In coronavirus-hit world, sponsors to stand by delayed Olympics
25 March, 2020, 6:10 pm
(Reuters) – Major corporate sponsors of the Tokyo 2020 Olympics are standing by the International Olympic Committee after the Games were postponed and experts familiar with the deals said the companies would not likely seek the return of billions of dollars committed to the agreements.
Fourteen global companies including Coca-Cola Co (KO.N), Procter & Gamble Co (PG.N) and Intel Corp (INTC.O) spent $500 million this year and have committed close to $4 billion on multi-year contracts that designate them as top-tier sponsors, according to research firm Global Data.
On Tuesday, the Tokyo Games were postponed to 2021, a first in the 124-year modern history of the event, due to the coronavirus pandemic which has prompted governments to shut businesses globally.
Moments after the announcement, three major sponsors, Procter & Gamble, Intel and Coca-Cola, reaffirmed their commitment to the games.
“As the longest standing sponsor of the Olympic Games, we remain committed to working together with the IOC and TOCOG (Tokyo Organising Committee) to create a successful and safe event,” said a Coca-Cola spokesman.
Despite the severe financial toll on the sponsors, the companies generally consider themselves long-term partners of the International Olympic Committee (IOC).
“No doubt, the IOC and Japan are working hand-in-hand with those 14 sponsors,” said Jason Karlov, a partner at law firm Barnes & Thornburg, who has worked on previous IOC sponsor deals. “They keep the Olympic movement functioning and thriving.”
Beyond the Olympics, the pandemic has forced the cancellation of nearly every national and regional sporting event in the coming months. Lawyers involved in those deals said many corporate sponsors, often smaller companies hard hit by the outbreak, are trying to back out and get their money back.
However, even if a company wanted its Olympic sponsorship money returned, it is unlikely the deal with the IOC allows it, according to those lawyers familiar with the deals.
The sponsorship dollars are crucial to the operations of the IOC, which is a non-profit funded primarily by broadcast rights and revenue from top sponsors. The companies generally pay a portion of the total contract upfront when they sign and the remainder is paid in installments over the length of the agreement.