London’s Burning: Controversy Heats Up Over Protecting the Olympic Brand
By Marco Bertini, Assistant Professor of Marketing, London Business School
The Olympic Games in London are officially kicking off, providing us the opportunity to witness the world’s most prestigious sporting event. As Olympic athletes descend upon London, local businesses are finding ways to capitalize on the moment.
But there’s been debate around some companies many say are overstepping their bounds, using the Olympic symbols without permission. For instance, Bloomberg BusinessWeek interviewed Dennis Spurr, a butcher in Dorset who depicted the Olympic rings as sausage links and was confronted by officials from the Olympics. And The Daily Mail reported that London’s cake stores are being told not to use any Olympic logos on cakes due to copyright.
London is one of the premier cities in the world. It has its own recognizable appeal and brand. Thus, it would make sense that others would try to capitalise on it. So what’s the big deal and is it really all that harmful for local companies to use the Olympic logos in a creative way?
To fully understand this issue, let’s first look at the economics of the Olympic Games and points of profitability.
How Does It Work?
By almost any measure, the Olympics are big business. For instance, the 2000 Sydney Games generated $2 billion in revenue from five sources: broadcast rights, international sponsorship, ticketing, domestic sponsorship and licensing rights.
Licensing rights refer to the use of Olympics logos and trademarks on items ranging from stamps and coins to t-shirts and stuffed animals. This year in London, Adidas emerged as a Tier One Partner, allowing the sportswear company to receive marketing and licensing rights in addition to other perks (game officials, volunteers and staff will all be donned in Adidas sportswear). Other tier-one partners for this year include BMW, BP, British Airways, BT, EDF, Lloyds TSB.
But once the sponsorships and licensing rights are in place, it’s important to examine the flow of revenue.
Where Does the Money Go?
The revenue from the principle sources is allocated to: The International Olympic Committee (IOC), National Olympic Committees, International Federations and Organizing Committee for the Olympic Games (OCOG).
In the case of the Sydney Olympics, the major beneficiary was the host city OCOG, which used the funds to stage the Games. Historically, 50 to 60 percent of the revenue from broadcast rights and international sponsorships, plus 100 percent of the revenue from ticketing, domestic sponsorship and licensing rights, went to the OCOG.
Of the remaining revenue, the IOC kept a portion to cover its administrative and operational costs and allocated the rest to the 205 National Olympic Committees of the IOC’s member nations and to the International Federations of the sports of the Olympic Games.
Who is Responsible to Monitor and Control Logo Use?
Of the five sources of revenue, the IOC – a non-profit organization based in Lausanne, Switzerland – is responsible for negotiating and managing the broadcast rights and international sponsorships, while the host city’s OCOG is in charge of ticketing, domestic sponsorship and domestic licensing.
According to a report in The Guardian, London already has a range of legal protections in place, but the IOC since the Sydney Games in 2000 requires an additional layer of legal sanction. In fact, there are laws in place that are meant to prevent non-sponsors and non-licensed businesses from employing images or wording that might suggest too close a link with the Games.
The Danger of Non-Licensed Businesses Using the Olympics Logo
The Olympics are no different than any other business. Most companies spend good money on building their brands. While few would question the right of these businesses to protect this asset, the same has to be the case for the Games.
This is a brand name the IOC wants to make sure grows in stature. But this is complicated in that the brand is “borrowed” to host cities. That is, the IOC “owns” the brand in a sense, but the host is the one who manages it in the running of the event.
I can understand that local London businesses feel some sense of shared ownership. After all, the Games are held in their town and they paid their share for the construction of the infrastructure. But irrespective of this feeling, the fact remains that the Organising Committee has final ownership of the brand. The store owners will likely still benefit from the increased traffic in London from July through August. But those running the event have the obligation to make sure (a) their name is represented accurately and positively, and (b) that the rights of those corporations that have paid good money to be formally associated with the Games are respected and upheld.
So as you marvel at the Olympics this year, you might also think about all of the strategy that is behind the scenes. And while many might become frustrated with the IOC’s strict regulation, you can’t deny that they’ve kept the Olympic brand shining – year after year.
Marco Bertini is a professor of marketing at London Business School. He focuses on consumer/managerial decision-making, and the behavioral aspects of pricing & promotions.