David Owen ©ITG

It is coated with Oxfordshire dust, the legacy of its storage berth in a garden shed on the estate where Winston Churchill was born. But while it is showing its age, the navy blue plastic ring binder I hold in my hands deserves a place in Olympic business history.

Dating from 1976, the binder contains, over about 200 closely-typed sheets of A4 (some endearingly inserted upside down), a detailed presentation by The West Nally Group, the sports marketing pioneers who used to hang out with the nightingales on London's swanky Berkeley Square, to the organisers of the XXII Olympiad - Moscow 1980.

The document is something of a landmark because it spells out the essential insight that, along with the TV/digital technology revolution, has underpinned elite sport's astonishing metamorphosis over the past half-century into Big Business.

This is that, when it comes to sponsorship, less is more; that, in a business world starting to be dominated by globe-straddling multinational enterprises, properties like the Olympic Games would generate more cash more efficiently by offering worldwide exclusivity to their partners in individual product categories, rather than by striving willy-nilly to close as many deals as possible.

The same insight was at the heart of the transformational Los Angeles 1984 marketing effort. It remains the core principle of the mighty The Olympic Partner (TOP) worldwide sponsorship programme originally developed by the International Olympic Committee (IOC) and sports marketing company ISL in the latter part of the 1980s. 

TOP has grown over the years into an international marketing phenomenon, now generating more than one billion dollars in cash and value-in-kind goods and services per four-year Olympic cycle.

It is one of life's sustaining ironies that among the first people offered the opportunity to cash in on this great leap forward in marketing theory were the granite-faced Communists of Soviet Russia.

One of the reasons the West Nally dossier is so thick, indeed, is that group managing director Patrick Nally and his colleagues evidently felt the need to include an elementary marketing primer, setting out the basics of a consumer-driven marketplace for interlocutors inured to a socialist command economy.

The ring binder which deserves its place in Olympic business history ©ITG
The ring binder which deserves its place in Olympic business history ©ITG

"Where there is a sizeable market for a particular product," Appendix E explains, "eg a detergent for laundering clothes, several companies will manufacture a product to reap the profits available from selling it to the public...

"Basically all the products are the same and perform their task adequately. How, then, is the consumer persuaded to buy one rather than the other?

"This is where the elements of the marketing mix come into play…" And so on.

To situate the dusty folder in its correct context, it is perhaps best to start with a look at fundraising for the Montreal Summer Games, an event fast approaching when West Nally's Moscow presentation was delivered.

These Montreal Games have become a byword for financial disaster, mainly as a consequence of escalating facilities costs.

A list of estimated sources of finance contained in the Official Report for Montreal illustrates how completely and utterly Olympic Games funding has changed in the last four decades.

Of CAD$310 million (£180 million/$240 million/€205 million) of anticipated revenue, no less than CAD$250 million (£145 million/$195 million/€165 million) was expected to come from Olympic coins. A lottery was the next highest prospective contributor at CAD$32 million (£18 million/$25 million/€21 million). TV rights, the mainstay of modern Olympic funding, were put down for a measly CAD$3 million (£1.7 million/$2.3 million/€2 million). Sponsorship was not even mentioned.

In the end, revenue of CAD$430 million (£248 million/$334 million/€283 million) was generated. TV did better than expected, bringing in CAD$32 million (£18 million/$25 million/€21 million), as did the lottery, spectacularly so, producing CAD$235 million (£135 million/$182 million/€155 million). Then there was CAD$9 million (£5.1 million/$6.9 million/€6 million) attributed to something called the "Revenue Division". This, essentially, was revenue from sponsorship and licensing.

According to the Report, 124 Official Supplier deals were concluded with companies willing to supply free goods and services useful for the staging of the Games. These were valued at CAD$15.5 million (£8.9 million/$12 million/€10.2 million), of which CAD$2.6 million (£1.5 million/$2 million/€1.7 million) was cash.

In return for these offerings, companies were allowed to use official marks and proclaim themselves "Official Supplier to the 1976 Olympic Games". The Report notes that "in most cases, these rights were exclusive to a particular product or a geographical area".

The idea of the accompanying sponsorship programme was to enable companies whose products were of no direct use to Games organisers to make a contribution. Amounts of as little as CAD$100 (£58/$78/€66) were eligible, with awards tailored to the size of the donation. CAD$25,000 (£14,500/$19,500/€16,500) apparently entitled you to a Gold Beaver.

The programme ended up involving a staggering 628 companies, who were able to style themselves, Official Sponsor/Supporter/Promoter of the 1976 Olympic Games. From all this effort, around CAD$4.2 million (£2.4 million/$3.3 million/€2.8 million) was raised.

