SPORTS MARKETING: FAST TRACK TO RECOVERY

A lot is resting on next year's Olympics and Euro 2004, not least for what they could mean for recovery. Alasdair Reid looks at how the events are performing commercially.

Next summer's Athens Olympics are likely to be the most commercially successful in the games' history. Indeed, every Olympic Games (except Moscow in 1980, for obvious reasons) since Rome in 1960 has been a bigger marketing money-spinner than the one before.

But now we need the Olympics to deliver more than ever. There's Euro 2004 too, perhaps a less prestigious gathering but, in Europe at least, economically far more important. And the WPP group chief executive, Sir Martin Sorrell, cited both tournaments (along with the US Presidential elections) as the reason for 2004 being recovery year.

There are several channels by which money flows into the system via big sporting tournaments. Paradoxically perhaps, the highest-profile deals - the event sponsorship agreements listed in the table - are the least important. That's especially the case with the Olympics, where the agreements are tied up in rolling four-year deals and many of those on the roster - from Coca-Cola to Kodak - are seemingly there in perpetuity.

In the UK, there's also a missing factor in the commercial equation where the Olympics is concerned - it's carried by the BBC, so there are no broadcast sponsorship opportunities. Not on terrestrial TV at any rate. If you want to sponsor TV coverage of the games you have to go to Eurosport - the Olympic specialist - broadcasting Olympic action 24 hours a day during the event, with hours of live feed. Across Europe, it expects more than 150 million individuals to watch at least some of its coverage.

Broadcast sponsorship (across two TV channels and their website) costs 2.2 million euros. Liz Jones, Eurosport's sales director, agrees that the Olympics can be a powerful stimulant for the media economy. "It's different from Sydney, where everyone was having a great year anyway. Now we're not quite out of the quagmire but a good 2004 will give everyone confidence," she says.

It's a bit of a coup signing an event sponsor to a broadcast sponsorship deal too. The second priority for an event sponsor is usually to maximise the value of its event partnership through big spot ad campaigns. So, although event sponsors have first refusal on all broadcast sponsorship deals, there's often little left in their pot. Unless you approach this as Uefa has with Euro 2004, where the top four partnership deals wrap event and broadcast sponsorship into one package. Carlsberg, McDonald's, Coca-Cola and JVC have each paid ten million euros for the complete Euro 2004 package.

The "official" advertiser involvement is only the tip of the iceberg, however. These big sporting events stimulate activity in all sorts of less obvious ways. "In Euro 2000 and last year's World Cup, big slugs of money came into the TV marketplace," Richard Davies, Initiative Media's head of sponsorship and sports, recalls. "Interest in the Olympics can be patchy but football is always good for the ratings and if England do well, it brings a spring to the step. I expect a lot of people are keeping their powder dry for 2004."

Brian Greenwood, the chief executive of the sports marketing agency Prism, points out that these events deliver special audiences: "As media fragments, then the relative importance of major sporting events increases as they deliver a large, defined audience over a fixed period."

Nick Theakstone, the director of investment at MindShare, agrees. He points out that rivalry between brands, whether they are directly involved in the events or not, seems to intensify when there's a clear focus for activity. He says: "The market is likely to be buoyant because there are many advertisers for whom the sports environment and audience will seem attractive. For many, the football especially will be a must-have event."

So the major broadcasters are already factoring in a major windfall next year, are they? The European ones based on football, the US majoring on the Olympics? Absolutely, Martin Bowley, the chief executive of Carlton Sales, says: "Actually, it's almost irrelevant whether you're carrying the events or not. They generate activity and client spend ramps up. I think the football will perform well, no matter how England do, because with so many European stars playing in the Premier League, there's more of a general awareness of European football."

But Theakstone warns of getting too carried away: "Money will certainly be coming into the marketplace and that will be very welcome to ITV, but one of the reasons it will seem so good will be because this year has been so low.

"And although some advertisers will be creating additional budgets, others will have been holding money back this year or will be pulling it forward from 2005. So a possible downside is that a great 2004 may be followed by a tepid 2005."

A SPONSORSHIP BONANZA

OLYMPICS

No accurate breakdown is available for the Olympic Partners over the four-year period ending with the Athens games. But the total IOC income from the partners in this table across the period is estimated at more than 234 million euros. Kodak, for instance, is believed to have paid $100 million for an eight-year deal covering the 2002 Winter Games in Salt Lake City, Athens, the 2006 Winter Games in Turin and the 2008 Tiananmen Square Summer Games in Peking.

Olympic Partners: Coca-Cola, John Hancock, Kodak, McDonald's, Panasonic, Samsung, Schlumberger, Sports Illustrated, Time Magazine, Visa, Xerox

EURO 2004

The top four sponsors pay ten million euros each; with the supplier deals a large element of barter is involved so evaluation is difficult.

Carlsberg event plus broadcast

McDonald's event plus broadcast

Coca-Cola event plus broadcast

JVC event plus broadcast

Canon event sponsor, non-broadcast

Hyundai supplier partner (transport)

Mastercard supplier partner (payment systems)

NTT Com supplier partner (information technology)

Source: www.uefa.com.

INSIGHT FROM NMA

With such big TV-oriented tournaments around next year, it's easy to overlook the role that newspapers can play in creating a positive advertising environment in their sports pages. A recent Newspaper Marketing Association study, however, has undertaken qualitative and quantitiave research which demonstrates the strong relationship between the sports pages and their (largely male) readers. Some 54 per cent of readers head straight for the sports pages instead of the main headline news, and 69 per cent scan the front page headlines then turn to the sports section. The big sporting events for 2004 are likely to attract more coverage in the back pages and so can provide a strong editorial environment for advertisers, particularly those targeting the traditionally elusive male audience.

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