Winning gold: Inside the Olympic movement’s commercial transformation

Tokyo 2020 is already a historic event.

The first Olympics ever postponed in peacetime will always stand out in the record books, one year removed from its anticipated line by the Covid-19 pandemic. With just a few months to go, it is hard to escape speculation about just what kind of Games it will be.

That is a question to get used to. The upheaval will not end in 2021 for the world’s preeminent multi-sport event. This decade will be marked by changing habits among sports viewers and participants, evolving media trends, and an intense contest for the attention of audiences – not least those younger ones the Olympics has not yet won round. New and surprising disciplines are joining the programme, sometimes one Games at a time, with experiments to come in esports and other forms of digital engagement and staging. 

Commercially, this opens up other enquiries. Most notably, about what an association with the Olympics is worth and how to make sure it remains worthwhile. The person charged more than anyone else with answering those is Timo Lumme, the long-serving director of TV and marketing services at the International Olympic Committee (IOC).

“We in any case have to be doing two things at once,” he says. “You have to be looking at the everyday, the operational, the short term, make sure that you’re delivering, hopefully over-delivering on clients, whilst you’re strategising and creating the circumstances for a successful future.”

Lumme, who joined the IOC in the mid-2000s after spells with ESPN, Nike and IMG, is speaking to SportsPro in mid-March. Coincidentally, it is the day after the IOC’s annual sponsor meetings – held, like this interview, over a video link.

“And we very consciously focused firstly on the here and now,” he continues, “which is Tokyo, Tokyo, Tokyo, and then we moved the discussion to more strategic elements, more developmental things – just to remind people that this is something that we’re thinking about every day and we are continuing to aim or have the objective of growing value for our partners.”

The business of reorganising this most complex of sporting occasions, acting on incomplete details, has demanded both structured thinking and improvisation. While there were some contingencies built into IOC contracts, a lot of the steps taken were “effectively new”. Postponement brought a rerun of procurement, rental and employee contracts. “Just all of that took us through September,” Lumme recalls, “and then after that we started all of the heavy lifting on what you might call Covid countermeasures.”

Every sponsorship, broadcast and licensing agreement – for the IOC, Tokyo 2020 and the 206 national Olympic committees (NOCs) – needed the same forensic attention. “We’ve had to shift the whole marketing superstructure,” Lumme explains, “which in our world runs in four-year periods and ends in the year of a summer Games – it should have ended in 2020. We had to extend some sponsors’ rights, extend the period of activation.

“Obviously we’ve had some issues of overlap with new sponsors coming, so all of that needed to be managed and that’s an ongoing thing as we get closer to the Games.”

Protecting value for partners is another target. Overseas spectators cannot attend Japan’s Games; 600,000 tickets must be refunded, with a knock-on effect for hospitality programmes. International media activities will probably be limited. At the start of February the IOC, the International Paralympic Committee (IPC) and the Tokyo 2020 Organising Committee issued a series of ‘playbooks’ outlining instructions for every group who might be competing or working this summer. Still, planning must remain fairly reactive, informed by public health imperatives.

“We wanted an Olympic Games that would still be recognisable and identifiable as a real Olympic Games,” says Lumme (right), asked what baseline expectations his team set for partners. “All the sports, all the athletes, all the disciplines as a whole sporting event.”

Outside of that, he stresses the longevity of partnerships, as well as the scale of Tokyo 2020 as a “milestone” for “a new sense of optimism” heading out of the pandemic. Its worldwide audience, he says, will be “translated into a marketing platform for the partners that will be, hopefully and we expect, massive”.

“It will carry a lot of value for them,” he continues. “Yes, it’s true to say that depending on how the next few weeks and months go, the onsite activities may have to be curtailed somewhat. But, bigger picture, the impact of the Olympic Games on people outside just the host city of Tokyo, we do expect to be absolutely significant.”

The IOC will want to keep that reach in partners’ minds in the years ahead. Beyond the uncertainty of Tokyo, the long-term picture is one of stability. Every Olympic host is confirmed until 2028, while the Australian city of Brisbane was named in February as the IOC’s ‘preferred partner’ for the summer of 2032.

LA 2028 is around four years ahead of schedule in its marketing activities after the unprecedented double award of two events in 2017, when Paris was installed for the 2024 edition. For the IOC, populating a local organising committee at such an early stage should have plenty of upside.

