Sponsors walking away from the Olympics

By Frederik Balfour and Reena Jana

updated 1:11 p.m. ET Aug. 4, 2008

With the opening ceremonies for the Beijing 2008 Olympic Games just days away, corporate sponsors are getting ready to do victory laps of their own. This year's Olympics have been hyped as a blockbuster for marketers, a chance to ride the wave of Chinese national pride that may translate into billions of dollars in sales of Adidas sneakers, McDonald's Big Macs, or General Electric wind turbines.

But Beijing 2008 is likely to go down as the high-water mark of the Olympic sponsorship program. While the Games offer unique attractions to sponsors, multinationals are already looking more critically at whether the payback will be worth it for future Games. Of the 12 global sponsors for the Beijing Olympics, only eight have signed on for the 2010 Winter Games in Vancouver and 2012 Summer Games in London. (The International Olympic Committee sells sponsorships in four-year increments to cover both Winter and Summer Games.)

Among the high-profile sponsors deciding to back away is Lenovo. Its sponsorship of the 2006 Winter Games in Turin and the 2008 Summer Games in Beijing will be a one-time shot for the Chinese PC maker. Other current sponsors who so far have not committed to ponying up for the next pair of Games will be Johnson & Johnson and Manulife Financial. Even longtime Olympic supporter Eastman Kodak, a sponsor since the IOC first established its global partnership program in 1986, has pulled the plug. "It's just not the best way for us to spend our money," says Kodak Chief Executive Antonio Perez.

The issue comes down to weighing the value of shelling out increasing amounts of money vs. the potential payback. Companies have paid $866 million, or an average of $72 million apiece, to sponsor the Turin and Beijing Games. That's almost one-third more than the $663 million total paid to back the Salt Lake City and Athens Games in 2002 and 2004, and up from $579 million for the Nagano-Sydney cycle in 1998 and 2000. Rowland Jack, a senior bid consultant in the sports marketing and sponsorship team at Hill & Knowlton, says the attractiveness of the Beijing Games was probably a big factor accounting for the jump in sponsorship fees, as so many companies were interested in bidding.

Yet some research suggests few consumers even notice who is backing the Games. In a survey of 1,500 Chinese city dwellers earlier this year by London's Fournaise Marketing Group, only 15 percent could name two of the 12 global sponsors, and just 40 percent could name one sponsor: Coca-Cola. Adding to the confusion for consumers are 21 additional national-level sponsors, including Adidas and Volkswagen. "If you are a traditional marketer, it's a big waste of money," says Fournaise CEO Jerome Fontaine.

Some sponsors feel otherwise. Longtime partner Coke has signed on through the 2020 Games. "Coke has not in the least reconsidered its Olympic sponsorship," says Kevin Tressler, director of Coke's Worldwide Sports & Entertainment Marketing. Neither has GE, which has landed $700 million in revenues from 400 Olympics-related projects such as rainwater recycling at Beijing's Bird's Nest stadium.

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