Olympic Woes Could Impact Brands

Olympic Woes Could Impact Brands
The Olympic flame, next to the Bolshoy Ice Dome.

CHICAGO — As the Winter Olympics get underway in Sochi, Russia, this week, market watchers said negative buzz is quelling excitement about the event.

Terrorist attacks in the region and calls for a U.S. boycott to protest anti-gay Russian laws are souring the mood, according to Matt Powell, an analyst for SportsOneSource.

“The enthusiasm is down for a lot of reasons: where it is [being held], the anti-gay stance, and it doesn’t seem like the U.S. has as many star athletes participating,” he said.

And following fatal bomb attacks nearby, the terror watch may affect traffic at the event, which is expected to cost Russia more than $50 billion.

“Of course, the safety of our athletes, employees and guests at any sports event is our No. 1 priority,” said Lars Mangels, a spokesman for Adidas. “We trust that the Russian government as well as the organizing committee are taking security very seriously.”

In a similar statement, Nike echoed those remarks.

Outside of security concerns, Paul Swinand, an analyst with Morningstar Capital, said interest in Olympic sports could be waning as soccer and football continue to become more popular. “The premier sports are crowding out the little sports,” he said. In addition, Russia’s far-off location might be turning off American spectators who were excited about past Olympics held in London and Vancouver, British Columbia.

Nevertheless, sponsor companies said being involved is still a positive reflection on their brands.

For Herzogenaurach, Germany-based Adidas — long-term sponsor of the Summer Olympics — this week’s event is a chance to show off product on national federations from Germany, the U.K. and Australia, as well as on athletes and the national teams in biathlon, cross-country skiing, ski-jumping and bobsled.

“Winter Olympics, in general, are a much smaller event for us than the Summer Olympics, and from a commercial point of view, not as relevant as the World Cup,” Mangels said. “However, for the brand, it is still a very important platform. … It gives us a great stage to showcase that we are equipping the best athletes across a multitude of sports and disciplines with innovative high-performance products.”

Being affiliated also is a boon for brands looking to cater to the Russian consumer. Portland, Ore.-based Columbia Sportswear, which created the uniforms for the U.S., Canadian and Russian free-skiing teams, was mindful of the international — as well as local — impact the games can have on its reputation. “Columbia is a global brand and we have a strong presence in Canada and Russia, as well as the U.S. It’s important that [we] remain top of mind,” said Scott Trepanier, senior manager for public relations and promotions.

Mangels noted that Adidas — which counts the Russian market as one of its biggest opportunities globally — will unveil a significant marketing campaign in the country.

And Swinand said all the efforts could pay off, especially if there are interesting developments. “You hope there’s some kind of drama, that the win is interesting to the public so [your logo] appears often and you can [see] a return on investment,” he said.