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Think of it as an aspiring law student’s most anxiety-filled nightmare.
Imagine a logic puzzle involving the schedules of 206 national Olympic teams, 33 global sport federations, 11,000 athletes, hundreds of sponsors and broadcasters, dozens of venues and hundreds of hotels in the world’s largest metropolitan area. You must make it all fit together — a task that usually takes most of a decade — in a few months.
That’s what faces the international Olympic industry in the wake of the March 24 decision to postpone the Tokyo Games, which were supposed to start on July 24, until the summer of 2021 at the latest because of the coronavirus pandemic. “This is indeed a very challenging question,” International Olympic Committee President Thomas Bach said.
Answers won’t come for weeks or months, but here are the most pressing dilemmas, according to interviews with more than a dozen Olympics industry insiders.
Global IOC sponsors: Is exclusivity gone in 2021?
The Olympic Partner [TOP] sponsors with the IOC are supposed to get comprehensive global exclusivity across every national team, the organizing committees for Games scheduled within their contract period and the IOC. German insurer Allianz, for instance, is supposed to get those rights starting Jan. 1 in a deal worth more than $50 million a year. But there are two insurance companies — Nippon Life Insurance and Tokio Marine & Nichido Fire Insurance — already signed on as top-tier domestic sponsors to Tokyo 2020 in $100 million-plus deals. They will presumably be allowed to remain sponsors for 2021, overlapping with Allianz’s expected window of exclusivity. Also, the U.S. Olympic & Paralympic Committee may extend both Liberty Mutual and The Hartford through Tokyo 2021.
“The whole issue of harmonization of sponsorship rights between Tokyo Organizing Committee sponsors and TOP sponsors and [national Olympic committee] sponsors, that’s a big deal,” said Terrence Burns, executive vice president of global at Engine Shop. “It’s not insurmountable. It’s very complex, because you’re talking IOC rights, Games rights and NOC rights, three different levels with three different price tags.”
Another example: MilkPEP’s sponsorship of Team USA expires Dec. 31; the white milk category is supposed to be shifted to a global sponsorship with Chinese dairy giant Mengniu, which did a rare joint deal with Coca-Cola starting Jan. 1.
Current U.S. Olympic & Paralympic Committee sponsors: What do we get?
All 19 Team USA domestic sponsors, including United Airlines, Liberty Mutual and Kellogg, have contracts that are supposed to expire on Dec. 31. Will their contracts be extended? “All TBD,” said one senior sports law expert. “Depends what sponsors want. My guess is some will want Tokyo 2021, some might prefer some financial relief. Some may have other priorities. The one thing I know for sure is that the sponsors are not ‘entitled’ to rights for Tokyo ’21.”
Future USOPC/LA28 sponsors: How does this all affect our future deals?
Starting Jan. 1, all USOPC rights become the property of the U.S. Olympic & Paralympic Properties, the joint venture with LA28. In at least one case, there’s a conflict: The joint venture sold the airline category to Delta starting Jan. 1, but current sponsor United Airlines had expected one last go-round with Tokyo 2020. “While the short-term adjustments that come with postponement require hard work and collaboration, we are optimistic for the future,” LA28 Chairman Casey Wasserman said in a statement.
NBCUniversal: Will the ad revenue come back?
By March 3, NBCUniversal had set a record by selling more than $1.25 billion worth of ads for Tokyo 2020, more than 90% of its inventory. Those deals were cut in one of the most robust ad sales economies on record, one that saw big events like the Super Bowl, NBA All-Star Game and NCAA Tournament sell out months ahead of schedule. NBC’s powerful sales pitch of the Olympics, offering a respite from a white-hot presidential campaign, resonated in the market. Will demand come anywhere close for Tokyo 2021?
NBCUniversal said it was “exploring all options” but declined to elaborate.
The 2021 World Athletics Championships and other major international sports events: What do we do?
The University of Oregon and USA Track & Field are supposed to host the sport’s largest non-Olympic event in August 2021, but that appears virtually certain to change as a result of the Tokyo postponement. Oregon executives and USATF are stuck in limbo until the schedule comes together. The same can be said for the World Table Tennis Championships in Houston next June, not to mention UEFA’s European soccer championships and the World Aquatics Championships.
Athlete sponsors: How much new work needs to be done?
For sophisticated Olympic sponsors, individual athlete deals were signed long ago, and some appearances and content shoots are already complete. Can that content survive to 2021, or does it need to be reproduced? Also, there’s been an influx of new companies with Olympic athlete deals ever since the USOPC relaxed rules for companies that don’t sponsor the Olympic team, and they may be further behind.
