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Morgan:News:2010 |Business| #489
(FEATURE) NEWSPAPER SAYS ALL NATIONAL SPONSORSHIPS UP FOR GRABS JAN 1 FOR 2010 GAMES
2010NewsWatch
A reporter for one of Canada's national business newspapers, Keith McArthur of the Globe & Mail, says the Royal Bank of Canada's parent company, RBC, will lose its historical position as a favoured national sponsor of the Olympics at the Canadian national level, a position its held since 1948, along with a number of other companies. The RBC and a handful of other firms will no longer be able to rely on "right of first negotiation."
The newspaper, in a feature story, says that "new International Olympic Committee rules require all incumbent sponsors in any host country to bid against all challengers if they want to maintain their rights. All relationships between the Canadian Olympic Committee and its sponsors will end Dec. 31. When the Athens Games conclude, the COC sponsorship office will go into suspended animation, and the Vancouver Organizing Committee (VANOC) will begin selling rights for the next eight years, including the 2006 Winter Games (Torino), 2008 (Beijing), 2010 (Vancouver) and 2012 (yet to be awarded)."
McArthur says the effect is to declare "open season on one of modern marketing's single most valuable commercial opportunities. And it's a process that could add more than C$250-million to the Vancouver Games budget. Predictably, the competitors are in full training mode. Canadian Imperial Bank of Commerce is said to be preparing an aggressive challenge to RBC. HSBC Bank is considering a bid of its own. In the telecom sector, Telus aims to dethrone Bell Canada, which has sponsored the Games for the past eight years. There will be wrestling matches in other categories as well. Price tags will be steep. Sports marketing experts say that in banking, telecommunications and automotive sectors, Olympics sponsorship rights for eight years could sell for as much as C$60-million. And that's a fraction of what it will cost the winners to exercise and leverage those rights through advertising and promotion. To put that in perspective, RBC's entire ad budget last year was C$20-million, according to Nielsen Media Research."
The newspaper quotes consultant Keith McIntyre, president of K. Mac & Associates in Mississauga as saying, "It's going to be the biggest marketing commitment most of these companies will ever make. There are going to be some bidding wars. . . . Companies may go on a spending frenzy."
McArthur asks, "The obvious question is why? What's so valuable about sponsorship rights?", then quotes Laurie Schild, a vice-president at Bell Canada for the reason: "This is the most recognized brand in the world, The halo effect that you get from that -- there's a lot of benefit."
The reporter claims the Olympics are no longer about philanthropy, "It's about brand building. RBC says it gets a return at several levels. It uses athletes to motivate employees and make them more productive. And its Olympic-themed activities -- everything from advertising to community events and seminars for small businesses on how to capitalize on the 2010 Games -- make people think more positively about the bank, yielding new revenue. But unlike traditional media advertising, where established metrics exist for evaluating return on investment, the calculus of brand-building through sports marketing is a lot fuzzier. Although details haven't been finalized, Canadian Olympic sponsors will likely be buying the right to use the COC and Vancouver 2010 logos on advertising, letterhead, products and services for the next eight years. VANOC would be expected to use sponsor logos in its own promotional materials, and may also provide opportunities for joint advertising among sponsors. In some categories, such as telecom, companies will also win the right to supply products to VANOC."
McArthur suggests that "dozens of companies are trying to determine what it's worth." He says McIntyre helps companies appraise such investments based on how many "impressions" sponsorship generates -- how many times consumers are reminded of the connection between the Olympics and the sponsor, either through PR or advertising. "In some categories," says McArthur, "such impressions could be worth C$15 million to C$30 million over the eight-year period. But softer benefits -- unquantifiable -- will raise the value to as much as CC$60-million."
McArthur quotes Robert Cruikshank, Telus's executive vice-president in charge of his company's bid, which is now in the hands of VANOC, along with Bell's, as saying, "Can you get a return on investment at C$30-million to C$60-million? I believe you can."
McArthur says Telus has "assembled a full team to calculate what the sponsorship agreement is worth under the IOC's open bidding process. To meet the new requirements for Vancouver's bid, the [Canadian Olympic Committee] had to ask several key sponsors, including Bell Canada and Roots Canada, to sign waivers ceding rights of first negotiation." He says Bell didn't sign that waiver lightly, quoting Schild as saying, "We anguished over it, but it was the right thing to do."
