IBM pulling out as Olympics sponsor
Posted: Friday August 07, 1998 02:11 PM
NEW YORK (AP) - IBM is ending its 38-year relationship with the
Olympic Games, deciding after months of negotiations not to sign an
8-year deal with the International Olympic Committee, the company
said Friday.
IBM, which spent more than US$100 million to sponsor the 1998
Winter Games in Nagano, Japan, and provided much of the
behind-the-scenes technology for free, wanted local Olympic
organizing committees to share the technology costs.
But the two sides never agreed on how much money should be paid
to IBM or how much the company should do for free in exchange for
marketing rights. IBM executives were upset by an IOC decision to
seek a more profitable sponsorship deal for upcoming Games'
Internet services and sites, a role IBM held in the last two
Olympics, in Nagano and Atlanta.
"The IOC asked for a significant increase in our sponsorship
commitment. We felt that was not commensurate with the marketing
benefits we would receive in return," IBM spokeswoman Debbie
Gottheimer said, confirming reports that the company was pulling
out.
The IOC concluded that IBM's projected costs were too high,
Richard Pound, an IOC vice president in charge of sponsorships,
told The Wall Street Journal.
Greg Ellevsen, IBM Australia's manager for corporate
communications, similarly told Sydney radio station 2UE that the
company was parting ways with the IOC because of increasing costs
and that the IOC wanted a separate Internet provider.
"We've been negotiating for several months but it turned out
that the cost was way in advance of the benefits," Ellevsen said.
"Paying more for reduced benefits just didn't make much sense.
We had a philosophical point of difference with the IOC - they
decided they wanted an Internet-separate sponsor and we wanted to
showcase all of our technology."
IBM's sponsorship will end with the 2000 Summer Games in Sydney,
Australia. At the Nagano and Atlanta games, the company supplied
computers and staff to run Web sites, score boards and other
technology. It promoted its Olympics involvement in television and
print advertisements.
IBM came under severe criticism for its performance in Atlanta,
with the results delivery system incurring many problems and unable
to meet its promises to news organizations.
The decision means the company won't be involved in the 2002
Winter Games in Salt Lake City. U.S. Olympic Committee marketing
chief John Krimsky expressed some concern abut the timing.
"With less than four years to go [before the 2002 Games], it is
absolutely essential for the organizing committee to move quickly
in replacing IBM's technical capability with a results system
necessary for the conduct of the Games," he told The Salt Lake
Tribune.
Still, officials of both the Salt Lake and U.S. Olympic
committees expect to benefit from the change.
"It increases the chances of revenues from the sales of
sponsorships to several parties instead of one," SLOC President
Frank Joklik told the Tribune.
He envisions sponsorships worth tens of millions of dollars from
separate companies offering computer hardware, software, results or
system integration.
"The value of marketing rights in the computer category has
increased because technology has expanded so rapidly. It's hard for
one sponsor to put adequate valuation into it," he said.
IBM was one of 11 global sponsors of the 1998 Games. Most paid
the IOC more than US$40 million for their sponsorship packages,
but IBM spent roughly twice that to fill the additional role of
technology provider.
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