U.S. Olympic Committee CMO, Lisa Baird, was sure of sealing a cloud services deal with the International Olympic Committee (IOC) after the Rio Olympics.
Her opportunity opened after AT&T informed her that they were no longer going to renew their contract. She then went straight to Timo Lumme at the International Olympic Committee. After speaking with Lumme, Lisa Baird willingly dropped her pursuit of a deal.
Lumme informed her of IOCs pending negotiation agreement with Alibaba Group Inc. to take over sponsorship. This bid would generate more revenue then what could ever be provided by the USOC single-handedly. Allowing Alibaba Group Inc. to become the sole cloud service provider would create an Olympic global e-commerce platform and acquire sponsorship category status for future games.
Lisa’s call to Timo Lumme made him realize that there was a possibility of delivering exclusive sponsorship rights in the U.S., which played a huge part in their current deal negotiations.
A few months later, it was announced that Alibaba and IOC reached a 12-year deal amounting to more than $800 million, where 20% of the global sponsorship revenue will go to the USOC up until 2020.
The digital economy has opened more chances for the sale of worldwide sponsorship. Experts believe more categories will be created as globalization evolves – as seen when the IOC considers the sale of its new category for professional services rights.
Furthermore, the IOC is considering experts’ help from advanced corporations for a worldwide brand boost. This will only be possible if the IOC and Olympic committees have a coherent relationship while also monitoring the domestic partner’s conceptual rights to negotiate an extension like what they initially did with AT&T.
The IOC and USOC’s ability to effectively negotiate has improved, thanks to the 2012 revenue-sharing deal. To date, there has not been clear terms aligned to allow the USOC to get the 20% of top deals but this could be replaced by a different system in future. IOC improved the conditions when it increased the list price in 2014, raising global rights costs to $200 million in four years instead of the estimated $100 million. But on a scale comparison, USOC deals have only slightly improved in marginal global gain with its distribution expected to exceed what it can get on their own.