February 27, 2018
After 41 years, McDonald's and the Olympics are no more. In a shock move, McDonald's who originally had a deal to run through to the Tokyo 2020 Olympics, have announced that they will be pulling out of their deal three years early, with immediate effect.
McDonald's, after the success of the 2012 Olympics, reportedly signed a contract extension reportedly worth $200 million. So it begs the question, why have McDonald's done this?
So far reports seem to be that the groundbreaking decision between the two parties was mutual. With McDonald's reportedly stating the announcement was part of a review of its marketing spend and a ‘new global growth plan’ and the International Olympics Committee’s (IOC) Managing Director of Television and Marketing services, Timmo Lumme stating the IOC were ‘fully understanding’ of McDonalds decision in ‘today’s evolving landscape’.
There have been lots of rumblings around McDonald's losing its brand relevance around the Olympics and the IOC were coming under increasing pressure from health campaigners for supporting brands such as McDonald's. Likewise, it was reported McDonald's were unhappy with the many supply issues they experienced at the Rio Olympics.
Even so, it’s still very unusual to cut a sponsorship deal short, unless there is a breach of contract, which in this case, is unlikely. McDonald's more than likely feel this money is better spent elsewhere and the IOC no longer have an official food sponsor which allows them to take a new direction.
Rob Nunn, a shareholder in ECHO, said; “Obviously McDonald's and its Executives are concerned about the business’s market position. By cutting the partnership early it closes a relationship over 40 years old. A move this big by McDonald's would not have been taken lightly. It will be telling to see how quickly the Olympic Partnerships team can replace them, my bet is that it won’t be quick.”
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