Covering Their Assets

Posted on by Chief Marketer Staff

The 2004 Summer Olympic Games in Athens could be the riskiest investment in the history of sports marketing. If the Games go on next month without a hitch, sponsors stand to profit. But if the Olympics are interrupted by construction delays, terrorists or a decision by the United States not to compete, many stand to lose on a global scale.

Ask any group or sponsor involved with the Olympics for comment, and they’ll tell you the Olympics will start August 13 and end August 29, as scheduled. However, when asked in May what would happen if the Games were postponed or cancelled, several TOP Sponsors (sponsors of “The Olympic Program”) went from cheerful and positive to monotone and unsure.

Concern stems from news out of Greece. For the first time in the history of the Games, the International Olympic Committee has taken cancellation insurance. The $170 million policy covers the IOC should the Athens Games be called off due to war, terrorism, earthquakes or flooding.

Shortly after the IOC released news of the insurance policy, exactly 100 days before the scheduled start of the games and a day after Greece said it had expanded its Olympic security budget by 50%, a triple bombing took place at an Athens police station. The Revolutionary Struggle group took responsibility for the attack and warned that state officials, VIPs and security officials due to attend the Olympic Games were “undesirables.”

After two rounds of ticket sales that ended in April, Games organizers had sold about 1.8 million tickets out of a total 5.3 million. Travel statistics further suggest that the expected tourism boom has not occurred.

In addition, delays in construction of the Olympic venues raise red flags among security experts. Even if venues are allowed to open in early August, there is little time for trial security runs.

Athens Mayor Dora Bakoyannis said that nothing had been done in recent years to promote the Games, and she went on a self-imposed worldwide tour in May to let the people know that Athens will be ready — and safe — for The Olympics.

“One of the key concerns — and right now it is nothing but speculation — is whether the U.S. pulls out of the games. That would be a total disaster for everyone involved,” says Michael O’Sullivan, COO of Mequon, WI-based The Leib Group, which advises the sports and entertainment industry.

“I have heard some speculation about postponing the Games, but I don’t see how the IOC could do that. There are legitimate concerns about the facilities being ready. We’ve seen the press on the stadiums and major facilities, and that has to be taken into consideration,” O’Sullivan says.

Michael P. Moran, spokesman for the American Insurance Assn., is confident that sponsors will have their Olympic investments insured, as the IOC does. “Clearly, a terrorist attack on any major event with U.S. interests — and, in this case, Britain and Israel — is a real threat,” Moran says. “Anyone that has the possibility of business being disrupted because of that should be covered in some way.”

But Kevin Sullivan, VP of Sports Communications for NBC Sports, says that questions about the Summer Olympics going on as planned is nothing new. “In 1988, there was talk that the North Koreans were going to cross the border and disrupt the Seoul games. In ‘92, the Basque separatists in Spain were threatening to disrupt the Barcelona games,” Sullivan says.

“In 1996, there were no concerns and there was a bombing,” notes Sullivan, referring to the Summer Games in Atlanta. A terrorist bomb in Centennial Park left two people dead and more than 100 injured. However, the 2002 Winter Games were held in Salt Lake City five months after Sept. 11, and went off without a hitch.

“The Athens Organizing Committee, in conjunction with the IOC, has developed one of the most comprehensive security systems ever,” says Cheryl Herbert, director of p.r. for the United States Olympics Committee. She points to its $1.2 billion budget and the presence of about 70,000 police; there are seven police escorts or officials for every one athlete.

But still, O’Sullivan and others are unsure if sponsorship of the 2004 Summer Games is worth the risk.

“Personally, I think security is pretty strong there and it’s too obvious a target for a terrorist attack. But on the other hand, I’m not sure I want to test it,” says O’Sullivan, who was involved with the Games in Atlanta and the 1980 Winter Games in Lake Placid. “The bombings 100 days before the Olympic start was a little disconcerting. The group had no connection with Al-Qaeda, but no one really knew who Al-Qaeda was before 9/11, so how much comfort can you take from that?”

The USOC says the games will go on, and the U.S. will participate. But the ultimate decision belongs to the Athens Organizing Committee (ATHOC). “We feel very confident in working with our officials and with the Athens Organizing Committee that the games will go on,” says Herbert. “But in terms of a guarantee, nothing is guaranteed in life.”

