Rio 2016: The commercial journey

With Rio 2016's commercial preparations entering their final execution phase, SportsPro looks back at how the Games' domestic sponsorship programme was put together.

Rio 2016: The commercial journey

Preparations for Rio 2016 have been long and, at times, chaotic for the local organising committee’s commercial team. As a sales process that began in 2010 enters its final execution phase, SportsPro looks back at how the domestic sponsorship programme was put together.

By Michael Long

Commercial partnerships are the financial lifeblood of every Olympic Games. According to the International Olympic Committee (IOC), revenue generated from them accounts for more than 40 per cent of all Olympic income, with partners providing the vital funds, technical services and product support necessary to ensure the Games are an operational and sporting success.

While the IOC manages broadcast partnerships, the TOP worldwide sponsorship programme and the official supplier and licensing programmes, it is the responsibility of the local organising committees, under the direction of the IOC, to handle domestic sponsorship, ticketing and licensing programmes within the host country. The domestic sponsorship programme in particular is always closely scrutinised throughout Games preparations, largely because its composition serves as both an indicator of the local organisers’ operational aptitude and a barometer of the event’s financial success.

Almost from the moment an Olympics are awarded to a city, the formation of what is called the Games Marketing Plan begins. The organising committee for Rio 2016 started putting together its plan in the early months of 2010 and, amid the swirl of optimism that invariably follows a winning bid, the initial interest among corporate Brazil was resoundingly positive.

In November of that year Bradesco and Bradesco Seguros became the first top-tier partners to join the Rio 2016 domestic sponsorship programme, investing a reported US$350 million – considerably more than the minimum amount the organisers were reportedly seeking – to take exclusive rights in the finance and insurance services categories respectively. The Bradesco companies were quickly joined, in March 2011, by América Móvil, the Mexican multinational telecoms group whose three Brazilian subsidiaries – Embratel, Claro and NET – would receive rights in the telecommunications, mobile operator and cable services categories respectively. 

The Rio 2016 committee was, not unexpectedly, off to an auspicious start, but it wasn’t long before commercial preparations hit a snag. In October 2011 the American Maggie Sanchez, a former Microsoft and Vodafone executive, left her role as chief commercial and marketing director due to a reported ‘incompatibility of philosophies’ with the committee’s senior leadership team. Having failed to secure any major new deals during her ten months in charge, she was replaced on an interim basis by the organising committee’s chief executive Leonardo Gryner before Flavio Pestana, a Brazilian former media executive, took the role permanently at the start of 2012.

In addition to Pestana’s appointment, the organising committee announced several other key hires to, in its words, ‘complete its commercial structure’. Rodrigo Frazao was hired as sponsorship sales director, Henrique Leal as partner services director, and Sylmara Multini as head of licensing, retail and concessions. Commenting at the time, Rio 2016 president Carlos Nuzman insisted the new appointments would instil “the confidence and reliability we need to conduct such a record-breaking sponsorship programme”.

Bradesco became the first company to join the Rio 2016 domestic sponsorship programme in November 2010.

By February, preparations looked to be back on track when Nissan took exclusive tier-one rights in the automotive category. At the time, Rio 2016 officials said negotiations took six months and involved other brands but that Nissan’s proposal was selected as it ensured ‘a consistent mix of products, services and financial backing’. The Japanese carmaker, which will provide 4,500 ethanol or electric-powered vehicles to the Games, was due to open a manufacturing plant in Resende, in the state of Rio de Janeiro, in 2014, and the Rio 2016 Games were seen as a means of achieving its target of attaining at least a five per cent market share in Brazil by 2016.

Though the financial terms of the Nissan agreement were not disclosed, the deal was a major step towards the organisers’ goal of generating upwards of US$1.2 billion through domestic sponsorship. Before the Nissan deal, the local organising committee was thought to be halfway towards that goal and, after the hiccup of Sanchez’s departure, it appeared momentum had been regained. Then, after only weeks in charge, Pestana stood down, citing personal reasons.

Though the lack of continuity in the commercial department seemed not to have a noticeable effect on procuring key deals, the pressure was on Gryner and Nuzman to find a replacement to see the domestic sponsorship programme through to its conclusion. A little over 1,600 days out from the start of the Games, five top-tier sponsorship categories had been filled but just one company, professional services firm Ernst & Young Terco, had been confirmed in the second-tier official supporter category.

