There will be no more gold…en arches for the Olympics as the fast food giant, effective immediately, has mutually parted ways with the IOC.
In a surprise move, McDonald’s Corp (Chicago agencies: We Are Unlimited and Burrell Communications) severed its 41-year-old alliance three years early. In a joint statement delivered June 16, the two organizations severed ties as the fast food giant continues to re-evaluate and focus on its core business. This, along with rising Olympic sponsorship costs and declining TV ratings, made for a combo platter of reasons for the separation.
The fast food chain has been part of the IOC’s top sponsors program that contributes more than $1 billion in each four-year cycle for the games. The sponsorship would have run through the Tokyo Olympics in 2020, and bowing out will likely save it hundreds of millions of dollars according to a report in Reuters.
“We are reconsidering all aspects of our business and have made this decision in cooperation with the IOC to focus on different priorities,” said McDonald’s Global Chief Marketing Officer Silvia Lagnado.
The hamburger chain, first became involved with the games in 1968, when it airlifted hamburgers to U.S. athletes at the Winter Games in Grenoble, France and then moved to the status of sponsor in 1976.Despite pulling out with immediate effect, McDonald’s will continue at next year’s Pyeongchang Winter Olympics as a domestic sponsor.
The company’s move may also reflect a rising perception among consumer brands that exclusive Olympics sponsorship deals do not offer the marketing impact they once did. Some companies find it is much cheaper to work directly with athletes or specific countries than the IOC. One of the chain’s biggest fans, Usain Bolt, claimed he was fueled by a 100-Chicken McNuggets-a-day diet during his record-setting runs through the 2008 Games in Beijing.
According to a report from ABC News, Simon Chadwick, professor of sports enterprise at University of Salford in Manchester, England, said McDonald’s could be ending the deal for a number of reasons: geopolitical concerns, the doping problems in Olympic sports, the growing influence of companies in China and throughout Asia, who have been willing to pay more for these deals.
“This is such a fragmented and rapidly changing environment, that for a sponsor trying to understand how best to activate a deal with the IOC, it requires a huge amount of resources and some smart strategic thinking about where to place your bets,” Chadwick said. “It’s an incredibly complex market. In many ways, that could mean this type of deal is no longer economically viable for a corporation like McDonald’s.”
The IOC’s top-tier sponsorship program gives companies exclusive worldwide marketing rights and permission to use the Olympic rings in advertising. Those sponsors contribute about 40 percent of the IOC’s total revenues.
In a report from CNN Money, several other big name sponsors have pulled out as well. Budweiser and TD Ameritrade walked away this year, although their deals were only with the USOC, not the IOC. AT&T, Citi and Hilton have also opted to not partner with the USOC.
With the end of the deal, the corresponding relationship between McDonald’s and the U.S. Olympic Committee also ends, though most of the company’s American activation focused on the Olympic rings and not a specific Team USA angle.
The IOC said there were no immediate plans to replace McDonald’s in the fast-food category and that it would review that sponsorship segment going forward. The IOC has new deals with Bridgestone, Toyota (Chicago agency: Burrell) and Alibaba. The Sports Business Journal reported that Intel is set to announce a deal with the IOC next week as well.
Follow Colin Costello on Twitter @colincostello10.