When Peter Ueberroth turned the 1984 Summer Olympics in Los Angeles into the
first-ever profitable Games, he might have not have imagined that it would be
regarded as an epoch-altering event with the spotlight as much on corporate
sponsors as the athletes.
With less than 800 shopping days left before the Games in Beijing, the
capital of the world's fastest-growing major economy, cash registers at the
International Olympic Committee (IOC) and the Beijing Organizing Committee of
the XXIX Olympiad (BOCOG) are ringing loudly.
Enterprises from both home and abroad are jockeying for positions on
different rosters connected to the Games, in the hope of marketing their
products and enhancing brand awareness through this extraordinary opportunity.
It is not only corporate titans, but also Olympic officials who have are
keeping a close eye on the bottom line, especially since costs have soared in
the wake of the September 11 terror attacks in the United States.
"Without the support of the business community, without its technology,
expertise, people, services, products, telecommunications, its financing - the
Olympic Games could not and cannot happen," says IOC President Jacques Rogge of
the importance of Olympic marketing.
"Without this support, the athletes cannot compete and achieve their very
best in the world's best sporting event."
Liu Jun, deputy director of BOCOG's marketing department, says prospects for
the marketing programme of the Beijing 2008 Games are bright. "The sponsorship
and licensing programmes are progressing far better than our expectations," Liu
observes.
If every programme involved in the Olympic marketing package the most
comprehensive ever created for the Games goes smoothly, BOCOG's revenue from the
Games will surely exceed original estimates, Liu tells China Business Weekly in
an exclusive interview.
The original forecast by the Beijing 2008 Olympic Bidding Committee was
US$1,625 million when the city bid for the 2008 Summer Olympic Games five years
ago. The total cost of the Games was estimated at US$1,609 million at that time
but due to soaring security costs, this has increased substantially.
Sponsorship programme
On September 1, 2003, BOCOG kicked off its marketing package, which includes
the sponsorship programme, the licensing programme and the ticketing programme.
It has already signed up 11 Beijing 2008 Partners, eight of which are Chinese
companies, with Volkswagen, adidas and Johnson & Johnson rounding out the
list.
Apart from the 11 partners, the local sponsorship programme includes two
tiers of support: the Beijing 2008 Sponsor and the Beijing 2008 Supplier. Nine
companies have already joined the sponsor team and five have signed on as
exclusive suppliers.
The supplier programme, which started in December last year, is in full swing
and will last until the opening of the Games, Liu says.
He reveals that the marketing department is in contact with businesses
engaged in furniture, printing and vehicle rental which will be in great demand
during the Games encouraging them to join the exclusive supplier group.
While trying its best to provide a unique Olympic marketing platform for both
domestic and overseas enterprises, BOCOG will limit the number of corporate
sponsors to "avoid excessive commercialization of the Olympic Games," Liu
emphasizes.
"Companies must have a good reputation and social image. They need to
identify with, and boost, the ideals of the Olympic Movement and the concepts of
the Beijing Olympic Games. In addition, their products should be environmentally
friendly."
Though most Chinese companies are inexperienced in Olympic marketing compared
with their Western counterparts, domestic businesses have turned out to be quick
learners and are getting adept at leveraging Olympic resources to maximize
returns on their investments, while also forging long-term partnerships with the
Olympics in China, Liu observes.
The 11 worldwide Olympic partners (TOP), including China's Lenovo, will also
provide financial, product, technical and service support for the Games. It is
reported that BOCOG will pocket about US$260 million from the TOP sponsors.
Licensing programme
BOCOG will have more licensees and retail outlets for more than 20 categories
of licensed products this year. In addition, two specialized companies will be
chosen to provide design and marketing services for the licensed merchandise.
BOCOG has already developed more than 2,000 different products bearing the
Games logo, such as T-shirts, caps, pens and bags, and around 150 licensed
retail outlets have been set up across the country. By 2008, it is estimated
that 6,000 to 7,000 kinds of licensed products will be showcased at more than
10,000 licensed stores nationwide.
The debut of overseas sales is planned for the second half of this year, Liu
says, adding that permission must first be secured from the IOC and local
national Olympic committees.
