At 1000 Days To Go to Rio 2016, How Does Rio’s Sponsorship Programme Compare With London 2012?

With 1,000 days to go to Rio 2016 just gone, it’s interesting to compare the status of Rio’s domestic sponsorship programme with London 2012′s at the same point back in 2009.

What our research shows is, despite London 2012 being in the market at the nadir of the UK recession, and Rio being expected when it was awarded the Games to successfully leverage Brazil’s booming economy, at this stage Rio is a long way behind London in almost every respect.









This should come as no surprise. We’ve commented previously about how, after a stunning start in early 2011 with huge finance and telco category deals, Rio’s sponsorship sales programme has gradually stalled along with the Brazilian economy, and now faces big challenges given the ongoing protests, persistently negative PR about the Rio 2016 operation, Brazil’s economy, and Brazil’s ability to stage major – and even minor – events.


Last week, in an interview with AP, Rio’s Chief Commercial Officer Renato Ciuchini revealed that the organisation was now targeting $1.3-$1.5 billion in domestic sponsorship revenue, and that $650m (£400m) has been raised to date.

By comparison, with 1,000 days to go to London 2012, we estimate that LOCOG had raised $894m (£552m) of its final total of $1.2 billion (£739m).

In other words, London had raised 75% of its final total, but Rio has raised only 50% of its minimum target and only 43% of its stretch target.

Deal Volume and Value

Rio is also well behind London in deal volume.

With 1,000 days to go London 2012 had closed 23 deals in 23 categories, whereas Rio has closed 10 deals in 8 categories (the Bradesco sponsorship covers both banking and insurance, and the telco category sponsorship was acquired by a joint bid by Embratel and Claro).

Conversely, Rio’s average category deal value, at $65m, is much higher than London’s $38.8m.

But on this point, Rio seems to be confident. Back in August, it slipped out an announcement that it had now sold 50% of its sponsorship packages, suggesting that it envisages doing only another ten deals.

If it sticks to this, Rio will have to average $85m for each deal to reach its stretch target of $1.5 billion, and $65m – its current average – to reach its minimum target.

As its current average is skewed by the huge Bradesco and Embratel-Claro deals, together worth $500m, the jury is very much out as to whether Rio can sustain this given the market challenges it now faces.


Rio also lags behind London in all three of the tiers that modern Games Committees use to market their domestic sponsorships.

At the same point in the London 2012 cycle, LOCOG had sold and announced six of its seven Tier 1 sponsorships (BMW was announced a month later, in late November 2009) and six of its seven Tier 2 sponsorships (the seventh, Arcelor Mittal, was announced in March 2010).

In comparison, Rio has three in Tier 1 (finance, telco and automotive) and four in Tier 2 (professional services, beer, packaged foods and dairy products).

But what’s most striking is that whereas LOCOG had eleven Tier 3 deals in place with 1,000 days to go, Rio has only one, with Nike (although oddly, that deal has yet to be officially announced – the Nike logo just appeared on the partners section of the Rio 2016 website).


I’ve written before about how important value in kind (VIK) is to the Olympic sponsorship model and to Games budgets.

Because the Games are the world’s biggest and most complex peacetime operation, it takes far more to deliver them than pure cash. The Olympic sponsorship model is like a giant joint venture, with both the IOC and the local organising committee outsourcing critical products and services from sponsors, without which the Games couldn’t happen – and that’s why the majority of Games sponsorship in the modern era is delivered in the form of VIK.

As such, all of Rio’s sponsorships to date will have included an element of VIK – some (Embratel-Claro, Nissan, Ernst & Young, Nike) more than others.

But the fact that Rio 2016 has done so few deals at this stage compared to London 2012, particularly at the Tier 3 level which is always heavily VIK-based, means that right now it is having to do two things with important budget, cashflow and delivery implications.

Rio 2016 must be paying cash for vital products and services which Games committees normally use VIK deals to finance, which means that its cashflow and overall budget must be incredibly strained. And it must also have had to delay sourcing other key products and services, with inevitable consequences for its operations and deadlines.


Let me be really clear that, for certain types of business situations, and certain brand categories, Rio 2016 has enormous potential for brands in Brazil.

