LANE ONE: LA28 picks up the pace on sponsorships, while 2019 financials show slowed spending

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/Updated/While the Olympic world has been focused on the drama in and around the oncoming Tokyo Games and the political implications of next February’s Winter Games in Beijing, there is promising marketing activity – as well as a welcome lack of other activity – around the 2028 Olympic Games to be held in Los Angeles.

After announcing its first major sponsor – Delta Airlines – in March of 2020, the U.S. Olympic & Paralympic Properties (USOPP) group that combines the sales efforts of the LA28 organizing committee, the U.S. Olympic & Paralympic Committee and U.S. broadcaster NBC was quiet during the pandemic.

Until now. The combined marketing entity has announced three significant sponsorship agreement in the last 90 days:

15 March: Comcast joins as a Founding Partner for communications services.

19 May: Deloitte joins as a Founding Partner for professional services.

16 June: Salesforce joins as a Founding Partner for its customer-relationship management software systems “to deliver an engaging fan and athlete digital experience.”

The Comcast and Deloitte agreements were extensions of existing sponsorship agreements with the USOPC, but the Salesforce announcement is highly significant as it brings a major new business technology player into the U.S. Olympic Movement.

Salesforce revenues exploded to $17.1 billion in fiscal 2020 and it has announced expected revenues of $25.5 billion for fiscal 2022. It has already been a key part of a mega-event in Los Angeles as it was used for volunteer registration and processing for the 2015 Special Olympics World Games, managing the 29,616 volunteer applications and assignments for support for the eventual 8,560 volunteers who worked on that Games.

Its announced focus on “fan and athlete” experiences could signal an important shift for the company to direct-to-consumer programs in addition to its famed business-to-business applications.

These deals are welcome signs of progress for LA28, which has a domestic sponsorship target of $2.517 billion in its $6.884 billion budget (36.6%). Tokyo 2020 set all-time records with a domestic sponsorship program of more than $3.3 billion in cash, goods and services from 67 companies (15 Gold Partners, 32 Official Partners and 20 Official Supporters). Paris 2024, however, has a much lower target of €1.3 billion (~$1.55 billion U.S.) for its Games, of which about half has been raised so far.

At the same time, LA28 was fairly slow in hiring and spending in 2019, as the City of Los Angeles released the “2021 Annual Report from the Los Angeles Organizing Committee for the Olympic and Paralympic Games 2028” on 10 June.

LA28 does not post its financial statements or Form 990 tax returns on its Web site, as the USOPC does, but releases them through the City of Los Angeles in an “annual report” in mid-year. The 10 June 2021 package includes a review by the City’s Chief Administrative Officer and Chief Legislative Analyst and the financial statements and tax return for 2019 (2020 was reported as being in process).

The City staff’s review was positive:

“LA28 indicates the business operations were adjusted due to COVID-19 and transitioned to a fully remote workforce. Activities were focused on ensuring a solid financial foundation to minimize risk caused by near-term business disruption created by COVID-19. Operating reserves remain healthy due to a combination of the International Olympic Committee’s (IOC) quarterly payments ($9,000,000) as well as a substantial reduction or deferral of planned contractual, administrative, and travel spending.”

The report also noted that the LA28 commitment to youth sports support was not derailed by the pandemic:

“While [youth sports] programming was placed on hold due to COVID-19, LA28 continued to support youth sports through partnerships with various local entities, such as the LA84 Foundation’s Play Equity Fund, Los Angeles Unified School District’s Beyond the Bell Program, and Students Run L.A.. With support from Nike, LA28 donated approximately $600,000 in sports equipment to kids in Los Angeles. LA28 also donated outdoor safety equipment to facilitate safe outdoor play activities at [Recreation & Parks] facilities converted to outdoor childcare centers. LA28’s additional support and contributions for youth sports are provided outside of the [Youth Sports Partnership] Agreement and do not impact the available funding for future project plans.”

There’s little doubt that Nike will come on as an LA28 Founding Partner at some point.

The financial statements don’t reveal a lot because LA28 didn’t do that much during 2019. It received $36 million from the International Olympic Committee as contracted and $1.39 million in interest and some contracted revenues from its long-term sales partnership with Legends.

LA28 spent $12.9 million on staff in 2019 vs. $7.2 million in 2018, adding to both its own team and to the USOPP effort:

LA28 staff: $8.09 million in 2019 vs. $5.31 million in 2018 (+52.3%)

USOPP staff: $4.83 million in 2019 vs. $1.92 million in 2018 (+152%)

The employee counts shown on LA28’s Form 990 tax return were 34 in 2019 vs. 28 in 2018; this does not include the USOPP staff. The organization had $36.7 million in cash on hand at the end of 2019.

With the pandemic in 2020, the LA28 situation was likely more of the same, although Linkedin watchers noted a pick-up in hiring in some areas. The USOPP was busy hiring more folks to come up with more ideas for partnership programs.

The IOC Executive Board did not even receive a report on LA28 at last week’s meeting, and the focus continues to be on the sponsorship program. Happily, the recent news on that front is good.

Rich Perelman

(The text was updated to reflect the declaration of a pandemic in 2020, not in 2019. Thanks to reader Dr. Bill Mallon for noting this.)

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