The Business of the Olympics: Eliminate Competition?

In my Sport Management class the other day, we discussed the Olympics and how sponsorships for the Games work.  I thought that this would be just like the typical sponsorship system- whoever wants to be a paying sponsor can.  However, I soon realized that this was not the case at all.

There are three levels of sponsorship, and the highest level is called The Olympic Partnership (TOP) program.  The TOP program creates categories of business for the highest paying sponsors.  Companies are essentially buying a monopoly and exclusivity over a certain category of business so that their competitors cannot compete with them whatsoever.  Keep in mind, having a monopoly over anything is illegal and violates anti-trust laws.  However, the Olympics has such power that it basically gets past these rules and is a major exception to the law. 

Countries that host the Olympics have temporarily passed laws that may violate their own laws in order to protect their TOP sponsors during the Olympics—they go to these great extremes to ensure to their TOP sponsors that they will not have any competition. 

The TOP program is estimated to generate about $960 million for the Olympic organization, and therefore around 40% of the total revenue for the Olympic Movement.  This program produces a HUGE amount of money—the Olympics is considered the most popular international event in the world. 

McDonald’s is considered the “official” TOP Olympic sponsor of all retail food services.  This means that no other company in this category (like competitors such as Subway, Burger King, Wendy’s, etc) can advertise or compete with them over the Olympics.  These competitors can’t mention the Olympics in their advertising, display anything at the Games, or use any Olympic imagery.  This is a result of McDonald’s $200 million deal with the IOC for an exclusive 8 year Olympic sponsorship. 

What I think is interesting about this idea is that the Olympic committee AND the government go to such degrees to prevent competition.  Isn’t competition considered “good” in the business world and the real world?  Doesn’t competition make things a little more exciting? 

 This also made me think about games.  We wouldn’t be able to participate in games if it weren’t for competition- who would we be competing against? Our self?  This sponsorship program really shocked me.  The whole idea of the Olympics is essentially about promoting games and competitions, but the business of the Olympics is not like this at all. Do you think this is a little contradicting? 

Before learning about this program, I always thought that business was similar to a game- competitors fighting against each other for business.  The Olympics is MUCH different- there isn’t really any competition for the sponsors at all! The business of the Olympics is unlike any other type of business and therefore game. Do you guys think that this is beneficial for the Olympics- to eliminate all competition among sponsors?  Do you think the business of the Olympics should be more structured like a typical business, and therefore a “game”?  What are your thoughts on the TOP program?

-Brooke Kranz