There is much talk at present in the sports world and elsewhere of the threat of a new cold war.
So it is an interesting time to happen upon a document that sheds new light (for me at least) on the Olympic event most affected by the last one: the Moscow 1980 Games.
The document in question is a 30-page United States intelligence assessment of the state of preparations for these Games. A brief covering letter signed by Stansfield Turner, then director of the Central Intelligence Agency (CIA), comes across as distinctly cool on the notion of an Olympic boycott.
This was on the grounds both that the economic loss for the USSR would be “small” and that while internationally it would “keep the Afghan issue alive”, the Soviets would “also be able to play the role of an aggrieved party” and “utilize international disagreements over the boycott to exacerbate tensions between the US and non-boycotting (or reluctantly boycotting) states, probably including some close US allies.”
This letter is dated January 9, 1980. Just 11 days later, President Jimmy Carter issued his famous ultimatum to the effect that if Soviet troops did not withdraw from Afghanistan within a month, the US would boycott the Moscow Games. In the end they stayed until 1989. More than 60 countries – including West Germany, the national team of current International Olympic Committee (IOC) President Thomas Bach, who won a gold medal in fencing at the Montreal 1976 Games – joined the US in boycotting the Moscow event.
Such political background is interesting enough. But I must admit that what most caught my attention were the details the document contains about commercial arrangements with a wide range of western companies then expected to make contributions of one type or another to the Games.
Some of these were under “official supplier” sponsorship agreements that sound distinctly similar to the type of marketing deals that have become the bread and butter of modern elite sport financing, including the Olympics.
It might seem paradoxical to suggest that, had no boycott materialized, an event staged in Communist Russia could have blazed the trail for a sports marketing model that has become part of the furniture over the past three decades.
But based on what the US National Foreign Assessment Center (NFAC) is saying here, it seems reasonable to contend that if a boycott had been avoided, Moscow 1980 would be considered a pretty significant juncture in the evolution of modern sports marketing.
That is certainly the view of Patrick Nally, the then pioneering young marketing specialist whose company West Nally brokered many of the deals alluded to in the report.
“Moscow was going to be the turning point of Olympic marketing,” he told insidethegames.
“Global sponsorship was in its infancy.
“I had already written the plan of getting the IOC to get all the Olympic rings back under their own control. I presented it to Moscow in the mid-1970s.”
It was not until the mid-1980s that the Movement got around to acting on the idea of bundling marketing rights for the IOC, the Olympic Games and National Olympic Committees (NOCs) together, paving the way for the renowned TOP international sponsorship program, whose first edition encompassed the 1988 Olympic Summer and Winter Games in Seoul and Calgary respectively.
(Ironically enough, the green light to proceed with the quintessentially capitalistic venture that was TOP was also secured behind the Iron Curtain – at the 90th IOC Session in East Berlin.)
As the Official Report for Moscow 1980 explains, however, the sports goods manufacturer Adidas was already managing to utilize the Games emblem in its product categories in a large number of countries.
According to this report: “Adidas of France…was granted, in addition to the title of the Official Supplier to the Games of the XXII Olympiad, the exclusive right to use the official emblem commercially on bags, t-shirts and some sporting goods.
“The company had the right to sublicense. It covered 34 countries. In order to realize its marketing program more extensively, Adidas assigned its rights under the agreement to the West Nally company of Netherlands with great licensing experience. The West Nally concluded 21 sublicense contracts.”
In the end, of course, the boycott forced many agreements to be ripped up, much diluting the marketing impact of the Moscow Games and triggering some very hairy moments for Nally, about which more later.
Because it narrowly pre-dates the boycott decision, however, the CIA document allows a fascinating insight into how Moscow 1980 would have looked had international power politics not supervened.
So what does it say?
“While there will be no golden arches in Moscow,” the relevant passage begins, “foreign suppliers are making a substantial input into the games, and more than Moscow planned.
“To date, Soviet planners have placed orders with Western firms for an estimated $500 million worth of equipment and services.
“The figure would be higher but for the successful Soviet solicitation of free equipment and services in exchange for ‘Official Supplier’ status.”
The phraseology suggests that the CIA’s focus is more on what the Games is costing the USSR than any prospective marketing innovations.
It returns to these Official Suppliers a couple of pages later.
“Numerous American as well as other Western firms have purchased ‘Official Supplier’ status to the 1980 Olympics either for the title’s advertising value or to help the firm break into the Soviet market,” the report says.