The newspaper paraphrases Dave Cobb, VANOC's new senior vice-president of Revenue, Marketing & Communications as saying that by "starting with a clean slate, Vancouver will be able to maximize sponsorship revenue, argues That, he says, will allow it to mount a strong Games and leave a legacy for B.C. and Canadian sport."
McArthur says that VANOC estimates the operating budget for the 2010 Games will be about C$1-billion, and it plans to raise 25% of that from Canadian sponsors. "That figure," McArthur says, "is based on a preliminary but now outdated estimate of C$160-million in cash and in-kind income from eight to 10 top-level domestic sponsors (an average of C$2 million per sponsor in categories including airline, automotive, banking, brewery, oil and gas and telecom), and a further C$133 million in Tier 2 and 3 categories, such as clothing, office products and wine. International sponsors such as Coca-Cola and McDonald's would inject another C$85-million."
He quoted Cobb as expects domestic sponsors to pay a lot more than originally anticipated. "The numbers in the [briefing] book are understated. It would not be a good idea for people to assume that they can acquire particular categories for those numbers."
McArthur says that the telecom sponsorship "is shaping up as the most aggressive of categories. For Bell, a division of BCE Inc., sponsorship would provide a huge profile in British Columbia, a key growth market. For Telus, with its western roots, it would help build national profile. While Bell has a connection with the COC, Telus has been affiliated with the Vancouver Olympic bid since 1996, when its predecessor (BC Tel) signed on to support the bid."
The newspaper quotes Telus's Cruikshank as saying, "I think we're... putting forward a pretty compelling offer." McArthur says Cruikshank told him that Telus has an "exhaustive network and backup facilities" in British Columbia, which Bell would have to build. McArthur adds, "While Bell talks about having 2,000 employees in B.C. by 2010, Telus already has 7,200 employees in the lower mainland [Greater Vancouver and the Fraser Valley]."
McArthur also quotes Cruikshank as saying, "If you were CEO of the Games, who would you put more stead in, the person who was waving the most cash in front of you or the person that could minimize your risk?"
Bell's Schild, says McArthur, isn't conceding anything and quotes her as saying, "The way we're looking at this right now, we're going to win." Ms. Schild told McArthur that the Bell bid is less risky than Telus's because Bell offers a much wider range of products and services. And its B.C. work force will grow much faster if it wins the bid.
McArthur also quotes Bob Stellick, president of Toronto's Stellick Marketing Communications Inc., as saying that Bell's various product offerings -- satellite, Internet, cellphones and land lines -- could be advantageous. "Don't anybody discount Bell's... ability to get what they want," Stellick is quoted as saying.
The newspaper says that, "Other categories could also be competitive. Both Air Canada and WestJet say they are considering bids. And current sponsor DaimlerChrysler Canada Inc. may face competition from General Motors of Canada Ltd. (its U.S. affiliate sponsors the U.S. Olympic Association), and Volkswagen Canada Inc., which is advertising heavily on the CBC during the Athens Games. The battle could be so heated that corporations could overpay for rights."
McIntyre told McArthur, "Our advice is that you should definitely have concrete objectives set out well in advance. You'd better have a walk-away plan if you want to play in this game."
BACKGROUND
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The full newspaper article is in the Globe of August 21, 2004 on Page B4 and is currently available at:
http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20040821/RCOVER21/TPBusiness/TopStories
Originally published to Morgan:News:2010:Gold subscribers on August 24, 2004
Morgan:News:2010 |VANOC| #488
FURLONG JOINS CHORUS URGING MORE FUNDING FOR HIGH-PERFORMANCE ATHLETES
2010NewsWatch
The Vancouver Sun newspaper quotes John Furlong, the CEO of the Vancouver Olympic Organizing Committee, as adding his voice to the call that governments in Canada must invest more in its athletes to avoid the kind of poor medal showing the country is experiencing at the Athens 2004 Summer Games.
"It's impossible to dig a field with a spoon," John Furlong told reporter Jeff Lee in a telephone interview from Greece. "It's absolutely critical that as a country, province and society, that we learn something from how the results have gone here. It is very difficult to compete at the world level when you don't have the resources to complete your training."
