Japanese automaker Toyota Motor Corporation TM is reportedly planning to end its substantial sponsorship deal with the International Olympic Committee after the upcoming Paris Olympics.
What Happened: Toyota’s sponsorship agreement, which commenced with the Pyeongchang 2018 Winter Games in South Korea, is set to conclude after the 2024 Paris Games, as per reports in Japan, noted the Associated Press. The deal, initially valued at $835 million, is considered the IOC’s most significant sponsorship deal.
Citing sources close to the matter, Japanese news agency Kyodo suggested that Toyota was dissatisfied with the way the IOC utilized the sponsorship funds. The sources claimed that the money was not effectively used to support athletes and promote sports.
When approached by the Associated Press for comment, Toyota declined and stated that financial details were confidential. The IOC, on the other hand, did not respond to the reports.
Toyota had withdrawn its Olympic advertising in Japan during the pandemic-delayed Tokyo Games in 2021, citing strong public opposition to the event and the IOC’s insistence on holding it.
"We have an agreement with Toyota until the Olympic Games Paris 2024," the IOC said. "We continue to work closely together in preparation for Paris and we look forward to bringing these plans to life."
Why It Matters: The IOC derives 91% of its revenue from the sale of broadcast rights (61%) and sponsorships (30%). In the last four-year cycle ending with the Tokyo Games, the IOC’s 15 top sponsors contributed over $2 billion. This figure is expected to rise to $3 billion in the next cycle.
Toyota’s decision to end its sponsorship deal could have significant implications for the IOC’s future funding. The IOC may need to find a replacement quickly, as suggested by sports marketing expert Rick Burton, according to the report.
Amid the Tokyo Olympics, Japan faced corruption scandals related to local sponsorships and the awarding of contracts. The IOC’s contribution to the Tokyo Games was approximately $1.8 billion, with the total cost of the event estimated at $13 billion, at least half of which was public money.
Despite the controversies, the Olympics remain a highly sought-after sponsorship opportunity, with companies like Nike Inc betting on the event to boost their sales performance.
Image Via Shutterstock
This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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