Panasonic ends sponsorship contract with IOC. Why Japanese companies are ending Olympic deals?

Sept. 10, 2024, 10:19 a.m.

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Panasonic, headquartered in Osaka, has announced that it will discontinue its 37-year sponsorship agreement with the International Olympic Committee (IOC) at the close of the current year.

Panasonic initially became an Olympic sponsor in 1987 and subsequently extended its involvement to the Paralympic Games in 2014. The company has confirmed that it will terminate its sponsorship contracts for both events, as stated in a press release.

“Over the past 37 years, we have gained many valuable experiences” through the sponsorship and “deepened our bonds with sports fans and athletes around the world,” Panasonic CEO Yuki Kusumi said in the press release.

Advertisement IOC President Thomas Bach said in the release, “The IOC understands and fully respects that the Panasonic Group has to adapt its business strategy. Therefore, this partnership is ending in a respectful and friendly way.”

Panasonic are one of 15 ‘TOP’ sponsors for the IOC. While it is not clear how much it would affect IOC, but sponsors contribute over $2 billion in a four-year cycle to the IOC.

Two other Japanese companies, Toyota and Bridgestone, are also among the IOC’s 15 leading sponsors.

Toyota, which has reportedly been considering ending its sponsorship contract for several months, said it is not ready to pull out yet.

“Toyota has been supporting the Olympic and Paralympic movements since 2015 and continues to do so,” Toyota said in a statement to The Associated Press. “No announcement to suggest otherwise has been made by Toyota."

Bridgestone, a prominent tyre manufacturer, has informed The Associated Press that “no decisions have been made” regarding their sponsorship.

Why are Japanese companies ending IOC sponsorships?

Toyota are considering pulling the plug on their Olympics sponsorship. Reuters Japanese sponsors seem to have turned away from the Olympics, likely related to the one-year delay in holding the 2020 Tokyo Olympics. The COVID-19 delay reduced sponsors’ visibility with no fans allowed to attend competition venues, ran up the costs, and unearthed myriad corruption scandals around the Games.

Japan was once a key source of revenue for the IOC, but it's increasingly looking to sponsors from China, with growing interest from the Middle East and India.

The Tokyo Olympics saw Japan invest a substantial $13 billion, with government funds covering at least half of this amount. An official audit indicated the true cost may have been double this figure. The IOC's contribution was around $1.8 billion.

The Tokyo Games were marred by corruption allegations surrounding local sponsorships and contract awards. Dentsu Inc., a prominent Japanese marketing and public relations company, served as the marketing arm for the Tokyo Olympics and secured a record-breaking $3.3 billion in local sponsorship funds. This is separate from the revenue generated by the TOP sponsors.

According to a report by the Japanese news agency Kyodo, sources revealed that Toyota was dissatisfied with the IOC's utilization of sponsorship funds. They asserted that the money was “not used effectively to support athletes and promote sports.”

Reports from Japan suggest that Toyota might maintain its Paralympic Olympic sponsorship, which is a separate agreement with the International Paralympic Committee (IPC).

What is the value of the deals?

Toyota had a contact valued at $835 million, reportedly IOC’s largest when it was announced in 2015. It encompassed four Olympics beginning with the Pyeongchang 2018 Winter Games in South Korea and ran through the just-completed Paris Olympics and Paralympics.

The IOC generated $7.6 billion in income over the previous four-year cycle, concluding with the Tokyo Games. Financial figures for the cycle ending with the Paris Olympics have not been released yet.

The IOC's top-tier sponsors collectively contributed over $2 billion during that period. Projections indicate that this figure will climb to $3 billion in the subsequent sponsorship cycle.

The International Olympic Committee (IOC) has 15 top sponsors: ABInBev, Airbnb, Alibaba, Allianz, Atos, Bridgestone, Coca-Cola, Deloitte, Intel, Omega, Panasonic, P&G, Samsung, Toyota, and Visa.