“For sponsors’ individual agreements that have already been negotiated and in place, they have fixed terms, so the question becomes how flexible both brands and athletes are willing to be in terms of deferring or extending those agreements, and what that looks like,” said Will Ober, sports talent buyer at The Marketing Arm. “We’re getting toward the end of March here, so I’d be confident in saying a number of athletes have performed some service for brands and there may be some content already created. Does it work with the brands’ message or marketing mix a year later? Scheduling time with Olympians in a normal year can be challenging given training schedules, so how does a delay influence the scheduling of that?”
Athletes with short-term personal endorsements deals: Will brands reconsider 2021?
As the economy continues to slide, corporate purse strings are tightening and marketing budgets are getting slashed. Olympic athletes may soon feel squeezed, especially if they’re relying on smaller companies.
“Sponsors such as Coca-Cola and Toyota, I believe they’re going to take care of the athletes and make it as smooth a transition as possible,” said Sheryl Shade, a veteran agent in gymnastics and other Olympic sports. “It’s the newer sponsors and the smaller ones that have challenges. Do they have the rights [after 2020]? How is their business affected by this? The larger ones I’m not worried about, it’s the smaller ones: What kind of economic hit did they take, and can they extend and make this work for themselves and their athletes?”
Tokyo’s Olympic countdown clock on March 24 (left), showed the days remaining until the scheduled opening ceremony of the 2020 Games. After the Games were postponed, the clock displayed the date.getty images
Winter sport Olympians preparing for Beijing 2022: Will Tokyo 2021 crowd out 2022 preparations?
It’s possible there will be fewer than six months between the flame going out in Tokyo and the opening ceremony for the 2022 Beijing Games, currently slated to begin on Feb. 4 of that year. Such a small window could complicate matters for winter athletes trying to get sponsor money while Tokyo is happening. Even athletes with deals already in place are left wondering how things will play out.
“With winter 2018, the conversations started happening in November-December of 2016, and deals got done in the spring of 2017, and we shot content in the summer of 2017. How is all this going to affect that?” asked Denege Prudhomme, agent at Stanton & Co., which represents two-time gold medalist snowboarder Jamie Anderson.
Olympic hopefuls: How are we deciding the teams who compete?
The IOC has confirmed that athletes who had qualified for Tokyo 2020 would be guaranteed entry to the 2021 Games. But only about 20% of the U.S. team had qualified for Tokyo 2020, and for now, sport federations are still figuring out how to shift that process to 2021. It could have big ramifications in some sports. Take women’s gymnastics, where careers are notoriously short and the next star is always coming up in the ranks. “There are going to be more girls coming up who are 16 and eligible, so it will be harder to make the team,” Shade said.
Major national governing bodies: When will the Games be?
For the largest American sports, those with widespread grassroots participation and big Olympic teams, timing is everything. Track & Field, Swimming, Gymnastics and other large national governing bodies build their entire schedules around the Olympics. They need to cancel 2020 trials, schedule ’21 trials and build a competition schedule leading up to that. “It’s hard to even speculate until we know the time frame,” said USA Swimming CEO Tim Hinchey. “Once we know when the date would be, then we could back up the entire schedule leading into that. … It gets complicated very quickly. But we’d make it happen once we found out.”
USA Track & Field CEO Max Siegel said: “We have working committees of our most accomplished and decorated professionals in all segments, coaches and high-performance leaders, doing everything from figuring out how long does it take athletes to get fitness ready, to what venues and facilities will be able to accommodate us on whatever kind of notice.”
Smaller national governing bodies: How can we keep the doors open?
Team USA NGBs are already on pace to lose nearly $150 million in revenue because of coronavirus-related cancellations to domestic events, according to USOPC data obtained by Sports Business Journal. With the postponement of the Games, the USOPC estimates total revenue loss across the U.S. Olympic movement could reach $600 million-$800 million by August. USA Cycling, which has already cut 120 revenue-generating races, laid off or furloughed 30% of its workforce last Thursday. “What we are struggling with immediately is: We’re projecting at least three months of racing cancellation, maybe longer, and that is the immediate revenue stream,” said USA Cycling CEO Rob DeMartini. “The elite team is a little more insulated because it’s funded differently, through private donations.”
USA Weightlifting CEO Phil Andrews says the NGB’s revenue is already down 50%. He’s cut most freelance and contract employee costs, and he’s requested a 90-day pay reduction to provide spending relief. Even large NGBs are squeezed by the loss of event revenue.
