OMAHA — Union Pacific Corp. Chairman and Chief Executive Dick Davidson stood before 1,200 employees and their families at the Durham Western Heritage Museum in Omaha, the Omaha World-Herald reports.
It was Jan. 10 — a proud occasion for the company and its employees. The Olympic Flame had stopped in Omaha and was to continue its journey to Salt Lake City, in part, by a specially painted Union Pacific train.
As the workers and their children ate hot dogs and chips, Davidson took credit for bringing the flame to Omaha. A year ago, he asked that Omaha be on the Olympic Torch Relay route.
“I think the Olympic torch has proven to be an inspiration as it travels across America,” Davidson said. “Since Sept. 11, there has been a strong rebirth of patriotism in America.”
As a sponsor for the 2002 Winter Games, which begin Friday, Union Pacific joins 64 other companies that are helping underwrite the cost of the Olympic Games. Of the 2002 Olympics’ $1.3 billion budget, $859 million comes from sponsors. Other revenues come from ticket sales, broadcast rights and merchandise sales.
Companies spend millions on sponsorships because they recognize the importance of the Olympic brand. With the five rings come revenue-generating power, marketing opportunities and goodwill with customers and employees.
Companies may participate at four different levels, from “suppliers” such as Union Pacific – which spend at least $4 million in cash and in-kind services – to “The Olympic Partners,” which pay a minimum of $50 million in cash and services. The Olympic Partners for this year’s Olympics include such big-name companies as Coca-Cola, Visa, Xerox and McDonald’s.
Though not a sponsor, one of the biggest financial backers for the Games is NBC Television. It paid $8 billion for a 10-year contract to broadcast the games until 2004.
In return for their donations, sponsors get the right to market their services or goods with the U.S. Olympic team and the Salt Lake Olympic Games logos.
For its sponsorship, Union Pacific, whose subsidiary is the nation’s largest railroad, is allowing the Salt Lake Olympic Committee to park fleet vehicles in a rail yard it owns in Salt Lake City.
It hauled to Salt Lake City light-rail subway cars that will be used to transport people during the Games, as well as 2 million gallons of propane to heat tents in Salt Lake City. Union Pacific also helped pay the security and event costs of having the torch relay festivities in Omaha.
“It’s corporate pride and good business,” said U.P. spokesman John Bromley. “It’s the corporate responsibility to the communities we operate in. We wanted to do it.”
Union Pacific also was a torch-run relay sponsor for the 1996 Atlanta Games, but, unlike many sponsors, the company does not sell a consumable good, such as hamburgers, soda or passenger travel. It hauls commodities, such as coal, grain, lumber and automobiles for about 200 business
customers.
Bromley said being an Olympic sponsor is not necessarily going to bring the company an extra carload of freight.
So what does the company get for its sponsorship? Well, there’s recognition.
“You don’t paint a train with snowflakes if you want to keep it secret,” Bromley
said.
And then, there’s favorable public image.
Andrew Bergstein, marketing instructor at Pennsylvania State University, said Union Pacific has different publics to consider: regulators at the federal and state levels, stockholders and the investment community. He said sponsorships, in general, can be used to issue more stock, to attract potential acquirers, to find strategic partners or to seek companies to buy.
John Lucas, an Olympics historian at Penn State, said that in the past two decades, companies gave $10 billion to the International Olympic Committee, a Lausanne, Switzerland-based nonprofit that is the umbrella organization of the Olympics.
The concept got a big boost from the 1984 Los Angeles Olympic Games, which were the first to end in the black.
Bergstein, the marketing instructor, credits Peter V. Ueberroth, then-president of the Los Angeles Olympic Organizing Committee, for that fact. Ueberroth sought to generate revenue for the L.A. Games by tapping corporate sponsors.
“The 199 corporations that have the Olympic rings have sales that have soared astronomically in the last 25 years,” Lucas said.
Xerox, a 2002 Olympic Partner, is branding its printers and copiers with the Olympic rings. The company also set up special store displays, hung a seven-story banner from the Hilton Hotel in Salt Lake City and kicked off a TV advertising campaign in the days leading up to the Olympics.
“Clearly you would not sponsor something like the Olympics unless you can prove a rate of return,” said Xerox spokesman Carl Langsenkamp.
Typically, sponsoring companies will display the five rings on anything they can – candy bar wrappers, letters, billboards and print ads.
McDonald’s has, for past Olympics, promoted contests that tied into the Games. Visa’s television commercials display an Olympic logo, while an announcer stresses the company’s sponsorship.
Even a gift-giving scandal a few years ago that involved members of the International Olympic Committee apparently did not cause long-term harm to the sponsorships. At the time, John Hancock Mutual Life Insurance Co., an Olympic Partner for the 2002 Games, pulled the rings from its stationery and annual report.
Lucas, the Olympics historian, said that after the International Olympics Committee president fired and replaced the committee members involved, no sponsors withdrew.
For 2002, said Linda Luchetti, associate director of marketing communications for the Olympic Properties of the United States, the Olympics “ended up selling everything we wanted to sell and then some.”
The Olympic Properties of the United States is responsible for selling sponsorships and making sure sponsors’ contracts are honored. It is a joint marketing effort between the U.S. Olympic Committee and the Salt Lake Olympic Committee.
Luchetti said that when looking for sponsors, she approached past sponsors as well as companies that could provide needed goods and services, such as mattresses and telecommunications equipment.
The Olympic Properties of the United States began selling sponsorships for the Salt Lake games in July 1997 and finished last fall.
Union Pacific started working with the Olympics committee in the summer of 2000. Part of the company’s payback came Jan. 10, with the Olympic Torch’s run through Omaha and Nebraska. Another part came in the following days, as the U.P. Olympic train crossed the country.
In Topeka, Kan., people bundled in blankets and winter clothing watched the cold darkness for a glimpse of the train. As the train pulled into town about 3:30 a.m. on Jan. 11, the Olympics theme song played. The town erupted in cheers and clapping.
Outside cities like Topeka, people in rural Nebraska and Kansas waited at train crossings to catch a glimpse of the torch and the train. In Kansas cornfields, families and friends would sit on top of their trucks, taking pictures, holding flags and waving hello.
It was a day the spectators wouldn’t soon forget, and, for Union Pacific, that’s good business.