Wednesday, January 26, 2011

Paralympics gold lures sponsors

From the Wall Street Journal. In the picture, Amanda McGrory of the U.S. competes during the IPC World Championships in Christchurch, New Zealand, Jan. 22.

Over the course of her record-breaking career as Britain's most successful Paralympic athlete, Tanni Grey-Thompson went out of her way to avoid what she calls "pat on the head money."

"I wouldn't take money if it was because people felt patronizing towards me," Baroness Grey-Thompson said as she prepared to travel to this week's IPC Athletics World Championships in Christchurch, New Zealand. "You got to know the type of thing. 'Let's give her some money because she's so lovely.' I'd take money as an athlete and that's it."

Today, endorsement opportunities for elite disabled athletes like Baroness Grey-Thompson are no longer solely a matter of altruism. For reasons ranging from growing crowds to greater exposure, the Paralympic Games has turned into a fully fledged marketing opportunity.

Begun in 1960 as a parallel event to the Olympics, the Paralympic Games remained an afterthought with corporate sponsors and sports marketers, but has bloomed into a major competition, drawing more than 4,000 participants from about 150 nations across 21 sports. Attendance for the 2012 Paralympic Games is expected to hit 1.6 million and broadcasters across the globe will show more than a thousand hours of live coverage.

The upshot has been a rise in major corporate sponsorship for disabled sport. Support for the International Paralympic Committee has grown from virtually nothing to several million dollars a year in the past decade and the IPC now has five worldwide sponsors including Visa and Samsung.

But some marketing experts say the real reason for the sudden rise in sponsor interest in Paralympic sport is the discovery of a lucrative loophole in the notoriously strict legislation governing the global marketing of the Olympic Games.

Specifically, it can be traced to an agreement signed in 2001 by the International Olympic Committee and the IPC which established that each city selected to host the Olympic Games would also be obliged to host the Paralympic Games. By saddling host cities with the cost of staging both events, the arrangement greatly increased the financial burden of putting on the Olympics. The total budget for the London 2012 Olympic and Paralympic Games, for instance, is £2 billion ($3.2 billion), according to London's Olympic organizing committee, or Locog.

In a bid to offset the extra cost, organizing committees are scrambling to raise additional marketing revenue, says Patrick Nally, a sports-marketing consultant and co-founder of the London-based West Nally agency. The best way to do so, he said, has been "by establishing a close link between the Olympic and Paralympic events."

For many of the IOC's major sponsors, who pay more than $100 million in cash and kind for category-exclusive advertising around the Olympic Games, this has led to combined sponsorship programs to exploit the marketing rights of both events. But it has also meant that some companies unable to sponsor the Olympics because of the IOC's rigidly enforced rules on ambush marketing have started to realize that a relationship with the Paralympic Games can give them "the perception and kudos" of an Olympic presence, said Mr. Nally.

Leading the way is U.K. supermarket chain J Sainsbury PLC, which signed a high-profile deal to be the first sole sponsor of the 2012 London Paralympics last May. The move was lauded by Sir Philip Craven, the IPC president. "I think it is most certainly historic," he said.

But it was also controversial. The deal appeared to undermine the IOC's long-term agreement with Coca-Cola Co., which includes covenants restricting food retail at the Olympic Games.

By allowing the supermarket to use the Olympic logo on its own-brand carbonates, juices and water, Sainsbury's sponsorship essentially circumvented the IOC's category-specific marketing rules, thereby encroaching on Coca-Cola's exclusive rights. "It could almost be described as official ambush marketing," said Mr. Nally.

A Locog representative acknowledged that sponsorship deals are complicated by the wide range of products carried by some retailers, but said the IOC and Coca-Cola were satisfied with the Sainsbury's deal. "By working closely with the IOC and Coca-Cola, we were able to find a solution that worked for everyone," said a Locog statement.

A Coca-Cola spokesman said the company was happy to work with Sainsbury's as a sponsor of the 2012 Paralympic Games. "It is the responsibility of the IOC to set the parameters of any sponsorship agreements which bring rights of association with the Olympic and Paralympic Games," the company said in a statement.

But sports-marketing experts say the supermarket's Paralympics-only deal has transformed the landscape of Olympics marketing, dramatically raising the value of Paralympic sponsorship rights. Igor Stolyakov, head of marketing for the 2014 Winter Olympic Games in Sochi, Russia, expressed such admiration for Locog's ingenuity that he now intends to copy it.

"The Sainsbury's deal is a precedent," Mr. Stolyakov said. "It's very smart. Coca-Cola is a pain in the neck. They're nice people, and I like them very much—but in this respect Coca-Cola has blocked the supermarket category and the grocery category. London has done brilliantly by acquiring Sainsbury's as Paralympic sponsor [because] basically this is a trick. And if Coke insists on blocking the category with us, we would simply replicate London's trick."

Whatever the reasons for Sainsbury's involvement, the upswing in sponsors' interest in Paralympic sport is being felt by individual athletes, who are finding greater commercial opportunities.

"The Olympics are about human endeavour, being the best you can be and improving your potential," said Susie Williams, a marketing executive at U.K. telecommunications company BT Group PLC, a long-time Paralympic sponsor. "The Paralympics is the acid test of that."

For marketers, the Paralympics is "massively undervalued," Ms. Williams said. "The assets are much cheaper and it is a much less cluttered space."

The endorsement money still doesn't compare to the sums earned by their Olympic counterparts, but the cost of hiring disabled athletes for advertising work is on the rise, according to Baroness Grey-Thompson.

She has also noted a significant trend that speaks to the growing investment in Paralympic sports. "Many more Paralympic athletes now have agents, who are doing the negotiations for them," Baroness Grey-Thompson said.