Furlong told Lee that Canada has "seriously underestimated" what it needs to help high-performance athletes achieve top results in their chosen fields. "We don't do it to the level that's required."
The Sun says that Furlong believes Vancouver hosting the 2010 Winter Games is putting pressure to ensure Canada does well. And it paraphrases him as saying "that's not going to happen if there is not an all-round effort by governments, sport organizations, corporate sponsors and the public at large to give more support to athletes."
Lee quotes Furlong as saying, "Because the spotlight is on Vancouver and this is a one chance in a lifetime for us, we have to be the ones who are speaking out to support that kind of programming. High-performance sport in this country is something that people have to start playing a more significant role in. It is easy to say it isn't all about medals, and it isn't. But the fact of the matter is that when the athletes are doing well and performing at their best, it has an enormous inspirational impact on young people across the country. It's good for the morale of the country, and we can't let that slip by."
Several winter-sports organizations, such as the head of Cross Country Canada, have expressed the same frustrations, but say that it's essentially too late now to have much effect on the 2010 Winter Games because of development lag time for a high-performance athlete takes seven to 10 years.
Mark Lowry, the Canadian Olympic Committee's executive director of sport, said earlier the concept of unifying Sport Canada's athlete-support strategy and that of the COC's through a new National Sports Review Panel will have an influence on the 2010 Games. But, he adds, it will take 10 years to have the new strategy start having significant effects, which means the 2012 Summer Games will feel the effects more than 2010.
Meanwhile, an editorial in today's Globe & Mail, a national newspaper based in Toronto, says, however, that money isn't everything when it comes to Olympic medals:
"Glimpsed from afar, money may seem the reason Australia does so well. At the Sydney Games, it spent C$280-million on its athletes, or C$14.80 per capita, and won 58 medals; Canada spent C$62-million, or C$1.99 per capita for its 14 medals. (This year Sport Canada is spending C$120-million, but the focus is increasingly on winter sports, in the lead-up to the 2010 Winter Games in Vancouver.) But the 2000 Olympics were the culmination for Australia of a 25-year effort to celebrate the nation's sense of its physicality and ruggedness, and perhaps shake off colonial insecurities, by winning as many medals as possible. Money and fanaticism are mutually reinforcing. The reason for Canada's Olympic woes is that no one has articulated a convincing reason for this country to make the same push as the Aussies. Countries win at the Olympics when sports are rooted in their culture, traditions and psyche. And that cannot be bought."
BACKGROUND
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'(Feature) Cross-Country Canada short money, time for 2010 athlete development'
[Morgan:News:2010:Number:432; Published on Monday, July 12, 2004]
'COC after Air Canada's Olympic ads; new sports panel will 'influence' 2010; Hobnobbing with 2010...'
[Morgan:News:2010:Number:481; Published on Friday, August 20, 2004]
Originally published to Morgan:News:2010:Gold subscribers on August 24, 2004
Morgan:News:2010 |Business| #487
SWATCH, A 2010 GAMES SPONSOR, GETTING ATTENTION FROM ATHENS OLYMPICS
Swatch Group AG, one of the world's largest watchmakers, says in its first-half financial report for 2004 that the Olympic Games in Athens are, "drawing particular attention to the Swatch brand among an international public." Swatch AG is the official timekeeper for the Olympics through to the 2010 Winter Games in Vancouver and one of the 10 main sponsors of the 2004 Olympics. The Greek government estimates Athens is attracting a television audience of about four billion people worldwide, and many of them get to see the Swatch logo on a regular basis.
The Swatch logo is visible on the starters' blocks for sprinting events at the 72,000-seat Olympic stadium in Athens and on the touch pads in the Olympic pool, and the company is expected to get similar exposure during the 2010 Games. As a top-level sponsor, it deals directly with the International Olympic Committee for its marketing.
Bruno Grande, who heads Swatch's Olympic marketing division, declines to discuss the value of the company's contract is confidential. However Bloomberg reports that Jim Andrews, editorial director of the industry newsletter IEG Sponsorship Report, reports the watchmaker is spending about US$75 million (about C$98 million) per Olympic four-year cycle to be what the IOC terms an Olympic Partner.
Originally published to Morgan:News:2010:Gold subscribers on August 24, 2004