The positives (ratings and ad dollars) outweigh the negatives for NBC-TV, which paid $793 million for the 2004 Summer Games U.S. broadcast rights. “If you add up the ratings of the Olympics, it’s like having seven or eight Super Bowls on one network within a 17-day period,” says Mike McCarley, director of marketing and communications for NBC Olympics. He won’t say how much ad revenue the network has generated, but by late May, it had reached 85% of its goal, ahead of Salt Lake and Sydney Summer Games. Based on published reports of a $1 billion goal, NBC’s rights fees have already been paid by the sponsors.

“Advertisers covet the association with the Olympics. That brand is still golden, there is no question about it,” says Sullivan, who added that the Sydney Games won 103 of 106 prime time hours and every half hour for 17 nights, and was watched in the U.S. by 185 million people.

NBC has sent staff to Athens to prep for the Games, who report no signs that they will be interrupted. TOP Sponsor Xerox Corp. has had a team of employees there since just after the Salt Lake Games ended, but the company would not comment about specifics in Athens.

“We are confident that the IOC will address the issue of safety at the games with absolute care and vigilance,” said Carl Langsenkamp, spokesman for Xerox Corp. “Safety has been an ever-present concern at all the recent games. Xerox will prudently address any issue involving the safety of our employees and customers in preparing for our involvement in the Games.”

Xerox has been an Olympic sponsor since 1964, and this year’s Games mark its last as a TOP Sponsor. “Although the Olympics have been a great technology showcase for Xerox we are planning on focusing our marketing opportunities in other areas,” Langsenkamp says.

Xerox ads will include sports-oriented commercials that showcase the power of color, personalization and, customization. “We don’t have any particular Olympic-themed ads; we’re focusing on our brand,” Langsenkamp says. “What people normally see now will just be run in heavier rotation during the Olympics.”

Like Xerox, TOP Sponsor Coca-Cola Co. will also run ads during the Games that are not Olympic-themed. “We don’t necessarily create Olympic-specific advertising around every Game.” says Susan McDermott, senior manager of North American Public Relations for Coca-Cola.

Coca-Cola has several ad slots booked from Aug. 13-29, whether NBC broadcasts the Games or has to resort to alternative programming. “With an ad buy during regular programming, the broadcaster provides the advertiser guarantees for specific shows to deliver certain ratings. If the show under-delivers, the advertiser usually receives additional “make-good” ad slots at no additional cost,” explains McDermott. “However, if the Olympics were not broadcast, I’m not sure how that would work, because it is not a matter of the programming under-delivering on ratings, it is a matter of programming being canceled.”

Though NBC won’t say how advertisers will be covered in the event the games are cancelled, the broadcaster admits back-up plans are in place (in fact, have been for its Olympic coverage as far back as the 1970s).

Unlike Xerox and Coca-Cola, McDonald’s and Visa USA say they will maximize their TOP Sponsorship status via Olympic-themed ads.

With its Olympic-themed Super Bowl commercial, a national consumer promotion and title sponsorship of the Visa American Cup gymnastics competition all hitting in the first six weeks of 2004, Visa USA was one of the first major sponsors to tie in to the Games.

“We have never doubted for a second that the Games would happen. We’ve treated this no different than any other Olympic Games we’ve been involved with,” says Michael Lynch, senior VP-Event & Sponsorship Marketing, Visa. “Our goal is to continue raising the bar with our Olympic promotions and marketing.”

The 2004 Games will mark the 18th year of Visa’s sponsorship (it’s signed up through 2012). “No single sponsorship property has delivered stronger returns for our members and merchants than the Olympic Games,” says Lynch. More than 200 Visa card issuers and 1,900 merchants in the United States have signed up for Visa Olympic Games marketing programs.

At McDonald’s, its Go Active! campaign will tie in a variety of Olympic initiatives, showcasing the company’s ongoing commitment to balanced, active lifestyles and the spirit and ideals of the Olympic Games. The company has scheduled several global Olympic-themed commercials to reflect the company’s commitment to the Olympics. The ads, which will include appearances by athletes such as Yao Ming, ran through spring and summer, says McDonald’s spokesperson Lisa Howard.

