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Corporate backers are providing a crucial third of Paris 2024’s €4.4bn funds. But the scale and nature of sponsorship is evolving. In a social media age, athlete endorsements are more important than ever.
For sporting goods companies, the Olympics are an unrivalled showcase. But official sponsorship deals do not necessarily offer the best returns. While fans splash out on jerseys during football tournaments, there is much less of a market in Olympic-related kit. Moreover, sponsors do not always get full credit for their outlay. A 2012 survey suggested that 37 per cent of people wrongly thought Nike was an Olympic sponsor of the London games, compared with 24 per cent for official sponsor Adidas.
In an attempt to protect sponsors, Olympic organisers have strict rules against ambush marketing. They are a source of friction with competitors who want to promote their own sponsors. In 2019 a German court ruled that they went too far, in a breach of competition rules. The International Olympic Committee has now slightly loosened the rules and is running a pilot project allowing certain sports brands more latitude to promote athletes during the games in recognition of their long-standing support.
Nike needs to make the most of the changes. The US group, which has lost ground to rivals and shed a third of its market value over the past year, has planned a big Olympics marketing push. Nike can outspend competitors on key endorsement deals, according to Citi’s Monique Pollard. Its $4.3bn marketing expense last year was more than half as much again as its nearest rival Adidas, though spread over more than twice the sales.
The advantage of a big budget is the greatest when sponsoring athletes and teams in the sports that rack up the largest viewing numbers. Sponsoring a top basketball player like LeBron James, who has 160mn Instagram followers, does not come cheap but generates plenty of brand heat.
But challengers can seize opportunities too. That is particularly the case for sports that people are more likely to participate in than watch. The endorsement of a successful athlete is persuasive but not necessarily expensive. This has helped fuel the success of new running footwear brands such as Switzerland’s On and Hoka, owned by US-listed Deckers Brands. Deckers’ share price has come off recent highs, but it is still up by three-fifths over the past year.
Olympics are an opportunity for sporting goods companies to show off their innovations and raise awareness of their brands. Even a glimmer of reflected glory is worth competing for.
