Now that the flame for the 2020 Tokyo Summer Olympics won’t be lit until next summer, athletic brands, designer labels and other companies tied directly to the Games, or just hoping to ride the sports-minded wave, find themselves in an empty stadium so to speak.
After growing speculation that the Games would be rescheduled due to the coronavirus, the International Olympic Committee president Thomas Bach and Japan’s Prime Minister Shinzo Abe confirmed the inevitable Tuesday morning — that they will be held no later than summer 2021. In a conference call Tuesday, they expressed concern about what COVID-19 is doing to people’s lives and its impact on athletes’ preparations for the Games, according to the IOC. The leaders agreed that the Tokyo Games could stand as a beacon of hope to the world during these troubled times.
Suddenly, sponsors such as Asics, Samsung, Visa, Omega and Coca-Cola have seen their prospects of a major summer marketing boost vanish. In total, 14 corporate sponsors have reportedly spent $500 million this year and have committed close to $4 billion in multiyear deals. The Tokyo 2020 Olympics was reportedly expected to generate record domestic revenue of more than $3 billion.
But they are not alone in that disappointment of lost opportunity. Scores of athletic and apparel companies including Nike, Adidas, Ralph Lauren, Giorgio Armani, Speedo and more have various levels of links to the Summer Olympics, whether that be by supporting specific countries for the official opening ceremony, or sponsoring teams or individual athletes. In addition, Olympic years generally bolster participation in sports and subsequently activewear.
Luca Solca, senior research analyst for global luxury goods at Bernstein, kept the COVID-19 crisis in perspective. Asked about how the postponement may affect sponsors and brands trying to ride the athletic wave, he said, “In the current context, this wouldn’t look like a major issue, but just because more important issues are in front of it.”
Even so, the postponement also means a massive loss for advertisers this summer. In 2016, more than 3.6 billion people tuned into the Summer Games in Rio de Janeiro. The rescheduled Olympics comes at a time when social media was already putting a dent in viewership. Four years ago, 26.5 million people in the U.S. watched the opening ceremony — a drop of 14 million compared to the 2012 Olympics in London, according to Statista.
John Donahoe, chief executive officer of Nike Inc., which has a sponsorship deal with the U.S. Olympics Committee, said on its third quarter earnings call on Tuesday afternoon that he supported the decision to postpone the Olympics and is confident that once the world of organized sports restarts, the support and energy among consumers “will be off the charts.”
He also said that although many of the company’s new product introductions were tied to the Olympic Games, Nike “will continue to move forward in our innovation pipeline.”
This summer’s Games were expected to highlight Nike’s newest apparel and footwear innovations that provide measurable performance benefits as well as its commitment to sustainability, since many of the Olympics products feature recycled materials.
In February, Nike hosted a high-powered extravaganza during New York Fashion Week to unveil its Olympics uniforms and the brand’s latest product innovations, including performance running shoes and sustainable footwear and apparel. Donahoe said although the original plan was that these would launch around the Olympics, if the Games are deferred for a year, “we can still launch them on our timing.”
Although Nike has not disclosed how much of a sales boost it had been expecting from the Games, Matt Powell, vice president and senior industry adviser for sports for The NPD Group, wrote in a blog post last month that the big sporting goods brands view the Games as a platform to showcase new products and innovations rather than an opportunity to sell merchandise.
“Since sports retail today is in an ath-leisure period, I suspect these innovations will not have a major impact on merchandise sales, as performance has never been more out of fashion,” Powell said.
Although sales of Olympics-licensed goods have been growing, Powell said they still “pale in comparison to the professional leagues and colleges,” and the Games remain “less of a sales driver and more of a marketing play.”
Even so, in 2016, Nike saw a double-digit uptick in sales of its running shoes and apparel as a result of the Games, the company said at that time.
A few of the other leading sports brands such as Adidas and Puma, which sponsor hundreds of athletes in different sports, reacted to the IOC’s decision with a health-and-safety-first and we-are-the-world-like message.
