The Olympics are famously a competition where athletes compete for glory, not money. The bi-product of their successes, of course, leads to brand sponsorship deals and global fame. But what companies make the games possible in the first place?
Each has spent as much as $300 million for what’s called a quadrennium that includes one summer and one winter Olympics. This comes as domestic Japanese sponsors collectively contribute a record $3.3 billion, making this games the most expensive ever.
Procter & Gamble Paid $200 Million For Sponsorship
Procter & Gamble Co (NYSE:PG) signed an extension on its 10-year agreement with the International Olympic Committee (IOC) to sponsor Olympic Games globally through 2028 in Los Angeles. The original agreement was signed in 2010 and worth an estimated $200 million and includes the Paralympic Games.
It also launched the Athletes for Good Fund in 2020 to support Olympic and Paralympic athlete-backed causes through a series of grants. P&G awarded 52 grants (one per week) in the year leading up to rescheduled 2021 games.
The company is using the platform to market Tide, Pantene, Olay, Venus, and more brands through TV and digital campaigns. It’s also supporting the games through its in-store displays and product packaging. The association is expected to help increase sales, and it appears to be working.
Sales for the third fiscal quarter of 2021 are up 5 percent from the same period in the prior year at $18.1 billion. The company’s operating cash flow heading into the Olympic Games was $4.1 billion, and the results are expected to continue growing through year end.
With this push, the company could potentially rise to a $400 billion market capitalization by the time its contract is up for renewal. And the company pays a healthy $3.48 annual dividend. However, it’s important to know you’re paying over 25 times the company’s trailing 12-month earnings.
Alibaba Group Locks In Olympics & World Cup Soccer
Alibaba Group Holding Ltd (NYSE:BABA) became a Worldwide Olympic Partner in 2017, and the tech giant is helping the IOC modernize its digital presence in the cloud. It’s remaining a partner for the Beijing 2022 Winter Games, along with the 2024 Paris Summer Games and 2028 Los Angeles Olympics.
Its focus is IOC subsidiary Olympic Broadcasting Services, which provides the video of events, interviews, and more used by national networks in each country holding the respective rights. This is helping to automate the Games by leveraging Alibaba’s powerful cloud-based technology and tools.
The company’s market cap appears to be benefitting – it’s pushing towards $1 trillion, a value which many analysts believe it can reach and sustain. And it’s not just the Olympic Games – Alibaba (BABA) also worked with FIFA on the World Cup, which provide it with high visibility.
So long as the events go off without a hitch, the company stands to gain a lot of bragging rights over its American counterparts and competition.
Coca-Cola Co Remains A Staple Olympic Sponsor
Coca-Cola Company (NYSE:KO) and China Mengniu Dairy partnered to pay an estimated $3 billion in 2019 for a 12-year contract for exclusive marketing rights for four summer Games, two Winter Olympics, and the associated Paralympics and Youth Olympic Games.
This may seem like a big number, but the company spends an average of $4 billion annually on advertising costs. However, this number fell in 2020 dues to reductions in advertising spend.
Because restaurants and major events were shut down, much of the company’s sales suffered. By 2021, the company returned to 5 percent growth in net revenues and 14 percent operating income growth.
Intel Corp Inked A $400 Million Deal
In 2017, Intel Corporation (NASDAQ:INTC) forged a partnership with the IOC to become a Worldwide Olympics Partner through 2024. The deal Is estimated to be worth around $400 million and will join Alibaba in providing next-generation technologies like artificial intelligence, 5G, and virtual reality.
Using drones, 8k cameras, True View, and VR, the company is helping the IOC deliver a more immersive experience than ever before possible. And it’s only going to get better with time, as Intel brings a new level of data-rich connectivity to the event.
Intel’s market capitalization deflated during the Olympics tryouts, but the announcement of its potential merger with AMD’s GlobalFoundries division perked investors up.
Jumping on this over $200 billion market cap stock during the Games is a boon for investors in addition to its generous $1.39 annual dividend per share.
Visa Inc Sponsors NFL, UEFA, FIFA & Olympics
Visa Incorporated (NYSE:V) has been a Worldwide Olympics Partner since 1986 and extended its partnership through 2032. It’s main focus in Tokyo and beyond is pushing digital payment technology adoption while hosting a variety of guests in the event itself.
The company spends heavily to be a marquee sponsor at major sporting events held by the IOC, National Football League (NFL), FIFA, and UEFA.
Visa chief brand and innovation marketing officer Chris Curtin was quick to assure everyone the company is prepared to extend its support of the event and its athletes. He took to Twitter to reinforce their commitment while creating a great PR moment.
The move helps to fuel company growth as it continues to head toward a $600 billion valuation. And it’s embracing cryptocurrency to ensure it’s future-proofed against the rising tide.
Will GE Remain A Prized Sponsor?
General Electric Company (NYSE:GE) partnered with the IOC in 2005, including a $200 million 10-year deal signed in 2011. The recent changeup of GE leadership puts future GE Olympics sponsorships in jeopardy, but the company reportedly generated $1 billion in sales through its partnerships.
This makes it unclear what the future holds for the beleaguered defense contractor that was shrinking even before the economic plight of 2020. With its market capitalization struggling to maintain a value of over $100 billion, GE has perhaps the most to prove from the Tokyo Olympics.
As a conglomerate, GE (GE) has several divisions driving revenues, including Healthcare and Renewable Energy. These are both in high demand in the post-pandemic economy. And that could mean the company is undervalued. Of course, that assumes it can execute on its strategy to navigate its roadmap.
While it may not have resigned its commitment yet, GE could prove to be a comeback story worthy of the best sporting lore.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.