NBC set to sign more longterm sponsors
NEW YORK — General Motors Corp.’s $500 million deal to sponsor five consecutive Olympics on NBC is the first of its kind, but it won’t be the last.
The Peacock expects to further leverage its $3.6 billion investment in rights fees for Olympics from the year 2000 to 2008 with three or four more ad pacts to be signed by early December, execs said. Together, those deals will provide an enormous security blanket years before NBC would normally have begun to sell the Games, and instantly justify NBC’s own steep outlay.
Sources identified longtime Olympic sponsors Coca-Cola Co., AT&T, McDonald’s Corp. and Anheuser-Busch as those in advanced discussions to ink similar deals that will ensure their longstanding hold on television’s premier sports property (Daily Variety, June 30).
GM’s unprecedented pact, the largest sports sponsorship to date, mirrors NBC’s aggressive move to lock up the Olympics in two separate deals negotiated quickly in 1995, blindsiding rival networks.
Alone, the GM deal announced Wednesday accounts for 12% of the $4 billion in ad revenues NBC expects to gain from the five Olympics, and with three more sponsors of similar magnitude, the network’s $2 billion take would cover more than half of its rights fee.
GM, like other top sponsors, will pay the United States Olympic Committee separately for direct sponsorships of U.S. teams, merchandising and other promotions that could push the carmaker’s total outlay to $900 million over the life of the contract.
On NBC, GM will be the exclusive domestic automaker for the entire Olympics coverage, a distinction for which it paid an estimated $60 million last year with NBC’s Atlanta Olympics.
The new pricetag builds in inflation over the years of the pact, and includes a set number of commercial units. The pricing exceeds NBC’s initial estimates, and sets an impressive benchmark for future deals with similarly inclined sponsors.
But the rich deal is likely to put off secondary advertisers, who will be offered more limited sponsorships or more typical year-to-year deals.
“There are a lot of companies that look at the Olympics, and it scares the hell out of them,” said Bob Wright, NBC’s president-CEO, in an interview. “Their palms go sweaty; they don’t know how to work it into their marketing plan.”
But with a longterm deal that provides continuity for advertisers as well as NBC, “we can go to people under certain guidelines and say, ‘Listen, we will negotiate with you for a longterm marketing presence in the Olympics, and you will be assured we will be running the show every winter and summer,’ ” Wright said.
With “rampant fragmentation” of TV audiences a given, a longterm Olympics deal “can create tremendous marketing momentum,” said Philip Guarascio, VP and GM of North American operations marketing and advertising. “The timing, knowledge, and long-planning horizon will work in our favor,” even allowing GM to build new car launches solely around its known Olympics involvement every two years.
Under terms of its rights agreement with the Intl. Olympics Committee, NBC can pitch only sponsors who have signed longterm deals with the IOC or the USOC through 2004 or 2008. Those deals should be finalized in September, when the IOC names the site for the 2004 Summer Games.
CBS in February will broadcast the 1998 Winter Olympics from Nagano, Japan, and expects to sell $550 million in ad time for those Games. NBC will pick up coverage from Sydney in the year 2000, moving to Salt Lake City in 2002.
NBC Sports prexy Dick Ebersol said he’s already planning for more than 320 hours of coverage in Sydney, including some events on CNBC or MSNBC, which hope to generate increased subscriber fees with contract renewals.
Ebersol said the GM deal provides further evidence of the Olympics’ value in a dwindling network environment. “It’s truly the only event that puts mother, father and kids together in front of the television set since Ed Sullivan,” he said.