LA 2028 looms large on the horizon for the IOC

“They provide a lot of energy, ideas, new context for some of the stuff that we want to do,” Lumme says, “so it ends up being sort of a co-creation, a collaboration of ideas as we go along.”

That should allow the IOC freedom for some strategic planning, though its partners are often more tactical from Games to Games. The “context” for each, in everything from the importance of the local market to the “political to economic to social”, will drive the timing of their activities, says Lumme.

“I mean, they may have manufacturing plants in the country, they may be doing a lot of R&D in that country,” he adds. “I’m thinking here just of an example that comes to mind which is of Toyota in China. There’s a real drive towards getting away from the combustion engine, petrol-powered cars, and all sorts of developments are going on.”

As a result, sponsors will enter the marketing process for each event at different times. There are the “early integrators”, especially those “selling in solutions that may be part of the build-out of the Games somehow”. Then there are the more “consumer-focused partners” who will run concurrent cycles for the summer and winter editions: complete activities, debrief, and start again “three years out”.

That can create “a bit of a conveyor-belt phenomenon”, says Lumme. As the start date for the Games moves within 12 months, “the activation budgets and all the planning move into operation”. This year, for the first time in nearly three decades, two Olympic events have both entered that range together.

That is hardly the only reason the Beijing 2022 Winter Olympics will be complicated. The Chinese government’s response to pro-democracy protests in Hong Kong and, especially, its alleged mistreatment of Uighur Muslims detained in Xinjiang camps have drawn ever louder opposition. The governments of the USA and Canada are among those to have defined China’s actions there as genocide, while those countries were joined by the European Union and the UK in announcing sanctions against officials in Xinjiang for human rights abuses. 

There has been criticism of the IOC for upholding its 2015 award of the event to Beijing and, more than that, lobbying of partners by human rights campaigners and rising calls for boycotts from participating nations.

“The reality is that our position has always been clear,” Lumme says. “The Games are politically neutral. We’ve actually got the clear backing of a United Nations resolution that countries want to keep it that way. But we totally understand, that doesn’t stop interested groups from wanting to use the Games for their own means, and it doesn’t necessarily mean that we agree with everything that the host country’s government may be doing.

“And obviously we don’t live in a bubble in that sense; we know what’s going on. As much as possible, we try and engage with interested groups but we also make them aware of what our particular stance is and what we’re trying to deliver – and also, just as much, what we can’t do. We’re not a super-government that can do things that the member states of the United Nations can do.”

However that argument holds, Beijing also offers an “atypical example” of a Games build-up in a very different sense. Preparations continue on the understanding, for now, that Covid restrictions will stay in place. Limits on in-bound travel have meant operational tweaks, based on which overseas experts have been able to visit and when.

“In terms of some of the client groups and particularly our sponsors,” Lumme adds, “there’s been a much more challenging process to look at, for example, their hospitality or their on-site activation programmes – just, again, because they haven’t been able to access the country or it’s been more difficult for their local teams. Ticketing programmes have been delayed by about six months.”

As testing as the event-to-event servicing of sponsors is at the moment, it comes after a decade of pronounced commercial growth. The Olympic Partner (TOP) programme, the exclusive global sponsorship tier established in 1985, has been flourishing. At the virtual IOC Session in March, IOC president Thomas Bach told members it was on course to raise over US$3 billion in the ‘quadrennium’ from 2021 to 2024 – although that could include some holdover from the delay to Tokyo 2020.

For comparison, the period from 2017 to 2020 was due to bring in US$2 billion before last year’s postponement, while the IOC earned a little over US$1 billion from TOP sponsors in the 2013 to 2016 cycle.

There has been a noticeable change of identity within that group. McDonalds ended a 41-year association in 2017 but the same year, US technology provider Intel and Chinese cloud computing and ecommerce giant Alibaba both arrived. Insurance group Allianz followed a year later. Digital accommodation service Airbnb announced its deal in 2019. The latter trio are signed up until 2028 and all of them are likely to be committing nine-figure fees.    

Lumme says that the IOC, at the head of the wider community of Olympic bodies, does “want to stay relevant” and “attractive to all sorts of corporate enterprises” by driving themes like digital transformation. At the same time, he points to the involvement of Coca-Cola, Procter & Gamble and Allianz – “founded before the modern Olympic movement” – as evidence of a deeper appeal.

Inherent in this has been a renewed push on ‘marketing in kind’ and showcasing, which are significant given its clean-venue policy during Olympic competition. Partners can demonstrate their capabilities for prospective B2B clients, as Atos does through system integration and Alibaba will do when it rolls out paperless ticketing at Beijing 2022, or move their products to fans.

