Sponsors hope for the best, prepare for the worst, for Rio Olympic Games

With the country facing a national corruption scandal, economic worries, and the Zika virus, Olympic sponsors - and the brands looking to usurp them at the Games - are preparing for a range of serious issues.

Sponsors hope for the best, prepare for the worst, for Rio Olympic Games

The political and economic crises in Brazil have not gone unnoticed by sponsors of the 2016 Summer Olympic Games in Rio de Janeiro. And while they tell PRWeek in statements they remain committed to the mega-event, sports marketing experts say those brands have responded with a shift in campaign strategy.  

In 2009, Rio de Janeiro beat out Tokyo, Madrid, and a Chicago bid backed by President Barack Obama for the 2016 games. At the time, it was celebrated as a vote of confidence in Brazil’s growing economy and middle class, as well as improved political stability and the country’s ability to host such global events. It also played host to the World Cup in 2014.

Brazil’s then-President Luiz Inácio Lula da Silva proclaimed the Games would boost the country’s fortunes.

"Now, we are going to show the world we can be a great country," he said at the time. "We aren’t the United States, but we are getting there, and we will get there."

Now, less than four months before the Opening Ceremonies, the country is facing a national corruption scandal. President Dilma Rousseff is expected to be impeached, which has led to protests throughout the country. It has also slid into a steep recession, and Goldman Sachs warned earlier this year that the country’s economic woes had worsened into an "outright depression."

If that wasn’t enough, officials there are also dealing with the mosquito-transmitted Zika virus, which causes flu-like symptoms and has been linked to birth defects and poor pregnancy outcomes.

Steve Madincea, founder and group MD at London-based PR and sports marketing firm PRISM, says, "The downgrading of the Brazilian economy has many of the Olympic partners around the world concerned."

"Our client contacts have been shifting the emphasis of their promotions from inside the country to outside Brazil, where they feel they can obtain a better return on their substantial Olympic investment," he notes, in response to the country’s economic turmoil.

Madincea is optimistic the Rio Games will be a winning play both inside and outside the country. He notes Brazil has had challenges hosting major events before, recalling the 1995 Brazilian Grand Prix, when local hotels and car-rental companies jacked up their rates. The sanctioning body intervened, and he expects the International Olympic Committee would do the same, if needed.

"The Brazilian Grand Prix went forward, and I expect the same for the 2016 Rio Olympics," says Madincea.

Steve Hickok, SVP, partner, and global sports co-lead at FleishmanHillard, agrees that major events such as the Olympic Games always result in scrutiny of the host country. He notes, "We had issues related to human rights in Beijing, the threat of terrorism in London, and LGBT discrimination in Sochi."

"What is happening in Rio is something brands have to keep an eye on, but at the end of day, the Games will proceed," points out Hickok. "The sponsors who are ultimately able to protect their investment and amplify it will be the ones that succeed."

Brands in crisis training
Despite the optimism, Olympic sponsors should be scenario planning for any reputational risk that could arise from their involvement. For instance, global sponsors such as McDonald’s and Coca-Cola could be questioned about the rise of obesity in Brazil and other developing nations.

All sponsors – the list includes Procter & Gamble, Omega, General Electric, and Panasonic – should have plans in place in case an Olympic ambassador or athlete they support is stricken by the Zika virus.

"Sports marketing and issues and crisis management are two areas of our industry that have really united over the past three or four years. To understand why, all you have to do is look at the world of athletics – FIFA and its corruption scandal, drug doping across various sports, and events having been held where there is civil and economic instability," says Andy Sutherden, global head of sports marketing and sponsorship at Hill+Knowlton Strategies. "All of these things can bring as much reputational risk to a brand as it does opportunity."  

He adds that a well-prepared sponsor will have done two things. First, it should negotiate a contract with the Olympics rights holder that includes termination clauses related to specific situations that would put the brand into disrepute. The situations could, for example, include a doping scandal or a failure to police a competitive brand from gaining benefit of the Olympic name without having paid licensing fees.

"The work I am doing now is much more around contract negotiation. Historically, there has been too much ambiguity of what represents the right to terminate a contract," Sutherden notes. "Now they are taking much more care and attention to it. If a company’s reputation is at risk, the sponsor now has a very clear path to exit."

Brands should also conduct extensive media and crisis-management training with executives and brand ambassadors. He notes this skillset is needed in the weeks before the Games, when the world’s media descends on the host city and looks for stories to write about.  

"Historically, company spokespeople have been very fluent in talking about the positive nature of their partnerships, but less fluent in being able to speak when something goes wrong," he says.  "Sponsors need to scenario plan for every conceivable issue that could come around."

Sponsors are also expected to heavily communicate about the CSR components of their Olympic plans, given that Brazil is facing challenges including poverty, infrastructure, and public health issues.

GE, for instance, is planning to announce a legacy gift to the city to coincide with the 100-day countdown to the Opening Ceremonies, says Singapore-based Penny Shone, MD of communications for global growth and operations at GE.

"GE has established a tradition of donating technologies and solutions to the host city or country providing a real legacy benefit to the population," she says.

For the 2014 Winter Olympic Games in Sochi, it donated a mobile mammography van that travels to remote areas where there is little access to breast-cancer-screening technology. GE has also given legacy gifts to London (2012), Vancouver (2010), and Beijing (2008).

Nissan, another Olympic sponsor, has launched a mentorship program as part of its commitment to the Rio Games. The effort subsidizes 31 Brazilian athletes for the Summer Games and the Rio 2016 Paralympic Games. The automaker hired Hortência Marcari, a Brazilian basketball icon and Olympic medalist, and Clodoaldo Silva, a Paralympic multiple medalist in swimming, to mentor the athletes.

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