HomeSponsorshipMulti-SportUSA

‘Ambitious’ $2.5bn LA 2028 forecast is in fact deeply conservative

LIMA, PERU - SEPTEMBER 13: Paris Mayor Anne Hidalgo, IOC President Thomas Bach and Los Angeles Mayor Eric Garcetti react after the confirmation of the tripartite agreement which awards Paris and LA with the Olympic Games of 2024 and 2028 during the 131th IOC Session - 2024 & 2028 Olympics Hosts Announcement at Lima Convention Centre on September 13, 2017 in Lima, Peru. (Photo by Buda Mendes/Getty Images)

Ambitious. That was how the mainstream and sports business media universally described LA 2028’s latest forecast of $2.5bn (€2.2bn) for domestic sponsorship revenue when LA published its revised Games budget in late April.

Really?

I don’t buy it.

Just as I didn’t buy it when in late 2016 LA forecast $1.9bn from domestic sponsorship in its bid for the 2024 Games, which ultimately won it the 2028 edition after the IOC’s unprecedented dual award of 2024 and 2028 to Paris and LA respectively.

Of course, everyone in the Olympic sponsorship business knows how these things work. Olympic bids always low-ball their sponsorship forecasts (and much else besides, but that’s another story).

Back in 2016 the LA bid admitted as much, describing that domestic sponsorship estimate of $1.9bn as conservative.

Fast forward to today, and OK, let’s pay that extra $600m the respect it deserves. It’s anything but small change.

Neither should anyone blame LA 2028 for spinning that the revised forecast is ambitious. Much better to emulate the strategy of Peter Ueberroth, architect of LA84, who under-promised and over-delivered to such an extent that he resurrected not just Olympic sponsorship but the Games itself after the disasters of Montréal and Moscow.

Yes, LA 2028 is up against big competition for the big dollars from American sports, the 2026 Fifa World Cup, and everything else.

But make no mistake: $2.5bn is still conservative. Whether by volume or value of sponsors, LA 2028 will smash that target and deliver $4bn if not more.

Here’s why.

Let’s start with the strong correlation between the size of economies and host nation domestic Olympic sponsorship revenue.

London 2012 generated over $1bn. Tokyo 2020 has generated over $3bn and counting. Japan’s GDP is almost twice as big as the UK’s.

US GDP is almost four times bigger than Japan’s.

And the GDP of California alone makes it the fifth-biggest economy in the world.

Then there’s the undeniable fact that Corporate America loves the Olympics.

It is by far the biggest IOC investor, in the shape of NBC Universal’s $12bn American Olympic broadcast contract and six – almost half  – of the IOC’s global partners.

Right on cue, LA 2028 appears close to agreeing its first sponsorship, with Nike, the biggest American sports sponsor of them all, in a deal reportedly running well into nine figures that will as such take a big chunk out of that $2.5bn.

With LA 2028 still ten years away.

Those ten years are another reason why that forecast is so conservative.

Up until the IOC handed LA the Games, Olympic organising committees had a seven-year event horizon. LA’s is eleven and there are still ten to go.

That gives it unprecedented time to innovate the Olympic sponsorship offer and prepare and operationalise its go-to-market strategy.

We’ve already seen the first example of that with the recent deal with NBCU, which has not only de-risked LA’s budget but also added significant value to what will become LA 2028’s top-tier sponsor pitch by integrating into it an NBC media buy.

I expect more of the same when it comes innovating the sponsorship offer itself, as there is plenty of scope to re-invent the dated, category-driven Games rights package by creating new platform- and content-focused rights around the huge range of themes and stories that an Olympics presents, way out from the Games.

Chances of that happening in the city that gave the world Hollywood and the country that pretty much invented sports marketing? I’d say high.

There’s one other factor that convinces me above all that LA 2028 will deliver an historic number.

The power of the Games to unite a country, and the power of the Olympic brand to evoke and inspire the best in human spirit.

That’s a pretty powerful pitch anywhere, but particularly in America, where consumers love the Olympics – hence all that NBCU money, which wouldn’t be there if they didn’t – and which hasn’t staged the Games since 1996.

But in an America that is more divided than it has been for fifty years, with all the challenges that creates for businesses and brand marketers, it’s the most timely, relevant and above all unifying mass marketing opportunity bar none.

And LA 2028 will be taking all that, drenched in California sunshine and wrapped in the Team USA flag, to market.

I wish them well, and I think they’ll have no shortage of takers.

Tim Crow is the former CEO of Synergy. Follow him on Twitter @shaymantim 

Most recent

After launching in Miami this spring, the Sports Decision Makers Summit – from SportBusiness and Sportel – came to London's Rosewood hotel on July 9-10. This is what we learned from our expert speakers. W

Liverpool FC decided to arrange its own tour of the United States this summer, rather than compete in the pre-season International Champions Cup, because the club preferred to be "independent" and have more freedom to arrange opponents, dates and venues.

As the Tour de France moves towards its conclusion in Paris, Kevin Roberts talks to Ralph Denk, team manager of the German Bora-Hansgrohe team about the business of running and funding an international cycling outfit.

As France's Ligue 1 is staging a four-team tournament in Washington DC this week, Bob Williams looks at how it aims to expand its reach into the US and improve overseas media-rights income.