“And that, frankly, is something that we want to continue to develop,” says Lumme, “because those are basically, if you like, the real-life testimonials that provide so much value for the partners to be able to say: ‘I did this for the Olympic Games, therefore, I can do it for you.’”

The IOC has been finding innovative ways to showcase its TOP sponsors

Smaller integrations have also appeared over recent events, such as giving athletes Samsung smartphones to record their experiences of the opening ceremony. Nonetheless, a perennial goal has been stimulating exposure for TOP sponsors between the high peaks of Games-time interest.

As Lumme sees it, the Olympics lives on in those periods through the battles for supremacy and qualification across the 33 summer and seven winter sports. Most of the events where that happens are outside IOC control, of course, but Lumme does see a big opportunity in following athletes across them.

The Olympic Channel – an in-house digital service launched in 2016, which is now part aggregator, part original producer, and part auxiliary broadcaster for smaller events – is viewed as the keystone for a substantial digital bridging project.

“We’ve now actually taken the next step here and we’re going to aggregate the organising committees’ – so the Games digital platforms and websites and apps – into this,” says Lumme, teasing an announcement due to be made in the weeks after publication. “We’re bringing a lot more scale to this and we’ll be maximising not only the audience and the engagement and the experience in the run-up to the Games and during the Games – and we’ll do big numbers – but we also want to retain and engage as much of that audience in the period in between, which we call the ‘flame to flame’ period.

“It’s part of the zeitgeist, obviously, these days, not so much that people have shorter attention spans but that there are so many things competing for people’s attention. We think the Olympic Games, the Olympic movement and Olympic sport have a great and fantastic story to tell to people which is very relevant in their lives and so we want to make sure that those stories are available to them 24/7.”

Also central to that are the IOC’s third-party broadcast partners, for whom Lumme is keen to preserve “an Olympic content prism, day in, day out, to tell those stories”. There is ample basis for deeper collaboration in this space. In Europe, Tokyo 2020 will mark the biggest step so far in a €1.3 billion, 50-territory deal between the IOC and Discovery. Brazil’s Globo and Japan’s NHK are among the media companies with contracts in place until 2032.

Another of those is NBC, whose most recent US$7.75 billion contract extension – signed in 2014 but originally only due to come into effect after Tokyo 2020 – means it is still the IOC’s single largest benefactor. These arrangements give the Olympic movement stability, and the media companies room to develop their ideas. 

Different partners, naturally, have different priorities. NBC was on course to make over US$1.25 billion in advertising sales from Tokyo 2020, having moved 90 per cent of its inventory before postponement. It can probably expect to do similar numbers in 2021, supporting Lumme’s view that linear TV is “still the cash cow” for many media groups. The Olympics, however, is also pivotal in NBCUniversal’s bid for a diversified domestic audience: before the delay, the upcoming Games were meant to be the springboard for its new Peacock streaming service.

Discovery, meanwhile, has its own uses for Olympic content. It has recouped most of its initial rights outlay through sublicensing deals with free-to-air outlets across Europe. Now, having folded its Eurosport Player streaming service into the new Discovery+ OTT package, it also wants to put the Olympics at the core of a marketing and content strategy that compounds audiences for sport and unscripted entertainment.

“The long and the short of it,” Lumme says, “is that we work with partners and provide them with an agreement framework where they can continually evolve their business model to make sure that it’s relevant to their needs. We’d hate to be in a situation where it’s so restrictive that it stops working for them.”

The IOC needs to be as cognisant as its partners are of changing fan behaviour. In the interests of optimal reach, it sets terms on the viewership potential of its partners – demanding, for example, free-to-air penetration rates of 90 per cent of national households. Yet the relative significance of those parameters will shift as broadcast deals are renewed.

Notably, the decline in linear viewership among younger people in several key markets could well make it more important to deliver reliable audiences across digital channels. Lumme views the Games itself as a useful biennial marker for consumption trends, but a more formal evaluation is also underway.

Different parts of the world are operating at different speeds, of course, and so that has to be taken into account. It’s not a one size fits all, always, although when you do make policy, you want to make sure that it’s applicable to everyone.

“We’ve begun a review to look at how this might look and what might be more appropriate in a streaming world or in an omnichannel media world,” he confirms. “It’s something that we’re looking at now and it won’t be something that we change before Tokyo or even Beijing, but I think we would expect that there would be a revised regime, certainly, there for Paris. 

