General Motors has announced an end to its sponsorship of the U.S. Olympic Committee. GM also announced it would no longer commit to buying exclusive automaker status for advertising on NBC's telecasts of the Olympics.
The car giant cited a need for flexibility. Ad industry pundits have pointed to a need to avoid long term commitments and a switch from traditional TV sports: the exact model that Olympic finances have been built on since 1984.
Sponsorship and sports TV rights are inextricably linked. Broadcasters count on ad revenue from sponsors to cover the enormous sums they pay for the rights to cover events and leagues.
The deal had initially been done in 1997, in the lead-up to Salt Lake City 2002. GM's pullout will leave the USOC down some $5 million, or 7.5%, of its rights income per annum. NBC will now have as much as $100 million per Olympics in ad revenue to go find another buyer for in order to help make back the billions it is spending on televising Vancouver 2010 and London 2012 .
Just losing a sponsor, even a big one like GM, is no clear sign that the sky is falling in. But sports professionals everywhere will be looking to see if this is the start of a trend away from long term commitments and away from the traditional sponsor-an-event-and-buy-TV-airtime model. Four years ago, the ink had long since dried on the key U.S. TV deal for 2012. Today, nothing looks certain for 2016.
The Olympic Games and the Wimbledon tennis championships share a rare position of not selling advertising via hoardings in stadiums, on uniforms and on equipment, forcing all the action to take place during ad breaks that are fast losing their effectiveness. How much longer will the model hold? More importantly still, where are the ideas for replacing it?