Olympics fundraising falls short

The news last week that the Department for Media Culture and Sport (DCMS) has failed to raise a single penny from the private sector to support potential Olympic athletes has drawn criticism from politicians and sports marketing experts alike. Despite appointing Fast Track, the sports marketing agency founded by former Olympic athlete Alan Pascoe, the DCMS has no potential suitors to plug a £100m gap in finance for UK Sport, the body that funds elite British athletes (MW.co.uk June 27).

A deal was struck with the Treasury in 2006, where it was agreed that a five-year £600m package for UK Sport to help train British athletes between Beijing 2008 Olympics and London 2012, would be composed of £300m from the National Lottery, £200m from the Treasury and £100m from the private sector.

Fast Track says that while it is true that no money has been raised, it is “not yet in the marketplace”. A spokesman for Fast Track says it is “still in discussions” with the DCMS as to “how the money might be raised” with no clear strategy having been formulated at this point.

Critics of the DCMS and indeed the Government’s spending watchdog, the National Audit Office (NAO), say that delays in beginning fundraising have severely hampered any prospect of finding the money from the private sector. The NAO has even urged UK Sport to axe funding for sports with slim medal prospects at the 2012 Games, warning that there is a risk that raising all the money “will not be achievable”.

Yet the DCMS says it is “completely committed” to backing British athletes and claims it is “still working on” raising cash from the private sector. The department has pledged to step in and cover the first tranche of £20m, which is due shortly, so that UK Sport can allocate grants straight after Beijing.

Many feel that if it was to have had any chance of raising the money from commercial sponsors the DCMS should have been “working on it” long ago. The NAO notes that the contract to appoint specialist help (won by Fast Track) was not put out to tender until November last year, 16 months after the House of Commons Public Accounts Committee identified the need for outside expertise.

Liberal Democrat Shadow DCMS Secretary Don Foster cites “Government complacency” and says it would be a “travesty” if British athletes’ chances at 2012 were jeopardised. A spokeswoman for the Conservative Party observes that it was “typical” of the Government to make “grand announcements” of this type, “without any coherent plan as to how it would actually be accomplished”.

Meanwhile, the DCMS seems happy to propagate the view that it has held back on seeking commercial deals for UK Sport to allow the organising committee for London 2012 (Locog) to hit the ground running with its own goal of finding Tier One domestic partners, to the tune of £650m. To date, Locog has signed up Lloyds TSB, Adidas, EDF Energy, British Airways and British Telecom as Tier One partners, with at least three more industry sectors up for grabs.

A further Tier One deal is set to be revealed next week.

One sports marketing insider says that the idea the DCMS devised a strategy where it put Locog deals in front of funding prospects for UK Sport is “rubbish” and goes on to observe that the problem for UK Sport and Fast Track is that, in terms of commercial assets, “they have nothing to sell”.

Competition among asset holders in sports sponsorship has never been fiercer. In order to attract brands with significant sums of money to invest, rights holders must be able to demonstrate they have something valuable to offer. Sadly for UK Sport, it owns the rights to nothing. At best, it offers sponsors three days access to athletes per annum.

Locog, by contrast, owns all commercial rights associated with the London 2012 Games; partners can use the London 2012 logo and will reap a variety of other benefits.

The International Olympic Committee (IOC), the overarching Olympic organisation, owns the worldwide marketing rights of the Olympic Movement, including use of the famous Olympic rings.

Still more bodies vie for money to pay for different elements of 2012. The goodwill of many Londoners is already stretched to capacity by a hike in council tax bills to help fund the infrastructure for the Games. The construction of venues and infrastructure is the responsibility of the Olympic Delivery Authority (ODA), as distinct from Locog, which is charged with staging the Games.

The National Lottery is stumping up £2.2bn towards the public funding package for London 2012, £750m of this will come from specially designated lottery games, such as the recently launched Olympic Champions scratchcards (MW.co.uk June 24). Camelot says its Olympic fundraising is currently “ahead of target”.

The plethora of bodies involved at the heart of funding 2012 led IOC chairman Jacques Rogge to comment last week that the British public was “confused” about the rising costs and the various elements of its funding. The thrust of both Locog and Camelot’s communications strategy hinges on the need to encourage the whole country to embrace the Olympics as a national event, rather than a London-centric affair. Hence the creation of flags, incorporating a Union Jack with the 2012 logo, being issued to town halls and public buildings nationwide. There are plans for celebrations up and down the country to mark the handover from Beijing to London, with a huge free concert in The Mall, sponsored by Visa.

Also jostling for position in the market are the national governing bodies of individual sports. The Lawn Tennis Association (LTA), for example, recently embarked on a search for a commercial partner to “own” British tennis (MW last week). With a price tag of £24m over four years, many experts feel that the LTA may struggle to find a taker, as it lacks a number of significant UK tennis assets. Many other governing bodies are cash-starved and would welcome investment from the private sector and even the smallest could argue they have more to offer in terms of commercial rights than UK Sport.

The myriad of opportunities for sporting sponsorship – Olympic or otherwise – leaves the DCMS’ chances of finding £100m for UK Sport looking very slim indeed, experts say. Sources close to the DCMS say it is hoped that British athletes will win a substantial number of medals in Beijing and some company or individuals or a combination of both will be so overwhelmed by the “Olympic spirit” they will find the idea of funding training irresistible.

In the meantime, there is no saviour on the horizon for UK Sport. Sir Philip Green and Sir Richard Branson have been suggested as possible benefactors but a source close to Branson deems it “unlikely”, given Virgin Group has just taken over sponsorship of the London Marathon, in a deal that will last beyond 2012.

One sports marketing expert says that he is surprised Fast Track took the job on in the first place, given the uphill task it faces and the lack of clarity of thought from the DCMS. “This never had a chance of succeeding,” he concludes.

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