A Puma spokeswoman said Tuesday that the company fully endorses the decisions that the Euro and Copa America soccer cups and Olympic Games 2020 organizers have made to postpone until the summer of 2021. The company said in a statement, “This ensures that the athletes and players will have the fair chance to prepare and train as necessary in the time leading up to the tournaments and competitions, and also undergo drug tests. This is currently not possible with most countries being under lockdown. Once the general situation will start to normalize, we will adapt our planning accordingly to the new sporting calendar.”
For the 2016 Summer Games, Puma’s roster included sponsored mega track star Usain Bolt, as well as other track and field athletes and competitors in soccer, boxing, golf, beach volleyball, wrestling and volleyball. The company also used the occasion to further its mantra of “The future is female.”
An Adidas spokesman said Tuesday that the company supports the decision and fully understands it. Adidas said in a statement, “At the same time, we feel [for] all the athletes, who have prepared for the Olympic Games for four years. However, the health and safety of all involved have absolute priority in such an exceptional situation. We will support our athletes and teams in the run-up to the Olympic Games in 2021 in the same way as we had planned for this year, and are already looking forward to the Olympic Games next year.”
During a recent earnings call, Adidas ceo Kasper Rorsted addressed what would happen should two major sporting events be postponed: the 2020 Tokyo Olympics and the European soccer championships. That would knock between 50 million and 70 million euros — between $55 million to $77 million — off Adidas revenue, he said, noting that would be a marginal impact due to the company’s solid financial position. A week ago the UEFA pushed back the European soccer championship to next summer as well.
On board to suit up Team USA for the opening and closing ceremonies in Tokyo, Ralph Lauren is already anticipating the Games. A company spokesman said, “The health and well-being of our teams, partners and consumers around the world is what matters most right now. We look forward to our continued partnership with the USOPC and support of Team USA, as they realize their Olympic and Paralympic dreams in Tokyo next year.”
Armani declined to comment. With his EA7 Emporio Armani, Giorgio Armani was lined up to provide uniforms with graphics paying homage to Japan for Italy’s teams at the 2020 Olympics and Paralympic Games. The designer, whose work has been worn by other athletes at previous Olympics, unveiled his 2020 uniforms last June. Twenty Olympic athletes and nine Paralympic athletes closed his Emporio Armani spring 2020 show.
As a sponsor of USA Swimming, USA Water Polo, the British Swimming Federation and other sports agencies, TYR plans to work with its partners, federations and governing bodies to provide clear direction for its next steps, according to Matt DiLorenzo, ceo. Like millions of others, he values safety first and hopes the global economy stabilizes as soon as possible.
Looking to the positive, DiLorenzo said, “The good news is the Games are not canceled. Athletes are being protected and voices are being heard. We think the appetite for the Olympic Games will be even greater next year.”
Uniqlo weighed in on Wednesday, saying: “Uniqlo respects the decision to postpone Tokyo 2020. We look forward to continuing our partnership with the Swedish Olympic Committee and Paralympic Committee and achieving successful events together next year.”
Under Armour, which sponsors USA Boxing and provides the footwear for Canadian Olympic Committee, did not respond to requests for comment.
Whatever a company’s interest, the Olympics is a well-oiled machine that generates revenue through the sale of media rights, The Olympic Partnership program, the IOC’s official suppliers and licensing programs, domestic sponsorships, ticketing and other licensing deals. NBC Universal, for example, was on track to sell more than $1 billion in national advertising for the 2020 Summer Games, and was anticipating more than a double-digit gain compared to the Rio Games. NBC also had a plan in place with Twitter to post select live events and shows. Indicative of the breadth of Olympic-inspired products that are sold worldwide, Mattel was ready to roll out an assortment for Barbie, Hot Wheels and UNO brands.
Beyond the media exposure, commercial enterprises and pure thrill of witnessing the unexpected in sports, the Olympics always delivers breakout stars who typically achieve their own financial gains after the Games through sponsorship. American gymnast Simone Biles was one, landing sponsorship deals with Nike, Beats by Dr. Dre, Visa, Core Power, Choice of Champions, Spieth America, World Champions Center and MattressFirm.