Toyota's Olympic Exit Could Set Off A Domino Effect

As per media reports, Toyota has decided to end its sponsorship of the Olympics, the premier global sporting event, after the Paris 2024 Games in August. Reports from Japanese media indicate that individuals within the company are dissatisfied with the allocation of funds and believe that more should be directed towards athletes and sports.

Toyota is unlikely to be the last company to withdraw its support. Years of corruption and other public controversies have tarnished the Olympics' image, transforming what was once a straightforward, feel-good story for advertisers into a growing reputational risk.

The TOP

Traditionally, sponsors have eagerly sought to associate themselves with the Olympics. In 1985, the International Olympic Committee (IOC), aiming to capitalise on increasing television demand, established The Olympic Partner (TOP) program. Companies that joined received exclusive rights within their industry to market their brands alongside the event. For instance, Bridgestone is the sole Olympic tyre partner, and Allianz is the only insurer.

Over the years, the TOP program has become crucial for both advertisers and the Olympics. Between 2017 and 2021, there were 13 to 15 TOP sponsors who collectively paid US$ 2.28 billion to the IOC, making up 30 percent of the organization’s budget. Toyota has played a significant role in this growth. In 2017, it entered an eight-year TOP partnership worth an estimated US$ 835 million. The deal was strategically sound for the automaker, with three Olympics scheduled in Asia between 2018 and 2022: the Winter Olympics in Pyeongchang (2018) and Beijing (2022), and the Summer Olympics in Tokyo (2020). These events offered Toyota a prime opportunity to align its brand with the prestigious aura of the Olympics.

However, things did not go as planned. The Tokyo games were marred by corruption scandals that led to resignations, indictments, and convictions of prominent corporate and government figures. For the Japanese public, burdened with escalating costs, it often seemed that everyone was benefiting from the event except them. This perception worsened when the government decided to proceed with the Games despite the pandemic.

As the lighting of the Olympic flame approached, a national poll conducted two months prior revealed that a mere 14 per cent of Japanese citizens favoured hosting the Games. Late last year, the city of Sapporo scrapped all future plans to host the Winter Games due to public sentiment.

Toyota, initially aiming to leverage the Olympics for heightened brand exposure, withdrew all its Olympic-related TV advertisements in Japan. Akio Toyoda, former Chief Executive Officer notably refrained from attending the opening ceremonies.

Even three years later, repercussions persist. 10 individuals have been convicted of offering bribes to individuals associated with the event, with the most recent conviction occurring in March of this year. The tarnishing of the Olympic brand continues to unfold.

Waning Popularity of The Olympics 

Now, as Paris prepares for the 2024 Olympics, a recent poll indicates that 44 per cent of Parisians view hosting the games as a negative development—an indication of a doubling in negative sentiment since 2021.

Toyota's highly publicised disassociation from the Olympics presents a significant challenge, particularly for a company that endured the challenges of Tokyo 2020. This development should raise concerns for the IOC. Reports suggest that four out of the 15 TOP sponsors—Atos, Bridgestone, Intel, and Panasonic—are contemplating whether to renew their partnerships.

These companies, among other considerations, must assess the potential damage to their reputation associated with aligning with an organisation increasingly associated with financial scandals and mismanagement. Drawing from the experiences of 2020 and 2024, they may conclude that having their brand's name alongside the Olympic rings is no longer a winning strategy.

EE News Desk

EE Online Bureau EE News Desk