In addition, McDonald’s has global packaging and promotion initiatives to celebrate the Games. In the U.S., Olympic athletes will be featured on packaging and P-O-P and help launch a new menu item, which has yet to be disclosed. On the ground, McD’s will work with Olympic athletes including Ming, Venus and Serena Williams and Robert Korzeniowski of Poland, an Olympic gold medallist in racewalking, to bring Go Active! messages to consumers. During the Games, McDonald’s plans to host a Go Active! Day in Athens.

Like Xerox, which will have a team of 230 employees in Athens for the game, McDonald’s will send employees to Athens to work the Games through three full-service restaurants: one serving athletes, coaches and officials in the Olympic Village; one serving media at the Main Press Center; and the third feeding spectators at the Athens Olympic Sports Complex.

McDonald’s does not fear a potential terrorist attack at the Games. “We have full confidence in the IOC and their plans as it relates to security. Our crew is very excited about coming to Athens,” says Howard.

Cancellation denied

Speedo says it will use The Games as a world-wide showcase for its new FS II swimsuit, which will be worn by most of the swimmers competing in Athens. Though the suit has been launched an is being worn by athletes such as Gold-Medal hopeful Michael Phelps, who has a shot at seven Gold Medals, in events leading up to the Olympics, Speedo says its plan is to heavily promote FS II during the Games.

“Every indication is the games will go on as scheduled, but cancellation is in the front of our minds at all times,” says Craig Brommers, VP of Marketing for Speedo. The company has a backup plan in case the Games are cancelled, he says. “A test event has not been run in the swimming center yet [as of May 24, 2004], but we have been in constant touch with USOC and the people in Athens. We are confident that swimmers and fans will have the necessary security.”

The back-up plan had yet to be announced, Brommers says, but it may include clinics, a U.S. Swimming Team tour and other person-to-person publicity events. “This will happen whether or not the Olympics are held. It is a post-Olympic event, but it is something that would give the excitement of the Olympics to the United States should something happen with the Olympics,” Brommers says.

Speedo will use the U.S. Team Trials, held July 7-14 in Long Beach, CA, to build excitement for U.S. swim fans that do not want to go to Greece.

Companies such as Xerox and McDonald’s that are sending employees to work the Games in Athens are most-likely covered in the event of a terrorist attack, Moran says. “Employees of U.S. companies will have workman’s compensation insurance, which would cover them should an employee be injured or killed because of a terrorist attack,” explains Moran, adding that terrorists have their eyes on more than just the Olympics, as the U.S. government recently indicated.

“We’re not just looking at the Olympics, but large Fourth of July events, the Major League Baseball All-Star Game in Houston, other MLB games, the start of the college and pro football seasons,” Moran says. “There is the possibility of all those things [being attacked], in addition to icon properties and other facilities, like oil refineries that a terrorist might want to attack to damage our economy.”

For a large corporation, Moran says various types of specialty insurance can be negotiated to protect everything from their infrastructures to their advertising campaigns.

“Commonly in the marketplace, there is something called business interruption insurance, which would protect a covered event. I would expect that major advertisers would probably negotiate some sort of coverage.”


Before there was a United Nations, there were the Olympics, symbol of international amity. Controversy has swirled since the first modern events in Athens in 1896.

1896 – The first modern Olympic Games held in Athens (Paris was in original plan).

1904 – The Olympics planned for Chicago, but St. Louis World’s Fair organizers threaten to organize a rival tournament; the IOC and President Roosevelt vote to move the Games there.

1908 — Rome Games moved to London due to 1906 eruption of Mount Vesuvius.

1912 — Following the Stockholm Games, U.S. athlete Jim Thorpe’s medals are rescinded due to a breach of amateur rules; Thorpe is the first athlete disqualified for professional status.

1936 – Nazis’ rise to power, but the IOC holds both Winter and Summer Olympics in Germany. Hitler refuses to shake the hand of African-American sprinter and gold medalist Jesse Owens.

1948 — Japan and Germany not invited to London games, nor are athletes from the Soviet Union, which is not affiliated with the IOC.

1956 – The Australian government won’t change its six-month animal quarantine period, so equestrian events for the Melbourne Games are held in Stockholm in June.

1968 — During the medal ceremony for the men’s 200m, American sprinters Tommie Smith and John Carlos raise their black-gloved fists in support of the Black Power movement.