“Agreements between the Organizing Committee and Western suppliers specify the donation of cash, products, or both; the values involved depend on the goods’ importance to the Soviets and/or the level of competition for exclusive supply rights.”
There you have it – the spy agency groping towards the essential insight at the heart of modern sports/event marketing: that a relatively small number of sponsors with exclusive rights over a particular product category are likely to raise substantially more than a free-for-all involving a profusion of brands.
Nally first spelled this out in that same Moscow presentation he refers to above, concluding: “We cannot underline too heavily the need to offer exclusive association with the Olympic Games to a company in return for their payment of a rights fee.”
He subsequently applied the insight when faced with raising a particularly large sum from sponsors to cover a guarantee promised for rights to the 1982 football World Cup.
“It occurred to me that there was nothing more valuable to a company than exclusivity,” he told the journalist Neil Wilson for his 1988 book The Sports Business. “So that’s what I offered them.
“Each company associated with the World Cup exclusive in its own product category, with few enough categories to give them an additional rarity value.
“We also gave them a four-year involvement, rather than for the three weeks of the championships.”
It worked: Nally told Wilson that the program raised $135 million, enough to cover the $131 million guarantee.
The uncluttered, one-sponsor-per-category model was also critical to the success of the 1984 Los Angeles Games sponsorship program which was a key factor behind the event’s landmark profit that changed the face of Olympic history.
LA 1984 Organizing Committee President Peter Ueberroth recalled in his 1985 book Made in America how a study of the Lake Placid 1980 Winter Olympic sponsorship program had reported that the organizers there had more than 300 commercial sponsors, “but the result of all this was lifetime supplies of Chap Stick and yogurt – and less than $10 million in cash.
“That just wouldn’t work for us,” Ueberroth continued.
“So we set our sights on raising $200 million.”
Returning to Moscow, the NFAC reported that “most cash donations have been in the $100,000 to $250,000 range, but Coca-Cola paid $6 million in cash and is providing $4 million in beverage concentrate and a new bottling plant for the exclusive right to supply soft drinks at the Olympics…
“Similarly, Levi Strauss is donating 23,000 sets of blue jeans and jackets for officials and workers attached to the Games.”
It went on:
“Firms dealing in expensive, high-technology products, to whom publicity is of little value, have shown little interest in becoming official Olympic suppliers.
“The Soviets have had to purchase computers and telecommunications equipment.
“The exceptions are those situations where supplier agreements are part of a larger agreement combining the sale of a Western company’s product along with a donation-in-kind – for example the sale of photographic supplies by Kodak-Pathé (France) and sports uniforms by Adidas.”
A list of deals, including orthodox purchasing contracts, involving Western suppliers runs to 77, of which more than 40 are categorized as Official Suppliers.
Products furnished through this Official Supplier category run all the way from volleyball nets (Asics) to chewing gum (Mr Wrigley Jr Company) and measuring tapes (Cooper Group, Lufkin Division).
Minnesota Mining and Manufacturing (3M) is said to have a $2.2 million contract for Tartan track; the UK’s Edgar Pickering Ltd a $2.1 million deal for carpet-making machinery; and Hewlett-Packard a $900,000 contract for “lab drug testing equipment”.
In other words, had the Carter Administration – and of course the Soviet army – not acted in the way they did, one of the abiding images of the only Summer Olympics staged behind the Iron Curtain might have been of Russian Games workers drinking Coke, chewing Wrigley spearmint gum and clad head to toe in Levi’s denim.
This trio of American icons are all on a list Nally has provided of international groups with which his company had a direct relationship. Others include Rank Xerox, IBM and Magirus-Dentz, a bus/truck maker.
How then did the young marketing guru survive the commercial fallout from the boycott?
“My contracts were perfectly legit because we were a Monégasque and a UK company,” he tells me. Nevertheless: “I had nightmares in trying to manage the responsibilities that we had for Moscow.
“We managed to get through. We pulled it off, but it was a nightmare.
“I got Jesus to save me.”
“What I mean is I got Jesus Jeans, an Italian brand, to take over the Levi’s responsibility.
“I think we still evidenced that the whole concept for harnessing the international power of the Olympic trademarks was right.
It is a concept that has proved remarkably enduring.
By David Owen
Republished with permission from insidethegames.biz.