Once expenses had been deducted, the Report puts the net profit of Montreal 1976 sponsorship, marketing and licensing at a fairly piffling "close to CAD$5 million (£2.9 million/$3.9 million/€3.3 million)" – although "the CAD$12.9 million (£7.4 million/$10 million/€8.5 million) worth of goods and services supplied free of charge should be added to this total".

The Montreal 1976 Olympics are regarded as a financial disaster ©Getty Images
The Montreal 1976 Olympics are regarded as a financial disaster ©Getty Images

No wonder West Nally figured there had to be a better way.

The company was by this time extremely active in Olympic circles, with Patrick Nally arranging to rent a comfortably appointed Montreal townhouse during the Games in which to entertain and help further the interests of his growing list of clients.   

This no doubt explains why the dusty Moscow dossier includes a number of contracts, including what appears to be the 26-page agreement between the Montreal Organising Committee and Coca-Cola Limited, the Canadian arm of the beverage maker which remains a stalwart Olympic sponsor.

The document appears to confer the exclusive status of Official Soft Drink Supplier to the Games (excluding fruit juices) on the company in exchange for CAD$1.3 million (£750.000/$1 million/€860,000).

Interestingly, the venues covered excluded the Montreal Forum, which had almost the status of a shrine in the city, as the home of the revered Montreal Canadiens ice hockey team. It was at the Forum that Romanian gymnast Nadia Comaneci achieved the first perfect 10 in Olympic history.

West Nally cannot be accused of shooting for the moon with its proposals to the Moscow 1980 organisers: its estimate of the total marketing income, including merchandising, likely to be raised is a relatively modest $25 million (£18.5 million/€21 million).

But it advocates a fundamental change of approach, saying that to hit this target, “total co-ordination of promotional activity" between the Organising Committee and all National Olympic Committees (NOCs) is "essential".

Agreement with NOCs on a policy of cooperation is, accordingly, a "vital first step to a fund-raising programme". Moreover, approaches to raise finance should "concentrate on multi-nationals and major corporations". No more one hundred-dollar Official Olympic Promoters then.

If NOCs can be “encouraged to accept the logic of unity in approaches to multi-national companies,” West Nally predicts, “far greater financial return will be achieved”.

It uses an oil company, Texaco Petroleum, as an example, speculating that it might be willing to pay “substantial sums for the exclusive right of association with the Olympiad ‘80”. It goes on: “If agreement with local NOCs is not reached, national associations could sell local petroleum promotional rights to competitors of Texaco.

"This will dilute the promotional potential to Texaco – and the other petroleum company – and therefore the financial payment to both Moscow and the local NOC will be smaller.”

The Montreal Report points out that the 1976 Organising Committee sent letters requesting cooperation to “all 131” NOCs, of which 48 – “including those from the world’s major trading nations” – consented. This was in return for 25 per cent of royalties derived from their national territories. While the wording is not entirely clear, however, it appears that this related to merchandise licensing.

The world's biggest companies battle to become involved in international sport ©Getty Images
The world's biggest companies battle to become involved in international sport ©Getty Images

West Nally posits the following reasons for focusing its efforts on multi-nationals.

"1. They are capable of dealing in the types of sums we will be asking for the rights to be associated with the XXII Olympiad.

"2. They have an international viewpoint, which means that a) they will appreciate better the opportunity of association with an event of world influence; b) we can make one deal with a multi-national company which will result in funds being raised from several countries without the need to undertake negotiations in each of those countries; this increases dramatically the efficiency of the fund-raising effort.

"3. Multi-national companies are very concerned over their image with the general public and with certain influential groups such as consumerist and environmental lobbies.”

It underlines again there is one "key requirement" of any proposal – exclusivity.

"It is the nature of competitive marketing efforts in the traditional environment of the western economy and its marketplace that promotional efforts have a value only if a company can take advantage of them with no possibility of a similar or matching activity by any of its competitors in the same product field."

West Nally goes on to list 30 product categories that might be targeted – computers/data processing, timber manufacturers/products, smokers’ requisites and so forth – along with the main corporations active in each sector.

To a sports business nerd such as myself, this adds up to a fascinating insight into the genesis of a potent and, as it has turned out, remarkably enduring revenue-raising model – even if the Cold War in the form of the US-led boycott of Moscow ultimately put back its full realisation by an Olympic quadrennium or two.

Far from a potting-shed in a verdant corner of rural England, I think this ring binder’s long-term home should be in Lausanne, in the Olympic archive.