Rio Paralympics Financial Mess Yields Lessons for Future Gamesby
London 2012 tied Olympic sponsorships to Paralympic support
Rio failed to sell Paralympics separately, then needed bailout
Olympic host cities cover their costs with sponsorships, among other things, and the organizers of the Rio 2016 games learned two big lessons the hard way. One: Start early, before the economy has a chance to tank and companies bar the door. Two: Link Olympic sponsorships to support for the Paralympic games.
The Rio organizers suffered on both counts. Facing a slumping economy, they found it hard enough to sell high-priced Olympic sponsorships, let alone the Paralympic Games, which get far less international media attention.
“We tried as much as possible to bundle it,” said Rio 2016’s Chief Commercial Officer Renato Ciuchini, who joined in 2012 after his predecessor quit. Meeting resistance, the committee shifted its tactics. “The strategy was to upsell on the Paralympics, but that worked for very few companies. Most of the companies, once they have made a decision, they don’t change that decision.”
Rio hoped that once companies signed on as Olympic sponsors, they could be persuaded to kick in more money for the Paralympics. The plan was a bust. With little sponsor support and weak early ticket sales, the committee faced a cash shortage. Travel stipends to athletes from more than 50 countries were delayed, and less than a month before the Opening Ceremonies, athletes were still in limbo.
The cash crunch at the Rio Paralympics came in sharp contrast to London 2012, where the sponsorship model went further to link the Olympics and the Paralympics, guaranteeing the organization and execution of the latter.
“Bundling seems the more logical approach,” said Dominic Curran, Chief Executive of sports marketing company Synergy USA, adding that sponsors are typically too sophisticated to be persuaded to spend additional money after they’ve already cemented their strategies.
The “One Bid, One City” agreement of 2001 affirmed that Olympic host cities would also have to make a joint bid for the Paralympics. London’s would have been a “very good model to follow,’’ the International Paralympic Committee said in an e-mail.
Sponsors provided more than half of the 7.4 billion reais ($2.24 billion) for the Rio 2016 organizing committee budget, according to initial projections on its website. That money was used for everything from infrastructure to ceremonies, but it never publicly disclosed how much of the revenue was destined for the Paralympics.
About three-quarters of Olympic sponsors extended their support to the Paralympics at some level, according to the Rio 2016 website. Others put money behind different efforts. Bridgestone Corp. sponsored the U.S. and Japanese Paralympic teams in Rio and will sponsor the 2020 Tokyo Paralympics. McDonald’s Corp. maintained a restaurant in the athlete village that was free to Paralympians.
Organizers ultimately turned to state-backed companies like oil company Petroleo Brasileiro SA, state tourism institute Embratur, export and investment agency Apex and a lottery operator, Loterias Caixa.
The committee also persuaded Ambev SA’s Skol brand, which had already sponsored the Olympics, to extend its commitment. That deal is so fresh that 10 days into the Paralympics, the website still didn’t reflect Skol as a sponsor.
The local sponsors might be getting their money’s worth after all. While the Paralympics don’t draw much media attention, they have been a hit with Rio residents. In contrast to the sometimes lackluster crowds at the Olympics, Paralympic events have unfolded before full arenas, partially a result of lower ticket prices and fewer seats on offer. There, in-venue advertising has allowed companies to display their brands prominently on playing surfaces, runners’ bibs and elsewhere.
Regardless, the Tokyo 2020 organizing committee isn’t making the same mistake: It’s brought back the bundling model, and the marketing campaign is well under way. Four years before the Games, it already has a longer list of Paralympic sponsors than Rio did this month.