Olympics Feel the Hurt as Sponsors Steer Clear

J&J, Three Others Drop TOP Status as Recession Pinches Global Budgets

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NEW YORK (AdAge.com) -- The international Olympic Committee is being hit by the struggling ad market and worldwide recession as four of its TOP sponsors -- the highest sponsorship tier, paying an average of $80 million to $100 million for a four-year cycle -- have dropped out since the Beijing Olympics ended in August.

Johnson & Johnson last month joined Kodak, Lenovo and the insurer Manulife in bowing out as TOP sponsors for the next four-year cycle that begins in 2009 and ends in 2012. That includes the 2010 Winter Games in Vancouver and the 2012 Summer Games in London.

J&J did not return a call for comment, but an IOC spokeswoman in Lausanne, Switzerland, confirmed the news and said the health-care giant was "focusing its business on other priorities." She declined to speculate whether the economy or a host city decidedly less sexy than Beijing was to blame.

The IOC earned $866 million from the dozen TOP sponsors of the last four-year cycle, from 2005 to 2008, which included the 2006 Winter Games in Turin, Italy, and the 2008 Summer Games in Beijing.

"I think to a large extent that companies wanted to be involved in those Olympics in China," said David Carter, principal of the Los Angeles-based Sports Business Group and executive director of the Sports Business Institute at the University of Southern California. "That was a seminal moment for a lot of advertisers and sponsors. There certainly isn't the same sense of urgency to be involved in Vancouver and London."

Battle of perceptions
Sports-marketing expert Bob Dorfman, executive creative director of Baker Street Partners, San Francisco, said in these economic conditions, the return on investment for TOP sponsors may not be worth the high price of entry.

"The sheer cost of participation as a TOP sponsor is daunting, and a $100 million expenditure at this time could appear to the general public to be frivolous, even callous," Mr. Dorfman said.

The IOC said it has replaced Lenovo with another computer company, Acer, and its sponsorship total from the TOP program stands at $900 million for the 2009-2012 cycle. But that is mostly from increases in the cost of sponsorships for Acer and the eight remaining TOP members: Atos Origin, Coca-Cola, General Electric, McDonald's, Omega, Panasonic, Samsung and Visa. Panasonic and Samsung are committed through the 2016 Olympics; Coca Cola's deal is through 2020.

In an address to the European Olympic Committee last month, IOC President Jacques Rogge said he was hoping to reach $1 billion in TOP sponsorships, and that the IOC realizes it will not reach 12 TOP sponsors again.

USOC cable net faces tough start

The International Olympic Committee's difficulties might not bode well for the United States Olympic Committee, which is finalizing plans to start its own cable TV network. The channel, tentatively titled the U.S. Olympic Sports Network, has been two years in the making and is set to launch in the first half of 2009.

The USOC originally hoped to have the network on the air before this past August's 2008 Summer Olympics in Beijing, but it didn't quite fit into that optimistic time frame. The plan is to air live events, such as Olympic trials, as well as archival footage of previous Olympic events and some original programming. The goal is to increase exposure and create a wider audience for Olympic competition, particularly for low-profile sports that are mostly forgotten after the games are over.

While the USOC might have the content to start a network, it certainly has no guarantee of getting it on air. The NFL Network, started by the National Football League, and college athletics' Big Ten Network, started by the Big Ten Conference, both have been involved in well-publicized battles with cable operators to get their respective networks carried.

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