Olympic golf may open doors to cash in
Monday, October 5, 2009
The imagination leads to a range of intriguing possibilities: Hank Haney’s Olympic Golf Academy of Jamaica . . . or Taiwan . . . or India?
Nothing of the kind is a done deal, but top executives at sports marketing firm Octagon, which represents the renowned teacher, already are percolating ideas to capitalize on golf’s likely inclusion for the 2016 Summer Games. The final vote on the sport’s addition goes before the International Olympic Committee Oct. 9 in Copenhagen, Denmark.
Chris Higgs, Octagon’s co-managing director of golf, is only brainstorming, but he throws out a distinct scenario. Countries with little or no competitive golf experience will need coaching and instruction to develop athletes into future Olympians.
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Who better to help them than Tiger Woods’ instructor?
“That’s where I see an opportunity existing,” Higgs says.
Such discussions are occurring in all corners of the golf industry and illustrate just one of the countless ventures that might arise. But it’s virtually impossible to calculate a potential Olympic windfall for the industry, which is a hotly debated topic.
Part of the challenge lies in the fact that not all benefits will be quantifiable, especially as bottom-line improvements. Naysayers scoff at Olympic advocates who, they say, have overhyped golf’s expected addition. They roll their eyes at the perception that the Olympics will lead to a worldwide golf boom, creating ravenous consumer appetite for everything from golf goods to tee times.
The reality more likely is this: Olympic dividends will vary greatly from business to business and location to location.
On the latter, a consensus exists that mature golf markets such as the U.S. have little to gain as opposed to emerging markets in Asia and Eastern Europe. Keep in mind, too, that the exorbitant cost of associating with the Olympic rings – or better yet, marketing halos – will price out many.
Procter & Gamble, for instance, reportedly will pay $40 million to $60 million for a four-year deal, making the consumer-products giant an official Olympic sponsor beginning with the 2010 Vancouver Winter Games.
Nevertheless, nearly everyone in golf business – TV executives, agents, course architects, corporate sponsors, and equipment and apparel makers, to name a few – will try to tap the Olympics in some fashion because there’s simply nothing else like it.
“More than two-thirds of the world’s population – that’s north of 4 billion people – had some form of contact with the Beijing Games. It’s just amazing reach,” says Rick Burton, former chief marketing officer of the U.S. Olympic Committee and now the David B. Falk distinguished professor of sport management at Syracuse University in New York.
Some companies, such as Nicklaus Design, have been working on Olympic proposals for almost a year. The course-design firm has created a template for an Olympic practice facility that can be modified to meet the needs – and budgets – of countries willing to invest in their golf teams. With all of its bells and whistles, a facility would include a golf course, practice facility and fitness center, according to Paul Stringer, the firm’s senior vice president of business development.
The company hasn’t shopped the template yet, but Jack Nicklaus – who has business relationships with golf leaders in various countries who likely would lead their respective Olympic efforts – has informed them of the concept, Stringer says. Among the top markets Nicklaus will target: China, Russia and Mexico.
Stringer won’t say how much the practice centers would cost or how many facilities Nicklaus Design anticipates building, but adds: “We believe the Olympics could be a substantial opportunity.”
So, too, does IMG.
The Cleveland-based firm’s golf operations span the world, and its businesses include player representation, corporate sponsorship, TV and event ownership.
“On a macro level, I’m aware that there are people saying it’s being blown out of proportion,” says Mark Steinberg, IMG’s senior vice president and global managing director for golf. “But I have a different perspective. I think it would be far more devastating if (golf) isn’t included.”
He insists the industry shouldn’t lose sight of the ultimate goal: “If not for the Olympics, some nations would not be part of our sport. We’re trying to inject the possibility of increased participation.”
That could translate into numerous deals for IMG, now and down the road.
Countries that get excited about golf could invite IMG players for exhibitions, Steinberg says. And as the Olympics near, corporate sponsors may approach IMG with new endorsements. Another possibility: In some markets, the Games could spur demand for additional golf programming, which IMG’s TV division happily would broker.
Those who clamor for immediate gains also aren’t grasping long-term scenarios and the ripple effects of Olympic glory, says Octagon’s Higgs. A native of Jamaica, he wonders: What if his homeland, which already has produced great athletes such as sprinter Usain Bolt, were to deliver a golf champion?
“What would it mean to Jamaica if they had a Tiger Woods? What would it mean to the tourism of Jamaica, if their Tiger Woods promoted Jamaican golf courses and Jamaican resorts? Imagine the economic effect for the country,” he says. “That’s what the Olympics can do.”
Some golf equipment manufacturers, however, are less exuberant.
“I’m sure it’ll be exciting, and it’s great for the golf fan, but will it create interest to buy stuff? I really don’t know,” says Mark King, president and CEO of TaylorMade-Adidas Golf. “It’s only a benefit if it turns into dollars for us.”
TMAG hasn’t begun strategizing for the Olympics, but King says, when the time comes, his staff will tap parent company Adidas’ expertise in leveraging the Summer Games and other premier global sporting events. At soccer’s World Cup, for instance, Adidas has launched new footwear.
In similar fashion, King anticipates TMAG will unveil products around the Olympics.
Just don’t expect to see them featured in TV commercials during the actual competition. The Olympics’ sky-high ratings mean advertisers pay dearly for the reach they gain.
For the Summer Games’ U.S. network, which historically has been NBC, such viewership – and the addition of a demographic-rich sport such as golf – is bound to produce record revenue, says Burton, the Syracuse professor.
“There would have been an inflationary increase regardless, but golf will bring a real incremental gain,” Burton says. “The IOC will charge more for its TV rights, and the network will pass that along to advertisers.
“No disrespect, but if the Olympics were adding the modern pentathlon, I don’t think you’d see the broadcasters getting excited.”
Indeed, Olympic exposure can be significant.
“Beach volleyball can get an 8.0 to 10.0 rating as part of the Olympics as opposed to a 1.0 on its own,” says Neal Pilson, former president of CBS Sports. In contrast, it’s common for typical PGA Tour events to net ratings between 2.0 and 3.0. (A single ratings point represents 1,149,000 TV households.)
Olympic networks don’t sell ad units individually, which will prevent companies from buying TV spots just during the Olympic golf broadcast. Unlike the Super Bowl, which commands $3 million for a 30-second spot, the Olympics have charged a single advertiser more than $50 million for a bundle of ads dispersed throughout the two-week event, according to Burton.
As expensive as it is, he says, companies ante up because they know the value of being seen by the world.