Chicago Olympics Upset Is Blow to Media, Marketers

Tribune, USOC Sponsors Could Have Seen Boost But Loss Is Good News for Challenger Brands

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CHICAGO ( -- Those groans you heard following Chicago's failure to land the 2016 Summer Olympics Games after the games were awarded to Rio de Janeiro weren't all coming from Mayor Richard M. Daley's office.

Chicago was unceremoniously dumped in the first round of eliminations.
Chicago was unceremoniously dumped in the first round of eliminations. Credit: AP
Rio's upset victory in the International Olympic Committee's vote will have significant implications for media and marketers, many of which were hoping to benefit from the increased ratings and engagement that come from a local Olympics.

"A U.S. games will attract a broader audience," said Mark Lev, exec VP at sports-marketing firm Fenway Sports Group. "Viewership will be significantly higher. Companies will be more enthusiastic about investing in hospitality because it doesn't involve flying people across the globe, and more companies will look to activate against the games."

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Developing markets
While top-level IOC sponsors such as McDonald's Corp. or Coca-Cola would have welcomed a U.S.-based games, they are likely to enthusiastically deploy resources in a large, developing market such as Brazil.

But the vote -- which saw Chicago unceremoniously dumped in the first round of eliminations, shortly before Tokyo -- is a body blow to the U.S. Olympic Committee, which was counting on a local games to attract replacement sponsors following major recent defections such as General Motors, Home Depot and Bank of America, and also to restore momentum for a stalled bid to launch an Olympic-themed cable channel.

In addition, the USOC may be facing a challenge in retaining the sponsors it still has. Many of their deals were negotiated to give them a first crack at USOC backing during a domestic games.

And, certainly, an Olympics in Chicago would have been a huge boost to USOC backers such as Allstate, United Airlines and 24 Hour Fitness, which would have wielded the platform and its gaudy engagement levels against other local competitors. Now the USOC may have to sweat out whether all of those marketers renew their deals.

Some of the biggest beneficiaries of the decision may be local challenger brands -- such as MillerCoors, State Farm and Burger King -- that no longer have to worry about their competitors using such a lucrative platform against them in the U.S. "If you're a U.S.-based competitor of a [major Olympics] sponsor, you have to protect yourself somehow if the games are here," said Jeannie Goldstein, a partner at Chicago Sports Partners who was formerly managing director of sports and entertainment at WPP's Ogilvy Action unit.

Other winners and losers
The decision also has significant ramifications for both national and local media, as a U.S.-based games would have likely boosted the IOC's asking price for broadcast rights by as much as 10%. The rights are up for renewal after the 2012 games. (The Rio bid does, at least, offer the same time-zone appeal as Chicago, so ratings won't be depressed by viewers knowing who has won before they tune in as they do in tape-delayed games.)

But Chicago media outlets will feel the loss as well, because past Olympics have seen significant bumps in local ad spending, Ms. Goldstein said. The bankrupt Tribune Co., for instance, would have likely seen some benefit across all of its TV, radio, print and digital properties in the city, even though it won't be broadcasting the games.

The decision is also a blow to two major political brands: Obama and Daley. The president, who is popular abroad, had wagered that a last-minute appeal from him could tilt an international jury. That his presence seems to have mattered little is a blow to his prestige.

And Mr. Daley, who coveted the Olympics as a legacy to his long tenure leading Chicago, saw the effort largely undermined by public skepticism over cost and corruption. A Chicago Tribune poll recently showed fewer than half of Chicago's citizens supported the bid.

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