“Different parts of the world are operating at different speeds, of course, and so that has to be taken into account. It’s not a one size fits all, always, although when you do make policy, you want to make sure that it’s applicable to everyone and you don’t want to have a piecemeal approach.

“The other side of it is what we call the commercial integration. This is the ad space or the broadcast sponsorship space. That continues to evolve, it evolves as a function of consumer habits but, as much as anything, the delivery methods and the way that video is being presented and consumed and on what devices.”

With digital media providing much greater power to individual profiles, athletes themselves will have their own role to play in growing the Olympic following. In recent years, Olympians have pushed for reforms to IOC regulations like Rule 40 – which restricts the promotion of non-Olympic sponsors during Games-time, and is now devolved to national Olympic committees – and Rule 50, which governs personal political expression within the arena.

As those debates continue, Lumme does insist that the IOC “is an athlete-focused organisation” and that he expects the next phase of its commercial development to be supported by athletes’ media reach. The concepts for Tokyo and Beijing’s one year to go campaigns, he notes, were built on the athlete experience. The intention is to offer more tools and platforms for content created by athletes that may eventually enable them to “have some commercial gain for themselves”.

The Airbnb Experiences programme – where Olympians and Paralympians can run personal licensed events and classes, digitally for now but in-person as pandemic restrictions lift – “is just an example of the direction”.

“So it’s an ongoing piece of work but, personally, I’m very interested and excited by it because it’s opening so many new avenues in terms of helping the athletes and their journeys,” Lumme adds. “And as I said, the core of it is not just to focus on the two weeks.”

Across the board, Lumme sees the “overall vision and mandate” for the media operation as telling Olympic stories through “everything from clips on mobile right through to long form”. Original and documentary filmmaking, much of it created and housed within the Olympic Channel ecosystem, has been another area of recent expansion, with vast archives still there to be mined. The popularity of such output on streaming services like Netflix and Amazon Prime Video presents a new clutch of prospects.

“We were focusing on content on our own platforms but I think we will gradually broaden this and do syndication deals,” Lumme suggests. “We’ve moved beyond trying to drive audience for our owned and operated platforms. Of course, that remains very important, but with this scaling that I mentioned earlier we’ll look for a broader third-party distribution for our content.”

All of this hints at other ways of doing media business as rights holders digest the lessons coming in from film, TV, music and gaming. Even the most effective and conservative rights-selling organisations may come to think differently about how to make the most of intellectual property, and Lumme confirms that the IOC is weighing up its options. 

“I don’t think the IOC has ever been accused of being too fast, but by the same token I would hope that we’re not being too slow,” he says. “I think that we’ll look at all the opportunities we have before us but it could be possible. I mean, we’ve had plenty of proposals in the past to have IP-based series and so forth, and they continue to come in. I think at the end of the day, it’s not necessarily about trying to create franchises. It’s about telling the story in the right way.

“I mean, there’s a very flexible approach to that but at the end of the day, one thing we are concerned with is protecting the integrity of the people whose stories we’re telling and our own reputational aspect through the IP that we represent: the five rings.”

I don’t think the IOC has ever been accused of being too fast, but by the same token I would hope that we’re not being too slow. One thing we are concerned with is protecting the integrity of the people whose stories we’re telling and our own reputational aspect through the IP that we represent: the five rings. 

That would represent another phase of transformation for an IOC that Lumme believes has “come on leaps and bounds” around him in its internal capabilities and knowledge base. He sees it as more “systematic”, better resourced, and better placed “to drive the relevance and the importance of sport at a world governmental level”.

Despite a year in which he has “worn tracksuit bottoms more than I have for the rest of my life combined”, he feels energised by the demands of the work, and the possibilities. “We now have a full marketing department of 50 people,” he says. “On top of that, we have a digital media capability – beyond the host broadcaster, OBS – of 120 people. There’s massive changes.”

Still, the most telling adaptations may yet be those that lie ahead.

“Because it’s not just the Games that have to remain relevant as a driver of people choosing sport in this world, it’s also the IOC as an organisation,” Lumme argues. “You know as well as me the level of scrutiny that people have, particularly young people have, of organisations, and perhaps the absence of trust that has crept into our world in terms of these organisations. So it’s something that we’re really, really addressing, and we want the IOC to be not only relevant but respected and fit for purpose as we go forwards.”

Even set against the trials of the past year, that will be an exacting, enduring challenge.