns since 1984 has been to link images of Olympic sports or athletes to the host city (e.g., “Good luck to our athletes in London”), being careful not to use terms such as Olympic or Olympic Games in their advertising. Campaigns have included print and television advertisements as well as billboards in the months leading up to and through the Games. Consumers often infer a relationship between the product being advertised and a particular Olympic Games or Olympic team (Rosner & Shropshire, 2011). Some of the more notorious ambush campaigns between TOP sponsors and their chief rivals were Kodak versus Fuji Film (1984), Visa versus American Express (1988–), Coca-Cola versus Pepsi (1984–), and Nike versus Reebok (1992–). A classic case that illustrates the complexities of authority and control in Olympic sport, including the role of official Olympic sponsors, NOC sponsors, and pretenders, involved the 1992 U.S. men’s Olympic basketball team (a.k.a. the Dream Team) in Barcelona. Some members of the U.S. team, made up almost exclusively of NBA players, had endorsement contracts with sponsors that directly conflicted with official U.S. Olympic Team sponsors. Reebok, the official U.S. Olympic outerwear sponsor, provided warm-up jackets and pants to all Olympic athletes in all sports. Some members of the U.S. basketball team, such as Michael Jordan and Magic Johnson, chose to cover the Reebok name with American flags as they stood on the victory podium to accept their gold medals. Jordan initiated this action. As a Nike-sponsored athlete, he refused to be seen implicitly endorsing his company’s competitor. This incident thrust the U.S. Olympic Committee (USOC), Nike, Reebok, USA Basketball, the National Basketball Association (NBA), the NBA Players Association, and Jordan into a high-stakes public relations battle (Fay & Snyder; 2006; Katz, 1994). After 1992 the USOC amended its code of conduct to include language that requires all U.S. Olympic athletes to wear the official apparel provided by official U.S. Olympic sponsors of a given Olympics on the podium without exception (Fay, Velez, & Parks, 2011). Technical wear (team uniforms, swimsuits, jumping suits, ski suits, and so on) are exempted from this rule, and supplying such items continues to be a legal way for companies to ambush each other with respect to trademarks and logos on competitive uniforms.

The IOC and its NOC members have become forceful in limiting and counteracting ambush marketing campaigns by corporations and organizations intent on circumventing the costs of sponsorship. The IOC, NOCs, and local Olympic organizing committee (OCOG) must be diligent in protecting and supporting their corporate partners who have been granted exclusive advertising rights in exchange for millions of dollars in sponsorships. A direct result of this effort was evidenced by the city by-laws passed by the Vancouver City Council curtailing free speech in order to conform to the Olympic host city contract for the 2010 Olympic and Paralympic Games (Shaw, 2009). The years between 1980 and 1984 represented a crossroads for the Olympic Movement between its idealist philosophy as espoused by IOC presidents from de Coubertin to Killanin from 1896 through 1980 to a more pragmatic approach to power, control, and money as advanced by IOC presidents Samaranch and Rogge from 1981 to the present. With the advent of new financial power and marketing windfalls in the 1980s, the IOC and its host country organizing committees for the Olympic Games (OCOGs) fell prey to new scandals and challenges to the sanctity of the Olympic Games philosophy of fair play (Pound, 2004).




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