In September 2012, a new commercial lead was eventually found in the shape of Renato Ciuchini, a former telecoms executive. Ticketing and brand protection directors were also appointed as Nuzman and Gryner looked to plug important gaps in their commercial team. “Our marketing efforts are going really well with the signing of substantial tier-one sponsorship deals and the launch of licensing projects such as the coin programme,” a defiant Nuzman said at the time.

That November, however, the committee would undergo yet another senior executive reshuffle. Sidney Levy, a respected businessman who had led companies in Brazil and abroad, was installed as chief executive, plucked from his leadership role at commercial banking firm Valid Solucoes SA. Levy would replace Gryner, who himself would switch to the chief operating officer role previously held by Marco Aurélio Costa Vieira, who had only been appointed on the eve of London 2012. Gryner became the third individual to hold the post in under a year after Vieira’s predecessor, Roderlei Generali, was fired in June. In light of the latest upheaval, the committee was compelled to release a statement in which it put the changes down to an ‘internal restructuring process’ intended ‘to increase its capacities in different areas of the project, as well as improving internal procedures and coordination between all areas’.

“Gryner has long Olympic experience, having been involved in all Olympic Summer Games since 1976, and having been part of the Rio 2016 bid,” Nuzman said of his newest hire. “[He] therefore has all the credentials to lead all operational areas of the Games.”

If the internal instability had had little effect on commercial preparations until that point, there could be no denying its impact was starting to be felt. Save for a supporter agreement with Brasil Foods in May 2013, little progress had been made since the arrival of Nissan. With the countdown clock now inside three years, a concerted effort was needed to avoid further delays and to ease the mounting pressure on Gryner, Nuzman and Ciuchini, who admitted that the challenge of selling sponsorship was proving decidedly difficult amid Brazil’s darkening economic climate.

“I may have this calm face but there is a lot of pressure here,” he told the Associated Press. “There is no question about it. Our target is very high.”

Thankfully in January 2014, almost two years after the Nissan agreement, the committee finally delivered another top-tier partnership. Correios, the Brazilian state-owned postal service, was to become the official logistics provider of the Games. The company, already a major backer of several Brazilian sports, would be responsible for the delivery of more than 30 million items in the build-up to the Olympics and Paralympics, and it agreed to commit a reported US$128.4 million in cash and value-in-kind for the privilege.

With attentions in Brazil turning to the 2014 Fifa World Cup, the Rio organising committee would go on to do little business throughout the summer, other than agreeing smaller-scale supply arrangements with EF Education First and Nielsen. After the conclusion of the soccer showpiece, however, interest in the Games picked up once again. 

Renato Ciuchini (left), chief commercial officer of Rio 2016, helped secure a deal with Correios in 2014.

Ciuchini revealed to Bloomberg that seven deals were signed in the 30 days after the World Cup, helping to take sponsorship income for the Games to RS$2.6 billion, around 85 per cent of the total target. Agreements with the likes of Estácio, Technogym, CTS Eventim and 361°, a Chinese apparel company, were all penned before the year was out, helping to further build out the commercial programme and bring about much-needed optimism as the committee, which remained the subject of persistent criticism over construction delays and budget concerns, prepared to enter its most critical stage of preparations.

As 2014 turned to 2015, the committee claimed to have surpassed the record total of US$1.1 billion the organisers of London 2012 had generated from sponsorship. That was despite having been unable to secure deals with some of Brazil’s largest companies or others in sectors that traditionally produced some of the biggest Games deals. Firms in mining and agriculture, two of Brazil's most prominent sectors, were notably missing from the commercial programme, while support from an airline or a major utility company had not been forthcoming. Adding to the sense of urgency, Ciuchini said further tier-one deals would now be impossible as time was running out for companies to implement an effective marketing campaign.

Indeed, the committee was still some way behind schedule. With political turmoil, corruption scandals and a weakening real conspiring to shrink the Brazilian economy and dry up marketing budgets, Ciuchini and his team resorted to pitching partnerships weighted towards value-in-kind rather than cold hard cash. “For me to go to a company now and say, ‘Hey get money out of your bank account and give it to me,’ it’s a very tough discussion,” he told Bloomberg. “We started seeing VIK as a much easier discussion.”

A deal with Aliansce Shopping Centres was a product of this new approach. The company agreed to provide thousands of car parking spaces close to Games venues in return for in-store marketing rights. Similarly, Brazilian car hire company Localiza agreed to supply a fleet of 150 Nissan vehicles to assist in the running of the pre-Games torch relay in exchange for certain branding rights. Supporter-level deals were also struck with TAM Airlines, TAM Travel and the Brazilian media conglomerate Grupo Globo, whose four media companies – the Globo network, Globosat, Infoglobo and Sistema Globo de Rádio – would develop marketing activities around the event.

