The rumor that the Swoosh is going to sponsor the Brazilian Olympic Confederation (BOC) as well as the organizing committee of the 2016 Olympic Games in Rio de Janeiro has been going on in Brazilian industry circles since our recent trip to the country last January, in preparation for a major report on the Brazilian sporting goods market that should come out soon.
Numerous press reports in the last days have given the package as a done deal, although the figures they give for Nike's financial commitment vary widely from $25 million to $175 million. Neither Nike nor the Brazilian Olympic Committee wish to comment at this stage, as the agreements are not quite finalized yet.
First of all, Nike is expected to be the sponsor of the Brazilian team at the Olympic Games in London this summer as well as in Rio in 2016. Taking the place of Olympikus, the Swoosh should hold the rights to outfit the athletes for their travel uniforms and on the podiums, if the clauses of Adidas' sponsorship of the London games permit it, but it is not sure whether Nike will provide the outfits of the Brazilian team for the opening and closing ceremonies. Nike is already the sponsor of the Brazilian football and basketball teams.
Beyond the Brazilian team, Nike will also be a sponsor of the 2016 Olympics in Rio, according to the report, but it probably will not outfit the volunteers, reducing its financial commitment. The last time Nike sponsored the Olympics was in 2000, when the brand took over the contract from Reebok for the Sydney Games.
Adidas paid $127 million for a tier-one sponsorship for the London Games, and it will be the sponsor of the Fifa World Cup in Brazil in 2014. The Rio Olympic organizing committee has already reached its goal of raising $570 million in sponsorship revenues from Nissan, Bradesco, Claro, Embratel and Ernst & Young, so it probably doesn't need much more money from Nike.
Nike's new investments in Brazil come at a time where the brand is intent on reinforcing its leadership position in the country, where the sporting goods market is likely to grow sharply in the next few years.
Olympikus has been an official sponsor of the Brazilian Olympic Confederation since 1988, and this privileged status was one of the reasons behind the takeover of its former parent company, Azaleia, by Vulcabras, between 2007 and 2008. A former distributor of Adidas in Brazil, Vulcabras still has a management contract for the distribution of Reebok in Brazil and two other Latin American countries.
Officials of Vulcabras, parent company of Olympikus, will not confirm or deny the reports on Nike's new Olympic deals. They indicate for the moment that Olympikus will have a low profile at the London Olympics, except for its sponsorship of the strong Brazilian volleyball team. Olympikus last outfitted the Brazilian Olympic team at the Pan-American Games in Mexico last August.
Last year, Vulcabras raised its advertising expenditures to 12.4 percent of net operating revenues, up from 7.5 percent in 2010. Both Olympikus and Reebok, for which Vulcabras has a management contract in Brazil, absorbed a large portion of the increased spending, but in releasing its negative financial results for the last year a few days ago, the company said it would adjust its adverting expenses to historical levels over the next few years.
