Tokyo 2020 Already Secures Record Olympic Sponsorship Revenue In 2018
BY ADAM GROSSMAN
Olympic records are being set, but not just in Pyeongchang. It may be difficult to think about the 2020 Summer Olympics while the 2018 Winter Olympics are still happening, but the International Olympic Committee (IOC) stated that 2020 host city Tokyo has already secured almost $3 billion in sponsorship deals.
To put these record revenues in context, both London and Rio de Janeiro generated approximately $1.1 billion in sponsorship revenue for the Olympics in their cities. This also comes shortly after companies such as McDonald’s, AT&T, and Citigroup recently ended high profile agreements with the IOC because of “rising Olympics sponsorship costs and declining TV ratings.”
How could Tokyo be generating record revenues when trends at both the host city level and the international level seem to be against this outcome? We can start by looking at the host city analysis. According to John Coates, the head of the IOC’s Tokyo Games Coordination Commission, “Forty-three domestic sponsorship deals signed by Tokyo organizers so far had exceeded expectations” in 2017. That number has now increased to 47 partnerships in 2018.
What is behind Tokyo’s success? Japan is the home to many multi-national companies that are Worldwide Olympic Partners including Toyota and Panasonic. However, Tokyo also appears to be working with companies to maximize their fit with an Olympic partnership. In particular, the Olympics are typically an extremely strong platform for companies to increase brand awareness to an international audience for new product offerings.
That is what Tokyo appears to be stressing in its deals. For example, Nippon Oil & Energy Corporation will “provide oil, gas and electricity supply services for the Tokyo 2020 Games.” However, the company is also focused on using the Olympics as a platform to showcase a new product. More specifically, “Through the supply of hydrogen energy, for which demand is expected to increase for the Tokyo 2020 Games, we are contributing to the expanded use of new types of energy (emphasis added).” Nippon, through its ENEOS products, is using the Olympics as a platform to showcase the value of its new product to a global audience.
Mizuho Financial Group is an example of a Gold Partner that can use the Olympics to generate global brand awareness for its company. Mizuho is a company headquartered in Japan but has a listing on the New York Stock Exchange (NYSE). Mizuho is using the Olympics in part to “[stimulate] the Japanese economy to enable it to meet the demands of people from around the world who will be gathering in Tokyo and Japan for the Games.” Mizuho is using a local mission to create a worldwide platform to engage with a worldwide customer base important for its future growth as a company.
Mizuho’s partnership also demonstrates another interesting element of Tokyo’s approach. One of Mizuho’s competitors, Sumitomo Mitsui Financial Group Inc., has also signed on to be an Olympic partner. Tokyo is one of the first Olympics (with the IOC’s support). to allow multiple companies to become in the same category.
Having the ability to maximize partnership revenue through non-exclusivity is important to the Japanese organizing committee. Yoshiro Mori, a former Japanese prime minister and president of the committee, stated “We’re making an effort to reduce the burden on the city of Tokyo as much as possible.” The country had a clear goal to limit cost overruns and make the Olympics as fiscally sound as possible. Taking part in the opportunity to “build the world’s most efficient financial infrastructure” is a good fit for Mizuho’s brand goals and makes lack of exclusivity less important to the company.
It is not just Tokyo, however, that has seen a boost in sponsorship deals. For companies like McDonald’s with near-global ubiquity for many of its core products, renewing an Olympic sponsorship does not make as much sense.
Intel, however, is using the 2018 Olympics to feature its Virtual Reality (VR) product offerings in its “biggest production experience that we have delivered to date”. This includes distributing 30 events in 360-degree videos to 10 broadcast partners around the world. Virtual Reality is a new product offering for which the Olympics provides a great platform to showcase new capabilities. The ability to broadcast and consume games in VR in 2018 and 2020 (and beyond) makes the Olympics a good sponsorship fit for Intel and shows the importance of fit in increasing sponsorship revenue.