McDonald's ends Olympics
sponsorship deal early
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[June 17, 2017]
By Liana B. Baker and Karolos Grohmann
NEW YORK/BERLIN (Reuters) - McDonald's Corp
<MCD.N> ended its 41-year-old sponsorship of the Olympic Games three
years early, the International Olympic Committee said on Friday,
reflecting the U.S. fast-food giant's focus on its core business as well
as rising Olympics sponsorship costs and declining TV ratings.
McDonald's deal would have run through the Tokyo Olympics in 2020, and
bowing out will likely to save it hundreds of million of dollars if it
had continued into the next four-year Olympics cycle and beyond.
McDonald's has been trying to hold down costs as it invests in improving
food quality, restaurant service and online ordering to woo back U.S.
diners. Intense competition has gnawed away at sales.
"We are reconsidering all aspects of our business and have made this
decision in cooperation with the IOC to focus on different priorities,"
said McDonald's Global Chief Marketing Officer Silvia Lagnado.
The company, first involved with the games in 1968 and a sponsor since
1976, was the Olympics' food retail sponsor. Despite pulling out with
immediate effect, McDonald's will continue at next year's Pyeongchang
winter Olympics as a domestic sponsor.
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The company's move may also reflect a rising view among consumer brands
that exclusive Olympics sponsorship deals do not offer the marketing
impact they once did. Some companies find it is much cheaper to work
directly with athletes or specific countries than the IOC.
Moreover, in a trend that began after the Beijing games in 2008,
shrinking television audiences for the games could be diminishing the
value of sponsors' ads. With the Rio de Janeiro games in 2016, many
viewers turned to social media alternatives like Twitter Inc <TWTR.N>
and Facebook Inc <FB.O>.
In the United States, Comcast Corp's <CMCSA.O> NBCUniversal said it had
attracted 8.6 percent fewer eyeballs for Rio than it did for London in
2012.
The fast food chain has been part of the IOC's top sponsors program that
contributes more than $1 billion in each four-year cycle for the games.
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![](../images/061717pics/busine85.jpg)
Athletes line up at a McDonald's inside the Olympic village in Rio
de Janeiro, Brazil on August 1, 2016. REUTERS/Kai Pfaffenbach/File
Photo
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While terms of Olympic sponsorship are not disclosed, a source who negotiated
previous IOC sponsorship deals said that top global sponsors like McDonald's
spend about $25 million a year or about $100 million for a four-year period that
includes a summer and winter games.
Reuters previously reported that the IOC had wanted to roughly double fees to
$200 million per four year period starting in 2021.
While it is unusual for an Olympic sponsor to leave early, sponsors change
regularly within the IOC's top program. The most recent addition was China's
Alibaba Group Holding Ltd <BABA.N>, which signed a deal in January for a
partnership through 2028.
The next three Olympics take place in Asia, and this could turn off U.S.
sponsors trying to reach a U.S. audience. The U.S. Olympic Committee also has
lost recent sponsors such as AT&T <T.N> and Citigroup <C.N> ahead of the 2018
winter games in South Korea.
The IOC said it was not planning a direct replacement for McDonald's, but it is
expected to announce a new global deal with Intel Corp <INTC.O> next week,
according a source familiar with the matter.
Intel did not immediately respond to a request for comment.
"Companies with a deep focus on technology are barging in while others migrate
out," said Peter Land, who works with Olympics and Paralympics sponsors for
communications firm Finsbury.
The IOC has faced criticism from public health campaigners for allowing sponsors
such as Coca-Cola <KO.N> and McDonald's to use the games to market their
products, which are perceived to be unhealthy.
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John Lewicki, who oversees global Olympic sponsorship deals for McDonald's, said
last year the company would reevaluate its Olympic relationship after changes to
a rule that ended a marketing blackout for companies that sponsor athletes
rather than the event itself.
Shares of McDonald's rose $1.06, or about 0.7 percent on Friday.
(Reporting by Liana B. Baker in New York and by Karolos Grohmann in Berlin;
Editing by Frances Kerry and Cynthia Osterman)
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