The Olympic Partners (TOP) sponsors invest between US$ 200 and 270 million each, in both financial and non-financial resources, every four-years to promote the legendary summer and winter games. But do returns justify the financial, political and reputation risks? New research demonstrates that this money is indeed well spent – particularly if sponsors commit to a sustained sponsorship investment over many successive Olympiads.
Returns can be substantial for TOP sponsors. But key criteria must be met by anyone hoping to develop, host or sponsor big international events. These best practices include having a crystal clear understanding of why this investment is important and how it advances the organization’s agenda; ensuring there is an alignment of values between the event and sponsors; and planning the pre-, during, and post-event investments. Many organizations do not adequately plan how to leverage and sustain momentum after the event. Yet this is vital for success, ensuring sufficient resources are available to implement the plan; and determining how to measure the results.
For sponsors who get it right, the numbers speak for themselves. Visa, the credit card giant, has been a TOP sponsor since 1986. Since then, their market share increased from 33 to 56 percent, and brand awareness grew from 50 to nearly 90 percent. Similarly, John Hancock saw its sales increase by US$40 to $50 million. Both improvements occurred as a direct result of Olympic sponsorship activities, according to Davis.
The value proposition is a complicated one, given the enormous prestige (and inherent risks) of the games.
Companies compete aggressively to be chosen as Olympic sponsors, hoping to benefit from the iconic, prestigious halo surrounding the event. But the games also create a platform for potentially negative and destabilizing activities such as protests, propaganda, and the assertion of various individual interests and causes. Thus, calculating tangible and intangible returns can be problematic.
Cities can benefit enormously too, if they balance all the components carefully. Barcelona renovated a run-down area of the city and turned it into a cultural icon for the 1992 Olympics. They’ve tripled the number of tourists visiting the city, as well as the number of room nights the average tourist stayed. Sydney, too, witnessed a sustained seven percent increase in tourism as a result of their Olympic investment, which would definitely not have occurred were it not for the Games. Academic and industry speakers have mentioned about the “tens of thousands of jobs” being created globally by the sports industry in the next five years, underscoring the importance of professional management practices.
Mr. John Davis is the former Dean of the Global MBA program at the S P Jain Center of Management in Singapore. Mr. Davis has also presented his paper, “The Impact of Sport Marketing and Sponsorship on Corporate and National Brand Building: The Development of the Olympic Brand and the Olympic Games in the Modern Era,” at the Lausanne International Sport Management Conference: Bridging Research and Practice in November 2010.