Busted Bonanza

The Olympic boycott hits sales

The Olympics are supposed to be for sportsmen, not businessmen. But every four years companies pay dearly to reap the prestige and lucrative sales surge of an Olympic tie-in. The Carter Administration's Moscow Games boycott, though, has turned the summer's expected sales boom into a bust.

The U.S. Olympic Committee has charged companies $50,000 for the right to become official suppliers to the U.S. team and use the Olympiad symbol in advertising. It also charges an additional $250,000 or more for permission to run consumer-sales promotions tied to the Games. None of the payment is refundable even if American athletes boycott Moscow. The Chicago firm VPI, Inc., for example, has stockpiled 28,000 mugs and 15,000 key rings emblazoned with the Olympic design or drawings of Misha the bear, the Games' official mascot.

Olympics promotions usually have been a good investment. Gillette was one of the first companies to use the gimmick, peddling the official razor of the 1956 Melbourne Games. Sales nearly tripled during the sports extravaganza. Says John Musgrave, marketing director of the Lake Placid Winter Games: "The Olympics are a super advertising buy."

The companies that have paid to sell their products through the Moscow Olympics include Coca-Cola, Levi Strauss, Wrigley, Burger King, McDonald's and Gillette. Most have now tentatively abandoned sales plans. Levi Strauss, which gave the U.S. Olympic Committee $275,000 and planned to supply $2.5 million worth of athletes' uniforms free, is redesigning a planned $8 million Olympic TV advertising campaign.

Thirty-four small companies have formed the Olympic Boycott Recovery coalition to demand Government relief for losses resulting from the Carter boycott. Executive Director Daniel Johnson claims that the embargo will cost his members $5.4 million in unrecoverable costs and $10 million in lost sales.

So far, the losses remain more potential than actual. While costly advertising campaigns have been killed, the purchased TV ad time can still be filled with regular, non-Olympic material. Even manufacturing expenses have not necessarily been totally wasted. R. Dakin & Co., the San Francisco-based company that bought the rights to make and sell Misha bears in the U.S., could defrock the critters of their Olympic belts and name tags, producing perfectly salable and politically inoffensive Teddy bears.

For some firms, though, the Olympic boycott may mean more than just a temporary setback and the ruination of an expected sales bonanza. Levi Strauss's negotiations to build a blue-jean plant in the Soviet Union could be damaged by the boycott. Coca-Cola saw the Olympics as its first major penetration of the Soviet market, which Pepsi-Cola so far has cornered. The company had already sent Moscow large supplies of the concentrated Coke syrup. But last week Chairman J. Paul Austin told his old friend and fellow Georgian Jimmy Carter that the company would abide by the embargo.

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