London 2012 clears first hurdle

As the Olympic bid signs up big-name backers, Mark Sweney examines what the sponsors get for their money

The team behind the London 2012 Olympic bid breathed a sigh of relief last week as it revealed that it has secured £6m of the £10m it plans to raise from corporate backers. Even more pleasing, it is attracting significant investment from exactly the heavyweight, household-name brands that will go down well with the International Olympic Committee, the body that chooses the host city.

British Airways, BT and EDF Energy have each paid £1m for the right to call themselves 'premier partners' (the top tier of sponsorship) and use the London 2012 logo in their marketing activity. Getting UK companies of this calibre on-side is critical, as it proves to the IOC that the bid is being taken seriously at a commercial level.

Sponsorship brings further benefits for London 2012. 'We get cash, obviously, and value in kind, such as flights from British Airways to the meetings and events,' says David Magliano, the bid's director of marketing.

Signing up big brand names also gives London 2012 access to its partners' promotional work, meaning it can extend awareness of the bid far beyond what is achievable on its own resources. 'We have a relatively low media budget,' explains Magliano. 'We are relying on exposure through our partners' marketing activity and via their own media, such as BA's High Life magazine and the utility bills sent by EDF Energy and BT.'

To exploit its association, BA intends to brand the tail-fins of its planes with the London 2012 logo. EDF Energy is doing the same with its fleet of service vehicles and will introduce the logo into its advertising later this year.

Return on investment

There are benefits from a planning perspective as well. London 2012's technical bid (detailing the infrastructure that will be put in place) is due in November. Both EDF and BT will play a critical role in that submission and have seconded staff to the bid team.

What is less clear, however, is what the partners get for their £1m investment. There are three tiers of support below premier partner: major partner, at £500,000; champion, at £150,000; and supporter, at £50,000. London 2012 is vague about exactly what each tier confers to a partner beyond brand association and the use of the logo for the top-level sponsors.

For Martin George, director of marketing and commercial development at BA, London 2012 was an opportunity not to be missed. 'We carry 30m people to and from London each year. We are a major British brand and people identify us with London,' he says.

'We are also global, so linking up with the world's biggest sporting event is a good fit. If London wins, there will be a big impact on tourism and we want to be involved from an early stage.'

An association with London was also a prime motive for EDF. The company is made up of London Electricity, See Board and SWEB, and adopted the umbrella brand last July. With the city at the heart of its operations, the London 2012 bid offers a high-profile vehicle to raise awareness of the name change by highlighting the company's local origins.

For the utilities sponsors, there are other potential benefits. If the bid succeeds in bringing the Olympic Games to the UK, large-scale infrastructure development contracts will be up for grabs.

All contracts will go through a legitimate tendering process, and it is likely that a business the size of BT would play a part anyway. But getting involved early is a way of feathering the nest for the future.

'There is undoubtedly an element of remembering who your friends are,' says Magliano.'These brands are well-positioned to become Olympic sponsors should we win.'

Louise Poole, head of brand at EDF, agrees. 'Being a premier partner doesn't guarantee us "favoured status" in terms of future contracts,' she says. 'But in the spirit of being a partner we would hope to be involved.'

The bid has negative associations as well, though. All the problems surrounding the build-up to the Athens Olympics this summer have removed some of the gloss from sponsorship of the world's largest sporting event.

And memories of the £600m Millennium Dome could dampen public enthusiasm for such major projects. This time around, the government and the London Development Agency are devoting £18m to the bid in addition to the £10m raised by corporate sponsorship.

Tax backlash

'Brands need to be careful, as public opinion about the London bid could be negative. There may be concerns over the large amounts of taxpayers' money being used,' says Cameron Day, new projects director at sponsorship consultancy The Works. 'It is also very focused on the South-East. You have to wonder at this stage how a building site in Hackney (the proposed site for the Olympics) will sell more flights for BA.'

The London 2012 team are unfazed by recent history, however. Sponsorship targets are being met and marketing activity can begin in earnest ahead of the IOC's final decision, which will be announced in Singapore next June. Costs and construction problems are issues for the distant future if the bid is successful. For now, London 2012 feels right on track.

DATA FILE - LONDON 2012

Sponsorship support

Premier partners: British Airways, BT, EDF Energy

Major partners: Canary Wharf London, Clifford Chance, Ashurst,

Freshfields Bruckhaus Deringer

Champion partners: British Airways London Eye, Berwin Leighton Paisner,

Radisson Edwardian

ODDS ON BIDDING CITIES

Rank City Odds

1 Paris 11/8

2 London 9/4

3 Madrid 7/1

4 New York 8/1

5 Rio de Janeiro 8/1

6 Leipzig 16/1

7 Moscow 20/1

8 Istanbul 33/1

9 Havana 100/1

Source: Ladbrokes

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