By: Karina Masolova. Contact the Editor at karina@plainlanguagemedia.com.
Long before an Olympic Games begins, its officially licensed merchandising program is pivotal in generating excitement. The selection process and final announcement of an official mascot, the launch of unique merchandise, and the sale of souvenirs all serve to project the host city’s message on to the world stage and promote the Olympic brand.
TLL estimates that Olympics-based licensed merchandise sales will generate appoximately $200 million in 2018 thanks to the 2018 PyeongChang Games and other efforts.
There are three tiers of licensing within the Olympic movement:
- Organizing Committee for the Olympic Games (OCOG)—License companies from the host country that create souvenirs related to the Games to be hold in that country;
- National Olympic Committee (NOC)—License companies to create team-specific souvenirs for their own country that is participating in an Olympic Game; and the
- International Olympic Committee (IOC)—Operates a worldwide licensing program in categories like films and video games. Makes all broadcasting deals and retains right to historical footage as well as OGOC marks.
More often than not, purchases are driven by a country’s local population. For example, 70% of merchandise sales tied to the 2016 Rio Olympic Games were made by Brazilians, while 30% were from foreign visitors.
While most licensing activity has typically been organized by the OCOGs, based around a specific Games’ mascots and logos, the IOC has stepped up to nurture the Olympic brands themselves over the last couple of years. IOC-led programs include the Olympic Heritage Collection (lifestyle brand counts a select handful of licensees including Lacoste) and the Olympic Games Collection (up to 80 licensees exploit the trademarks associated with past Games). The IOC is also licensing the official Olympic rings mark with five interlocking rings for the first time with its The Olympic Collection.
The IOC is also collaborating with NOCs on ecommerce as well as merchandise; it recently signed a a 12-year sponsorship deal with Alibaba to provide cloud computing services. The IOC will launch a dedicated Tmall store by the end of the year.
Generally, the Summer Games both generate more total licensing fees and command a higher royalty rate than those held in Winter. Direct revenues to an OCOG have historically ranged from $23–190 million. On average, the most recent Summer Olympics counted 70 licensees and $69 million in revenue to their OCOGs. The Winter Games, however, had an average of 61 licensees and $29 million in licensed revenue.
The royalty rate for Olympic licensed products varies by category—it may reach as high as 20% for some goods—but a more typical overall rate is near the 10% royalty estimated for the 2016 Rio Summer Olympics and the 7% royalty estimated for the 2014 Sochi Winter Olympics.
The 2016 Rio Games generated $31 million in revenue to its OGOG with just over 5,000 different products available. The committee reported $300 million in retail sales, with $45 million of that total attributable to the signature product of the Summer Games—the Havaianas flip-flop. Just over 3 million pairs of the footwear were sold.
The 2012 London Games had nearly double the amount of products as in Rio (10,000) and the second-highest revenues to its OCOG at $119 million. The committee reported that over 100 million products were sold for over £1 billion (roughly $1.5 billion) in retail sales. Twenty product categories included apparel, soft toys, pin badges, and programs.
The Tokyo 2020 committee expects that licensing will make up 4% of total revenues, for an estimated $120 million in revenue. The first official Olympic shops have already opened their doors, with approximately 700 items being sold including shirts, towels, and key chains. The licensing team is targeting children first and foremost; the Games’ official mascots were selected through a national vote by grade-school students.
Looking forward, the next Summer Games will be hosted be Paris in 2024 and Los Angeles in 2028.
Given that the final sell-off period has not concluded for the 2018 PyeongChang Games, final revenue estimates are not available. An estimated 1,500 products were produced spanning apparel, confectionery, stationery, plush, pin badges, and accessories. TLL estimates that retail sales will ultimately fall anywhere between $90–225 million and that direct revenues could reach up to $25 million.
The 2014 Sochi licensing program generated a reported $500 million in retail sales with over 5,000 products available. The OCOG made $35 million in direct revenue. Products included apparel and footwear, sporting goods, household goods, accessories, stationery, souvenirs, and toys.
In contrast, the 2010 Vancouver Games generated over $50 million for its organizing committee. The big-ticket item were the Red Mittens—approximately 3.5 million pairs were sold for total royalties revenue of $54.6 million.
Looking forward, the Beijing 2022 committee has also opened official stores selling over 140 products to the public including badges, keyrings, apparel, and commemorative stamps. Unlike the Tokyo 2020 team however, the official mascots are slated to be selected this coming fall.