As the organisers’ focus then turned to executing other aspects of the Games like ticket sales and test events, a handful of other companies were brought on board to help the organising committee meet challenges unique to the Games and the local market. Airbnb, for example, made its first significant foray into sport when it won a contract to provide 20,000 rooms for the Games. The California-based online private rental portal was said to have seen off competition from other more traditional providers as the organisers looked to increase the supply of accommodation. As the ‘official alternative accommodation services supplier’ to the Games, Airbnb has helped to provide affordable rooms for the expected influx of 380,000 foreign visitors during the event.

More recently, another intriguing deal saw Off! become the insect repellent partner of the Games. With the organising committee aiming to address concerns about the potential spread of the Zika virus, the SC Johnson-owned brand will distribute bottles of its product to athletes, staff and volunteers throughout the event. “To continue our support for the fight against mosquito-borne diseases,” said SC Johnson chief executive Fisk Johnson, “we will use our 60 years of expertise in mosquitoes to educate athletes, volunteers and spectators about how they can protect themselves against mosquito bites.”

The addition of Off! saw the number of Rio 2016 suppliers rise to 30 but most importantly, it spelled the completion of what, on reflection, was perhaps the most fraught domestic sponsorship programme in recent Olympic history.


Who’s on TOP?

According to IOC figures, The Olympic Partner (TOP) worldwide sponsorship programme contributed around US$950 million to the committee’s US$8.046 billion total marketing revenue in the Olympic quadrennium covering 2009 to 2012. That figure is estimated to rise to as much as US$2 billion for the coming cycle to 2020.

Each worldwide Olympic partner is granted exclusive global marketing rights and opportunities within a designated product or service category. Currently, there are 12 corporations within the TOP programme. Coca-Cola, Atos Origin, Dow, GE, McDonald’s, Omega, Panasonic, Procter & Gamble, Samsung and Visa enjoy full member status while a further two –  Japanese giants Bridgestone and Toyota – are part of the programme but their global marketing rights only come into effect in 2017.

Until the end of 2016, both companies have marketing rights limited to specific territories. Bridgestone can promote its sponsorship in the next three Olympic hosts, Brazil, South Korea and Japan, as well as the United States, while Toyota’s activities are restricted to Japan until next year.

Coca-Cola
Exclusive category: Non-alcoholic beverages
Olympic history: Sponsored Amsterdam 1928 and every Games since, giving it the longest continuous partnership with the Olympic movement.
TOP history: Charter TOP partner. Member since 1986.
Contracted until: 2020

Atos Origin
Exclusive category: Information technology
Olympic history: Supported Barcelona 1992 as Sema
TOP history: Joined in 2001 as SchlumbergerSema
Contracted until: 2020

Dow
Exclusive category: Chemistry
TOP history: Joined in 2010
Contracted until: 2020

GE
Exclusive category: Select products and services covering: Energy, Healthcare, Transport, Infrastructure, Consumer & Industrial, Advanced Materials, Equipment Services
TOP history: Joined in 2005
Contracted until: 2020

McDonald’s
Exclusive category: Retail food services
Olympic history: Sponsored Montreal 1976
TOP history: Joined in 1997
Contracted until: 2020

Omega
Exclusive category: Timing, scoring and venue results services
Olympic history: Timing and scoring sponsor of Atlanta 1996 and Sydney 2000, and a longstanding worldwide IOC licensee.
TOP history: Joined in 2003
Contracted until: 2020

Panasonic
Exclusive category: Audio/TV/Video equipment
TOP history: Charter TOP partner. Member since 1987.
Contracted until: 2024

Procter & Gamble
Exclusive category: Personal care and household products
TOP history: Joined in 2010
Contracted until: 2020

Samsung
Exclusive category: Wireless communications equipment
TOP history: Joined in 1997
Contracted until: 2020

Visa
Exclusive category: Consumer payment systems
TOP history: Charter TOP partner. Member since 1986.
Contracted until: 2020

Bridgestone
Exclusive category: Tyres, seismic isolation bearings, ‘non-motorised’ bicycles
TOP history: Joined in June 2014
Contracted until: 2024

Toyota
Exclusive category: Automotive
TOP history: Joined in March 2015
Contracted until: 2024

This feature appears in the August 2016 edition - a Rio 2016 special issue - of SportsPro magazine. Order your copy today here.