The International Olympic Committee says McDonalds ended its 41-Year Sponsorship Deal of the Olympics Three Years Earlier Than Expected.
According to the International Olympic Committee, McDonalds has decided to end its 41-year-old sponsorship deal of the Olympics three years earlier than expected. This reflects McDonalds’s decision to focus on its main business, but also reflects the rise in sponsorship costs as well as the Olympics’ declined TV ratings.
The decision to back out will likely save the company hundreds of millions, since it would be no longer be sponsoring the 2020 Tokyo Olympics.
Silvia Lagnado, the Chief Marketer from McDonalds, said: “We are reconsidering all aspects of our business and have made this decision in cooperation with the IOC to focus on different priorities.”
McDonalds will not be backing out immediately though. It is still going to be a domestic sponsor for the Winter Olympics at Pyeongchang next year.
The IOC has said that it isn’t planning for a direct replacement for McDonalds. However, some sources say that that next week it would be announcing the signing of a new deal with Intel Corp.
The Value of Olympics Sponsorship
It is argued that the reason behind McDonalds’ early retraction is because sponsoring the Olympics no longer provides an added marketing value like it once did. Many companies now find it cheaper to work with specific countries or athletes directly rather than through the IOC.
On top of this, since the 2008 Beijing games, there has been a general decline of TV viewership of the Olympics. This is largely due to many viewers resorting to social media platforms such as Facebook or Twitter to watch or find out highlights about the games.
This therefore caused a decline in the value of sponsor ads, which therefore is removing a lot of sponsors’ incentives to continue with their sponsorships.