Governing bodies that didn’t make the ’20 Olympics:How long until we get to start fresh?
NGBs that didn’t qualify for the Games were looking forward to a new quadrennial, when they’d have another shot at getting more funding from the USOPC. With the Games pushed back until 2021, it could mean an extra year of throttled funding. Speaking the day before the postponement announcement, USA Team Handball CEO Barry Siff said, “I was resigned to the fact that 2020 would be a low year of support for us, but was very optimistic for 2021. … If it does get postponed to 2021, I’ll have to rethink our whole approach to the next year.”
Marketers and advertisers: Does the message need to be changed for 2021?
Olympics-themed promotional campaigns were created in a strong economy and for a healthy world. Will the same message work in a recessionary, post-pandemic 2021?
“These Games will have an unprecedented sense of spirit and symbolism as well as provide an even greater opportunity and runway for brands to activate around,” Mary Scott, president of global integrated communications at UEG Worldwide and a longtime consultant to Olympic brands, said in an email. “Marketers will need to pivot and evaluate plans for how the Olympics fits into overall business and brand objectives not just for 2020 but also now for 2021. And of course, in the short term, there are still many unknowns as the pandemic continues to play out.”
Activation consultants: How quickly can we adjust?
Even modest showcasing and activation plans for the Olympics depend on years of careful logistical planning, often working against language and cultural barriers. Now plans must be recrafted in a matter of months.
“The key challenges to transitioning to 2021 are largely legal and contractual. Not only sponsorship deals and rights activation, but the entire supply chain of operational partners and vendors including hotels, transportation, staffing, production vendors, and more,” said Adam Lippard, chief partnership officer, GMR Marketing. “Working through this ecosystem and the downline impact will be complex but we plan to do it expeditiously. Ultimately, we’re challenging ourselves and our clients to adapt and lead. We’re helping them determine how they can use the postponement to step up and make a difference.”
Ticket holders: Can I get a refund?
Tokyo was the most in-demand Olympics ticket in years, with demand far outstripping supply in domestic Japanese sales and here in the U.S. At least some expenses already incurred by tourists and corporate VIP guests will be lost for good, but how much depends on negotiations still to come.
“The latest statistics for Tokyo 2020 were that 5 million of 7.8 million tickets had already been purchased or distributed,” said Ken Hanscom, COO of Ticket Manager, which handles group ticketing for major corporate clients. In a letter to ticket buyers, CoSport, the authorized reseller in the U.S., said that “purchases will be honored at the Games in 2021,” though exact details still need to be sorted out. Any plans for ticket refunds would need to be jointly decided upon by Tokyo 2020 and each national Olympic committee and authorized ticket reseller. “It will take weeks to finalize,” Hanscom said. Notably, CoSport’s contract with the USOPC is due to expire Dec. 31.
Olympics tourists and guests: Can hotels roll over deals and reservations until ’21? And will struggling airlines cooperate?
It’s harder to predict how other pieces of the travel question will fall into place, especially since the Games have yet to be rescheduled to an exact date. But Hanscom expects that the Tokyo Organizing Committee will work to roll lodging plans over to 2021.
“At a large scale, Tokyo 2020 is going to be working with everyone, especially with those that have been reserved for years, to find a solution,” he said. Flight plans offer a bigger complication, especially since most airlines’ current waiver periods for free changes or cancellations don’t currently extend beyond May. “There’s a real impulse to try to get your flight canceled or changed right now. … I would recommend that people wait to see what happens,” Hanscom said.
Everyone: What will economic and health conditions be in 2021? And what role can the Olympics play in a return to normalcy?
Even the most hardened cynic can envision the Tokyo 2021 Olympics turning into a triumphant celebration of the human spirit, if the pandemic is under control and the global economic fallout is mitigated. But there already are signs of sharp spikes in unemployment in some states and economists believe a serious recession is likely. Marketing budgets for 2021 are impossible to predict.
“Who knows?” former IOC marketing chief and Olympics business consultant Michael Payne said. “Obviously people are going to have to come out of this. The Olympics will probably have a higher profile on the world stage because of what it represents, so the platform is likely to have an even greater connection with people. But nobody today knows what the world will look like after we get through this.”
There is, of course, one final question for the Olympic community:
What if the coronavirus is not under control by this time next year, and the question becomes less about further postponement and more about cancellation?
That may be the one question everyone hopes to avoid and no one can fully answer.
Editor’s note: This story is revised from the print edition.
