Olympic Sponsorship Worth More Than Gold

MTWorkers setting up a Bosco Sports outlet at Sheremetyevo-2 last week.
If you were to melt it down, the real value of a gold medal at the Beijing Olympics would probably just scrape $200.

But the Russian amateur athletes topping the podiums at the games -- which start at exactly 8:08 p.m. Beijing time on Friday -- will be hoping for a lot more.

For each gold medal won, the government has pledged to stump up 100,000 euros, and individual sports clubs are adding thousands of euros more. Ten of the country's richest men, including Roman Abramovich, Oleg Deripaska and Vladimir Potanin, have also clubbed together to create a $14 million bonus pot.

While the hefty state payouts often dwarf the awards being offered by other countries, Russian athletes rarely figure on the lists of the world's highest-earning sports stars. That looks likely to change this year.

Traditionally, the relation between sport and business is more one of patronage than partnership, meaning that sport clubs and personalities are often dependent on sugar daddies or state corporations, and Russian athletes miss out on the lucrative advertising contracts enjoyed by their well-heeled counterparts in Western Europe, America or East Asia.

Now, led by a wave of sporting success, a consumer boom and increasing advertising savvy, that mentality is starting to change.

"In Russia, the celebrity endorsement market is still in its infancy," said Vadim Kormilitsyn, managing partner of celebrity agency Stars & Brands.

Whereas in the United States, 15 percent of advertisements use celebrities, with the figure rising to around 40 percent in East Asia, in Russia the total is a miniscule 2 percent.

But the volume of contracts is set to shoot up from $60 million in 2007 to about $200 million this year, Kormilitsyn said.

Following a recent string of sporting success in the country -- from victory at the Ice Hockey World Championships to unexpected success at the Euro 2008 football tournament -- companies are increasingly looking to sports personalities to sell their products.

Now, sports stars are estimated to make up 30 to 40 percent of the market. But that should almost double next year, advertising executives said.

That means that come autumn, the country should be festooned with pictures of victorious Olympians, promoting everything from washing machines to mobile phones.

A study from PricewaterhouseCoopers estimates that Russia will pick up 79 medals, just one short of the official target of 80 and third in the overall ranking, after China and the United States.

"Of course there is a lot of interest around the Olympics," said Viktor Tishchenko, father and agent of medal-winning lightweight boxer, Alexei Tishchenko.

Omsk-born Alexei, 24, won gold in Athens four years ago and has a number of sponsorship and endorsement contracts with Russian companies, his father said. His first fight is scheduled for Monday.

"The number of companies and the interest has increased since the last games," he said. "It is not a massive increase, but the amount has gone up steadily."

If the boxer were to go professional, he could count on the megabuck deals on offer in international title boxing. But for now, the money is sufficient, his father said.

"It depends on who you are. For some people it would be good money, and for others not. I think it's good money, but it's all relative," he said.

Many Russian sportsmen and women will be looking for inspiration to their compatriots who have made it big on the international stage and forged a global name for themselves. All follow in the wake of golfer Tiger Woods, who looks set to become the world's first billionaire sportsman over the next few years.

Tishchenko, pictured with his Athens gold, has several sponsorship deals.

Last year, blonde tennis star Maria Sharapova made $26 million, with only $3 million coming from prize money, Forbes Russia estimated. Sharapova is missing the Olympics because of a shoulder injury.

Way back, but still far ahead of the pack, pole-vaulter, world-record holder and Olympic favorite, Yelena Isinbayeva has a contract with Toshiba, estimated to be worth around $1.2 million.

"Once the Olympics are over, the winning athletes will be looking at average contract from $50,000 to $200,000," Kormilitsyn said. Athletics and boxing are the most profitable Olympics disciplines, and firms from the telecommunications and banking sectors are keenest to cash in, he said.

It's not just for the athletes that this year's Olympics represents a potential boom time. China has spent $42 billion getting the country ready, and income from both broadcast rights and sponsorship are soaring.

As they set out to crack the mammoth Chinese markets, companies are betting big on Olympic sponsorship.

Chinese computer giant Lenovo is estimated to have spent $80 million to $100 million to be this year's official sponsor, and 11 leading firms, including Coca-Cola and McDonald's, have stumped up a combined $850 million to sponsor the Turin and Beijing Olympics, Forbes reported.

From 2001 to 2004, sponsorship made up just over one-third of total revenue for the Olympics. Fees for broadcast rights account for just over half of all revenue during that period. Organizers estimate that the Beijing Games will bring in over $1.7 billion in broadcast rights.

But although they get their equal share of the central pot, the Russian Olympic Committee has lagged behind many of its counterparts in other countries.

Compared with the lengthy list of major corporate sponsors on the glossy web site of the U.S. Olympic Committee, the list of corporate sponsors for the Russian team is dominated by state firms, such as VTB, Sberbank and Aeroflot.

VTB is sponsoring the men's volleyball, women's basketball and gymnastics teams.

"They're the most promising. We think they will win," said Vasily Titov, deputy chairman of the VTB bank management board. "We want to be associated with the leaders."

The bank has featured the basketball players in advertising campaigns.

A lucrative sponsor that the Russian committee has snagged is luxury sports brand, Bosco, which provides the ceremonial uniforms and tracksuits for the team.

The company first signed up to sponsor the Olympic team at the Salt Lake City Games in 2001 and has renewed its contract every games since then until Vancouver in 2010. A spokeswoman refused to reveal the exact amount of the contract.

Helped by the added resonance of being associated with the Olympics, following the decision to give the 2014 Winter Games to Sochi, Bosco said it has seen brand recognition soar.

"The tendency is definitely positive," said the company spokeswoman. "Every games the number of fans in the stands wearing our clothing goes up and up."

Spokespeople for the Russian Olympic Committee were in Beijing, an official at the Moscow office said. Calls to the committee's Beijing office went unanswered.

Not all publicity can be positive. When the torch procession across the globe turned into a storm of international protest against China's policy toward Tibet, Olympics sponsors got scorched.

With a handful of leading Russian athletes banned recently from the games and the country's image tainted by doping scandals, major sponsors could prove weary of signing up Russian athletes.

"Our position with respect to doping is clear: Adidas is definitively against doping in sport, in every form," said Anne Putz, head of corporate PR at the sporting goods giant.

"We will continue to adhere to this principle in future, and we will terminate agreements with athletes found guilty of using prohibited substances immediately and in accordance with the terms of the agreements," Putz said.

But back home, perceptions that doping accusations and subsequent bans are politically motivated can actually help boost the stock of some athletes.

"A doping scandal can actually lead to a rise in someone's popularity because normal people see it as an unfair political attack," Kormilitsyn said.

Anna Yukhananov contributed to this report.