1972 – A terrorist attack on the dormitories of the Israeli team leaves 11 athletes, five terrorists and one policeman dead. The Games are suspended the following morning as a memorial service was staged, but competition resumes later in the day with the agreement of Israeli officials.

1976 – Planning errors and strikes cause construction costs to spiral; as the Montreal Games get underway, building cranes dominate the horizon. High security follows Munich, and 24 nations stay away.

1980 – Moscow games marred by protests over the Soviet invasion of Afghanistan. Japan, West Germany and USA teams are absent.

1984 — USSR boycotts Los Angeles games this time. With TV rights fetching vast sums, critics claim the Games, once a festival for amateur sport, have become over-commercialized.

1992 – No boycotts of Games in Barcelona. However, Basque separatists in Spain threaten to disrupt the Summer Games.

1996 — Atlanta Games overshadowed by a bomb in Centennial Park, leaving two people dead and more than 100 injured. In addition, transport and logistical problems haunt officials.

2000 – The Sydney Games become widely acclaimed as one of the best Olympics of all time.

Source: BBC

Photo credits: 1968, 1972, 1996: Getty Images; all others from IOC/Olympic Museum collections.

Odyssey to Athens

Based on attendance and TV ratings, there is no bigger worldwide event that The Olympic Games. With an audience that big (a projected 5.3 million live spectators and 4 billion via TV), marketers run Olympic-themed sweepstakes.

But with rumors swirling about potential terrorist activities and the possibility that some venues may not be completed by the Aug. 13 start-date, marketers are rethinking sweeps prizes for Olympic-themed promotions.

Companies sending contest-winners to Athens run the risk of negative feedback if winners fail to have a satisfying stay, says Michael O’Sullivan, COO of the Leib Group. “The main concern of any sponsor in Athens is the American consumer,” he says. “If it gets a lot of press that these games have become a fiasco, sponsors are going to get edgy about future association with it.”

While some companies have seen no drop in participation in promotions with grand prizes of trips to Athens, others have taken safety into consideration. Visa has held sweepstakes that send grand-prize winners to The Games in the past. However, for 2004, its Team Spirit promotion upped the ante for contestants by expanding the two grand prizes from a trip for two to a trip for four to the Games.

“We’re not doing anything different ….As with all sweeps, there are contingencies that are built into the actual mechanics of the program,” says Michael Lynch, senior VP Event & Sponsorship Marketing, Visa.

The decision to make it a trip for four instead of a trip for two was based on consumer sentiment. Lynch says research shows people would rather share an experience like a trip to Greece with a group.

“In general, our promotional efforts this year have been a success. I don’t think people are as concerned as the media makes it out to be,” says Visa spokesman Michael Rolnick. When a cardholder used his or her Visa card from Feb. 1 through April 30, he or she was automatically entered to win. Fifteen second-prize winners won 42” Panasonic plasma-screen televisions, which were to be delivered before the start of The Games.

In contrast, a sweep run by J. Brown Agency for BIC USA, Inc. offered the grand-prize winner options. BIC, the Official Shaver of the USA Swim Team, dangled a nine-day/eight-night trip for two to Athens, including hotel, airfare, tickets to three swimming events and $2,500 spending money. However, the grand-prize winner could instead — and did — choose a $10,000 cash prize. “A trip for two to Athens offered the winner no flexibility,” says Monica Sciales, management supervisor for Stamford, CT-based J. Brown.

Should the winner have chosen to travel, they would have had to provide their own travel insurance, a passport, and would have no escort around Athens. However, the agency said it did not see the option as a safeguard in the event of terrorism or cancellation of the Games.

Ira Cohen, director-Media Brand Equity for Meow Mix, said he considered sending the grand prize winner of the Meow Mix Gold Medal Games contest, which crowns the Top Cat Owner in the United States, to Athens, but decided the prize just didn’t add up. “We actually put all our pros and cons down on a piece of paper, and safety concern was on the cons list.”

But the main reason Meow Mix decided against a trip is the company’s main concern: helping pet owners keep cats happy. “A diamond-studded cat collar seemed more appropriate at the time,” Cohen says.

“I think you have to take safety concerns into consideration,” he adds, recalling his work for AT&T on the 2000 Summer Games. The only concern AT&T had about sending a prize-winner to Sydney was the distance and time difference. That was in the days before 9/11; also, the last terrorist attack at an Olympic games had been 28 years earlier in Munich.


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