But right now, Rio 2016 is a sponsorship price-taker rather than price-setter in Brazil. Brands have three very good reasons to be wary about investing, and to exert downward pressure on price.

1. The spectre of a Government bailout looms over Rio’s budget even if it reaches its stretch sponsorship target, as a Rio 2016 spokesman recently admitted to AP. If that happens, there’s little doubt that would see the anti-FIFA protests become anti-Rio 2016 protests, which would be a disaster for the IOC, the Games, and of course the Games’ sponsors.

For an in-depth look at the marketing and sponsorship implications of the anti-FIFA protests, our Brazil team’s blog from June this year is a must-read and includes that point.

2. The IOC’s Gerhard Heiberg had this to say in the same AP piece on Rio 2016:

“I know that some sponsors are waiting to see how things are going to be at the World Cup. Will it be a success? Will it be chaotic? If people feel things are going to be very good for the games, it’s easier to get the sponsors. If people feel things are not going to be 100 percent, they will hold back on the Olympics. First they want to see what’s going to happen with the World Cup.”

Absolutely spot-on – and brave of Mr Heiberg to say so. We are aware of a wide range of name brands in Brazil, who would otherwise be primed to become Rio 2016 sponsors, who are adopting a ‘wait and see’ attitude until after the World Cup.

3. The potential value of Rio 2016 to a brand is inexorably dropping. There’s already less than three years to go until the Rio Games, and every day that passes reduces the potential value to a brand – especially when you consider that, given the Brazilian consumers’ overwhelming preference for football and therefore the World Cup, the first half of 2014 is arguably, for an Olympic sponsor in Brazil, a write-off.


The Invisible Olympic Sponsors – And Why The Games Couldn’t Happen Without Sponsorship

There is a large group of Olympic sponsors whose primary objective over the next 17 days is to be brilliant, but invisible: the companies who provide vital Games Time services.

For brands like Atos (IT), BT (communications), Cisco (networks), Omega (timing) and UPS (logistics) the starter’s pistol on their sponsorship fires today. Everything they have done previously has mattered only in being preparation for this point. And if they make headlines in the next 17 days, it will be for one reason only: the Games being badly affected by a problem with their services.

To illustrate the point, all I need to write is G4S. Until a few weeks ago, G4S was familiar only to the big public and private sector buyers of its services, and was hoping to use London 2012 as a showcase to that small but highly lucrative audience. Now, of course, G4S is a household name because it failed to deliver, and the resulting fall-out has been calamitous for its reputation and share price.

In this space, it pays to be invisible. Get it right, and you have a trump card case study in the high-stakes world of big B2B contracts: “If we can do this for the Olympics, the biggest most complex event in the world, imagine what we can do for you.” Get it wrong and you’re where G4S is right now.

All of which reveals other aspects of the widely misunderstood Olympic sponsorship model, and why sponsorship is far more important to the Olympics than is commonly perceived.

The media convey the impression that the Olympic sponsorship model is the same as World Cup sponsorship and the like – a small group of consumer brands paying big money only for marketing rights.

The reality is very different. The Olympic sponsorship model is actually a giant joint venture, with the IOC and the local organising committee outsourcing critical expertise from multiple partners.

Because the Games is the world’s biggest and most complex peacetime operation, it takes far more to deliver it than pure cash. This Atos Olympics ad evokes that perfectly.

That’s why there are so many Olympic sponsors, and why the majority are B2B brands - although every Olympic sponsor, B2C brands included, provides important products and services as part of its sponsorship, without which the Games couldn’t happen.

And it’s why the majority of Games sponsorship is delivered in the form of ‘value in kind’ (VIK) products and services that are budget-relieving. In the modern era, VIK has consistently contributed the majority of domestic Games sponsorship, and I expect LOCOG’s final accounts to show VIK at 60% of its £700m domestic sponsorship total.

So if you’re ever tempted to join the vociferous chorus of those who criticise Olympic sponsorship, ask yourself this: if the sponsors weren’t there, contributing so importantly behind the scenes, how else would the Greatest Show On Earth be as big and brilliant as it is going to be, once again, in London?