The Olympics and McDonald’s used to go together like a hamburger and fries.
They are no longer a combo.
In a surprise move, the International Olympic Committee announced Friday it was ending its Olympic sponsorship deal with the fast-food giant three years before it was supposed to expire – severing a relationship that dated to 1976.
No financial details were released, though as part of the IOC’s top-tier program, McDonald’s signed a contract extension in 2012 that was reportedly worth about $200 million.
Much of that will be replaced by new sponsors in new categories. The IOC has new deals with Bridgestone, Toyota and Alibaba. The Sports Business Journal reported that Intel is set to announce a deal with the IOC next week , and a person familiar with the negotiation confirmed that to The Associated Press. That person was not authorized to speak publicly because the deal has not been announced.
IOC marketing director Timo Lumme says “we understand that McDonald’s is looking to focus on different business priorities.”
McDonald’s will, however, remain a national sponsor of the 2018 Olympics with domestic marketing rights in South Korea, and will operate restaurants in the Olympic park and village.
Some of the chain’s decisions may have been hastened by an increasingly tense relationship between the parties over the last two Olympics.
McDonald’s was among the many sponsors who had supply issues at the Sochi Games. In Rio, McDonald’s got little cooperation from the IOC or local organizers and barely had a presence inside the Olympic gates. One of the few McDonald’s operating on Olympic turf was in the Athlete’s Village, and it typically had lines running out the door, up to 100 athletes deep.
Among the chain’s biggest fans: Usain Bolt, who claimed Chicken McNuggets were his main staple during his record-setting runs through the 2008 Games in Beijing.
Simon Chadwick, professor of sports enterprise at University of Salford in Manchester, England, said McDonald’s could be ending the deal for a number of reasons: geopolitical concerns, the doping problems in Olympic sports, the growing influence of companies in China and throughout Asia, who have been willing to pay more for these deals.
“This is such a fragmented and rapidly changing environment, that for a sponsor trying to understand how best to activate a deal with the IOC, it requires a huge amount of resources and some smart strategic thinking about where to place your bets,” Chadwick said. “It’s an incredibly complex market. In many ways, that could mean this type of deal is no longer economically viable for a corporation like McDonald’s.”
The IOC’s top-tier sponsorship program gives companies exclusive worldwide marketing rights and permission to use the Olympic rings in advertising. Those sponsors contribute about 40 percent of the IOC’s total revenues.
The IOC said there were no immediate plans to replace McDonald’s in the fast-food category and that it would review that sponsorship segment going forward. Activating an Olympic marketing plan could become easier beginning in 2020, with Tokyo, Beijing and either Paris or Los Angeles hosting the three upcoming Games.
With the end of the deal, the corresponding relationship between McDonald’s and the U.S. Olympic Committee also ends, though most of the company’s American activation focused on the Olympic rings and not a specific Team USA angle.