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What Rule 40 Means for Athlete Sponsors

Blog Header Banner (5)Non-sponsors will be competing for gold at this year’s Games thanks to relaxed advertising rules. Rule 40 was first established to “to preserve the unique nature of the Games by preventing over-commercialisation” and protect official sponsors. It essentially blocks athletes from plugging their own sponsors during a blackout period that start weeks prior to the Games.

There has always been remarkably strict sponsorship and trademark rules associated with the Games and when I say strict, I mean it. There’s even a long list of words and phrases I’m barred from writing in this piece! So when I say the rule was relaxed it’s far from an anything goes situation.

The International Committee (IOC) announced that they would open the door to more non-official sponsorship deals allowing smaller brands a small slice of the marketing pie. The IOC made changes to Rule 40 which allows athletes to support, tweet about, appear in advertising for, non-official sponsors as long as no official intellectual property is previewed or The Games aren’t explicitly mentioned.

How Does it Work?

Basically, you can sponsor an athlete directly, rather than the actual event and you won’t be affected by the traditional advertising blackout. Is there a catch? Well, yeah advertising campaigns had to be approved and up and running by the 27th of March to continue throughout the duration of the Rio Games. They also couldn’t include any explicit references to the Games or include imagery such as the iconic rings. Despite the restrictions this is still a huge perk and many brands are reaping the benefits.

Until now you had to have heavy pockets to buy into sponsorship and by heavy pockets I mean upwards of 100 million! That’s no joke, the top eleven sponsors, including the likes of Coca Cola and Samsung, for the 2012 London Games paid a combined 1.2 billion. Who are this year’s sponsors anyway? Well, first of all you have Worldwide Partners who include the likes of Coca Cola, Samsung and Panasonic. These are the big guys who have longer contracts lasting an entire Olympic cycle of four years. Then you have the Official Sponsors of The Games including Nissan and an array of Brazilian companies. Lastly, you have Official Suppliers of the Games which includes firms such as Nike, Microsoft and Airbnb. Altogether the organising committee is estimated to make 1.4 BILLION AUD!!

This year there will be many other brands that benefit from their connections to The Games who will only be paying a small slither of the official sponsor’s investment.

Brands Benefiting from Rule 40

Under Armour 

Perhaps the biggest brand to benefit from the rule change is Under Armour who sponsors 250 athletes. Leading the shake-up Under Armours ‘Rule Yourself’ campaign depicts both the American women’s gymnastics team and the world’s most decorated athlete in history, Michael Phelps, preparing for the Games.

During the Games the sportswear brand will rent a series of outdoor gyms on a 50-mile stretch of beach in Rio to set up marketing outposts and host daily workouts for fans. They have also hired out several penthouses where fans can mingle with athletes. This commercial showing Phelps preparing for his last Games was particularly popular.

Gatorade

Sports drink Gatorade have enlisted some A-List athletes of their own! The ‘Never Lose the Love’ ad depicts sprinter Usain Bolt and tennis player Serena Williams training alongside their younger self. The heart-warming commercial cleverly plays the line between being an obvious sponsorship plug without actually explicitly mentioning the Games.

Why change the rule now?

The rule change wasn’t about evening the playing field for advertisers at all! It was actually prompted by athletes complaining that they were deprived of commercial attention and income during their most marketable profitable moments. Fair enough, if I had to endure their gruelling training regime i’d wanna be making coin to!

Of course, you can’t make everyone happy! Many official sponsors have expressed their concern that the rule change could undermine huge investments. It’s even got McDonalds, who have been an official sponsor of the Games since 1968, second guessing their investment. John Lewicki, in charge of Global Olympic Sponsorship deals for McDonald’s, said his company will be evaluating whether they will continue their long-lasting sponsorship.

“I wouldn’t necessarily say we’re all happy about it. If we find rule 40 impacts the value of our sponsorship, we could always go back and renegotiate for the future,”Lewicki said.

If a few big sponsors jump the boat it’s going to cause issues for the organising committee who relies on advertising income as their second largest revenue channel, after broadcasting rights. It also adds a layer of complexity to companies marketing strategies with big sponsors serving as a watchdog for anyone that steps past the line. If an athlete violated rule 40 they run the risk of being disqualified and even stripped of medals. Sounds a little harsh to me don’t you think?

I think in the end it comes back to the true value of an influencer. To have Michael Phelps or Usain Bolt promoting your product will most likely prove far more valuable than actually associating yourself with the overall event. Under Armour and Gatorade have thought carefully about who speaks to their target audience and have utilised this knowledge to develop smart marketing campaigns. Of course, very few brands can afford these guys but if we shrink this example down to a realistic situation then you can see how the idea applies. What does your audience want to see? Your name plastered everywhere or a person who they know and trust supporting your brand?

It will be interesting to see how the change affects advertising revenue for the big guys and how things will change for the next Games. I wouldn’t mind betting after Rio a few sponsors decide to put their hard-earned cash into direct athlete sponsorship and the IOC is going to loose out big time. On the plus side smaller brands, especially sportswear ones, will be taking home gold this year!

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