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Corporate sponsors are providing a Crucial third of the €4.4 billion Paris 2024 funding. But the scale and nature of sponsorship is evolving. In the age of social media, athlete sponsorship is more important than ever.
For sporting goods companies, the Olympics are an unrivalled showcase, but official sponsorship deals do not necessarily deliver the best results. While fans spend a lot of money on jerseys during football tournaments, there is much less of a market for Olympic-related gear. What’s more, sponsors don’t always get full credit for their investment. A 2012 survey suggested that 37 per cent of people mistakenly thought Nike was an Olympic sponsor for the London games, compared with 24 per cent who thought Adidas was the official sponsor.
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 had gone too far, breaking competition rules. The International Olympic Committee has slightly relaxed the rules and is conducting a market study. pilot project allowing certain sports brands greater freedom to promote athletes during games in recognition of their long-standing support.
Nike must make the most of the changes. The American group, which has lost ground to its rivals and lost a third of its market value in the last year, has planned a big Olympic Games marketing pushAccording to Citi’s Monique Pollard, Nike can outspend its competitors on key sponsorship deals. Its $4.3 billion marketing spend last year was more than half that of its nearest rival, Adidas, even though it was spread across more than twice as many sales.
The advantage of having a big budget is even greater when sponsoring athletes and teams in sports with the highest audiences. Sponsoring a top basketball player like LeBron James, who has 160 million followers on Instagram, is not cheap, but it generates a lot of brand impact.
But challengers can also seize opportunities. This is particularly true of sports in which people are more likely to participate than watch. The endorsement of a successful athlete is persuasive, but not necessarily costly. This has helped drive the success of new sports shoe brands such as Switzerland’s On and Hoka, owned by US-listed Deckers Brands. Deckers’ share price has come down from recent highs but is still up three-fifths from last year.
The Olympics are an opportunity for sporting goods companies to showcase their innovations and raise awareness of their brands. Even a small glimpse of glory is worth competing for.