Biggest sponsors remain committed to delayed Games

NEW YORK • Major corporate sponsors of the Tokyo 2020 Olympics are standing by the International Olympic Committee (IOC) after the Games were postponed owing to the coronavirus pandemic, and experts familiar with the deals said the companies would likely not seek the return of billions of dollars committed to the agreements.

Fourteen global companies spent US$500 million (S$723 million) this year and have committed close to US$4 billion on multi-year contracts that designate them as top-tier sponsors, according to research firm Global Data.

After Tuesday's postponement announcement, five major sponsors - Procter & Gamble, Intel, Airbnb, Coca-Cola and Samsung - reaffirmed their commitment to the quadrennial multi-sport event.

Said a Coca-Cola spokesman: "As the longest standing sponsor of the Olympic Games, we remain committed to working together... to create a successful and safe event."

Despite the severe financial toll, sponsors generally consider themselves as long-term partners of the IOC. But, even if a company wanted its sponsorship money returned, it is unlikely to happen, according to lawyers familiar with the deals.

Sponsorship dollars are crucial to the operations of the IOC, which is a non-profit organisation funded primarily by broadcast rights and revenue from top sponsors.

The companies generally pay a portion up front when they sign and the remainder is paid in instalments over the length of the deal.

Reuters did not view the contracts, but those familiar with them said that every deal differs and the delay of the Tokyo Games may not necessarily trigger any obligation for the IOC.

Some might require the IOC to provide "make good" compensation to its sponsors for a postponement of one year or more, lawyers said. This may include product placements for manufacturers of consumer goods, promotional footage or meet-and-greet events during the Olympics, said Eric Bergner, a lawyer for Manatt, Phelps & Phillips in New York.

But even with the sweeteners, some companies may find it difficult to remain in long-term pricey contracts as the spread of the Covid-19 disease takes a huge toll on the global economy, one senior media executive said.

Major sponsors who have said they will pull the plug on their Olympic deals.

"I think it is definitely a possibility that some sponsors may seek to terminate their sponsorship entirely," said James Johnston, a partner at law firm Davis and Gilbert, which represents a top IOC sponsor.

REUTERS