The cost of Olympic failure: sponsors, taxpayers ask if it’s worth it
by David Salter, former head of TV sport at the ABC and Channel Seven|
Aug 03, 2012 12:23PM |EMAIL|PRINT
At the close of the first week of the world’s largest marketing and merchandising operation — that is, the Olympic Games — many of those clinging to the Australian end of the bandwagon must be beginning to have doubts as to whether they’re getting value for money. The gold medal pickings usually become decidedly slimmer for us once the main action moves from the pool to the track, and that’s a distressing prospect for anyone here who’s staked their business or political fortunes on London 2012.
The Games themselves have long since ceased being primarily a sporting event. This is now the “Triumph of The Brand” — a monster, made-for-television extravaganza with inexhaustible advertising and licensing spin-offs for which the actual athletic competition has become almost incidental.
Over the past 30 years the Lords of Lucerne have turned their five-ringed circus into a multi-billion dollar business where host cities are conned into taking all the financial risk while torrents of sponsorship and TV dollars pour into the IOC’s numbered accounts.
The commercial intensity of the modern Olympics was well demonstrated by James Magnussen’s near miss in the 100m freestyle. That exasperating 1/100th of a second deficit will have cost him a fortune in potential sponsorship, endorsement and personal appearance contracts over the next four years (not to say considerable embarrassment for the Commonwealth Bank after his starring role in its dopey “Can’t/Can” campaign). A lot of new car orders were cancelled on Thursday morning.
The first fully commercialised Games were the 1996 Coca-Colympics in Atlanta. Before then, brand exposure had been modest — the ubiquitous Omega “Swiss Timing”, and discreet logos for sporting goods firms such as Adidas and Puma. But the Yanks wanted an international platform for their corporate behemoths (Coke, Nike, McDonald’s, IBM and Kodak) and the IOC grandees were only too happy to trade in their previous Corinthian principles for a mountain of greenbacks.
At the secondary level, local corporations have been keen to buy an association with their national Olympic team, particular sports and prominent individual athletes. The trick has been to get in early — spend most of your marketing budget in the months before the Games, riding on the coat-tails of jingoism and the “Olympic dream” before the realities of competition have a chance to intrude. That tactic certainly helps control the risk, but with the Australian team still failing to produce the levels of achievement and excitement we remember from Sydney 2000, much of the Games-themed advertising is already beginning to look awfully lame.
(But don’t shed any tears for the corporations who’ve gambled so much on buying a brand association with the Olympics. All their senior executives will be enjoying prime free seats at the best London venues — and they’ll recover at least 50% of their advertising spend via the tax deductions available for promotion and marketing costs.)
More significant in the longer term is the impact our team’s disappointing results are likely to have on funding for the Australian Olympic Committee. With the nation’s gold medal count still at one, the whole apparatus of generous government funding for Olympic sport comes under challenge. There’s little doubt veteran AOC boss John Coates has already set aside plenty of thinking time during his long flight home to start preparing a defence of the Committee’s strategy and performance.
This is all about politics, not sport. Since our disastrous one-bronze showing in Montreal (1976), AOC policy has been to reserve the majority of government support for the development of “elite” sports. That is sports — however obscure — in which it’s felt Australia might have a good chance of snaring a medal.
That’s why such disciplines as rowing, hockey and track cycling have enjoyed priorities quite disproportionate to their general participation rates. Up to now that approach has been successful, so it’s enjoyed the continued support of politicians on both sides who like to think international sporting success somehow converts into votes for them.
But the days of boasting about how Australia “punches above its weight” seem to be over and the moral equivalence arguments suddenly become more convincing. On one rough reckoning, the few gold medals we’re likely to win in London will cost the Australian taxpayer around $50 million each. That’s a lot of money that might otherwise have gone to health, education or a national disability scheme. Meanwhile, university students struggling to meet their HECS repayments wonder why athletes are paid to attend the Institute of Sport and receive their training, equipment, travel and food as a tax-free gift from the government.
The accepted counter-argument is that public funding for elite sport benefits the whole nation — it contributes to national fitness levels by encouraging participation, creates healthy role models, provides a source of national pride during overseas competitions, etc.
Well, those rationales are now looking rather frail. There’s no convincing evidence that Australians are getting any fitter (in fact the opposite seems more likely). Nor can we say with confidence that more youngsters are now throwing aside their Xboxes to take up water polo. Indeed, with the exception of soccer, the most popular competitive sports in Australia aren’t in the Olympics at all: AFL, rugby league, rugby union, netball and cricket. If the gold medals don’t start flowing soon in London, that distinction will not be lost on the politicians who dole out the funding.
So who are the real winners? Television, as usual. The Olympic juggernaut cannot work as a business model without TV. The saturation coverage generates huge ratings and overpowering brand awareness. That, in turn, makes the associated advertising and sponsorship cost effective. They get you coming and going in commercial TV.
Foxtel, with its eight simultaneous channels of coverage — free for existing subscribers — is consistently attracting audiences of more than 600,000 viewers every night. Even if some of those are opportunistic, sports-mad new subscribers who plan to dump the service once the Games conclude, the sheer numbers watching pay-TV rival free-to-air volumes and have made advertisers take notice.
Channel Nine secured the London 2012 rights years ago when the market was more buoyant. Advertising and sponsorship packages are now much harder to sell and by their own admission Nine will lose many millions by the end of the Olympic fortnight. But their ratings this week have been spectacular and they know that the benefits will stretch long after the Olympic flame has been doused.
Beyond trading on the rub-off prestige of the event itself, Nine’s coverage has been peppered with strident promos for its post-Olympic line-up of new programming. Curiosity will get the better of some viewers who normally wouldn’t be watching Nine — and that’s how hits are made.