"The licensing programme is not designed for money," Liu observes, "Our aim
is to promote the brand image of the Beijing Olympic Games and express the
unique culture of China and Beijing, as well as offer opportunities for ordinary
people involved in the Games, when they purchase the products and make their own
contribution."
The licensing programme also includes Olympic stamps and coins. The State
Postal Bureau has been authorized to issue a series of Olympic stamps, with
themes covering sporting events, the torch relay, the opening and closing
ceremonies, sports venues, and the traditional culture of China and Beijing.
About 20 million sets of stamps with the Beijing Olympic emblem and 15
million others with Olympic mascots quickly sold out just after they hit the
market in November.
BOCOG and the People's Bank of China signed an agreement earlier this year on
the Beijing 2008 Olympic Numismatic programme. According to the agreement, the
bank will issue Olympic commemorative banknotes and coins over the next three
years, including nine types of gold coins, 14 kinds of silver coins, eight kinds
of base metal coins and one banknote.
Ticketing programme
BOCOG has already worked out a strategic ticketing plan for the Games, which
covers pricing, sales, marketing, promotion, as well as printing and
distribution.
Based on an analysis of previous sessions of the summer Games, BOCOG expects
to have 7 million to 8 million tickets for public sale worldwide. "We will
observe the low-price principle and provide ordinary spectators with as many
inexpensive tickets as possible," Liu says.
According to the IOC, about 7.6 million tickets were available and 88 per
cent sold at the 2000 Sydney Games, bringing in US$551 million. At the 2004
Athens Games, of the 5.3 million tickets, 3.8 million were sold, or 72 per cent,
generating US$228 million in revenue.
It is estimated that tickets for the Beijing Games will be available in the
first half of 2007, after the timetables for all events are finally determined.
Chinese people can buy tickets through the Internet, call centres, agents and
ticket offices at sports venues. Overseas, fans can purchase tickets through the
national Olympic committees of their countries.
Financial viability
The three programmes and broadcasting rights constitute most of the revenues
that BOCOG can net from the 2008 Games. The income structure of BOCOG is also
almost the same as that of the IOC, according to Liu.
IOC statistics show that during the 2001-2004 cycle, including the 2002
Winter Olympic Games in Salt Lake City and the 2004 Athens Games, total revenue
from Olympic marketing hit approximately US$4.2 billion. About 53 per cent came
from broadcasting, 34 per cent from corporate sponsorship, 11 per cent from
ticketing and 2 per cent from licensing.
IOC estimates that the broadcast revenue for the 2008 Games will top US$1.7
billion, compared to US$1.5 billion in Athens. Forty-nine per cent of the
broadcast revenue will be allocated to the national Olympic organizing
committee.
BOCOG's budget will be met by the IOC's contribution from the sales of
broadcast rights and international sponsorship and also by its own efforts in
finding commercial partners and ticket sales, Liu says.
"However, our aim is not simply to get money, but to pursue a win-win
solution that can both support the Olympic movement and enhance the image of the
companies involved," Liu emphasizes.
Paralympic marketing
BOCOG launched the Beijing 2008 Paralympic marketing programme on June 5,
which is more focused on public welfare rather than profit, Liu says.
He points out that a successful Paralympics in Beijing will further propel
society to pay more attention to disabled people and help build better
facilities for them.
The participation of enterprises ensures the success of the Paralympic Games,
and contribute greatly to the development of the world Paralympic Movement, Liu
adds.
The Paralympic marketing programme consists of two parts, sponsorship and
licensing.
Like the Olympic marketing plan, Paralympic sponsorship is divided into three
tiers: the Paralympic Partner, the Paralympic Sponsor and the Paralympic
Supplier. The Paralympic sponsorship will be decided in July 2008, two months
before the Paralympic Games begin.
It is reported that all the Beijing Olympic Games partners and sponsors have
agreed to sponsor the Paralympic Games as well, and companies could still back
the Chinese Paralympic Committee or Chinese teams by buying relevant marketing
rights.
The Beijing Paralympic Games will be held between September 6 and 17, 2008,
12 days after the XXIX Olympiad concludes. The Beijing Paralympic Games will
have a total of 20 sports, the highest number in history.
