A new reality for Olympic sponsors

Transcript

NIALA BOODHOO: Good morning! Welcome to Axios Today!

It’s Tuesday, July 20th. I’m Niala Boodhoo.

Here’s what you need to know today: GOP leaders fight for a say in blue cities. Plus, the Delta variant in the U.S. -- by the numbers.

But first, the new reality for Olympic sponsors is today’s One Big Thing.

Companies spend hundreds of millions of dollars to be sponsors at the Olympic games, an investment that usually means big returns. But this year, the pandemic has put sponsors in a really tight spot. With the Olympic opening ceremonies this Friday, Axios’ business reporter Hope King is with us for the details. Good morning, Hope.

HOPE KING: Hi, Niala.

NIALA: So we've talked in the past about all the problems that these games have had because of the pandemic. What are the problems facing sponsors?

HOPE: I think the biggest one is just being associated possibly with a super spreader event. A lot of people in Japan are worried that despite all the precautions that the officials are taking there could still be - and we are seeing this as new athletes coming in are getting tested and testing positive for it - that this could lead to another outbreak as cases are already on the rise in the country.

NIALA: And what's been the reaction inside Japan to these things?

HOPE: Inside Japan, they have been taking to the streets to protest and that it's not something that's very common in Japan. So you can imagine just how upset people are. Back in may, a survey was conducted around the popularity of the games continuing forward, and a vast majority, 83% of folks surveyed in Japan said that they were against the games continuing.

NIALA: What does that mean for the advertisers who have undoubtedly spent millions of dollars at this?

HOPE: At this point, they are locked in. They have not been able to, especially for these top sponsors like Toyota and Coke to really kind of get out of them because they're multi-year contracts. However, in Toyota's case specifically, they have been at least making some adjustments to what they have planned. So in again, Toyota's case, they are no longer airing TV commercials that are linked to the Olympics and their executives are also no longer attending the opening ceremony because they do not want to be linked to this very unpopular game.

NIALA: Hope, why did these sponsorships matter?

HOPE: These sponsorships matter because for the local host cities they incur so much of the cost of building sort of the infrastructure, getting people around. And so if you look at sort of the budget of how much these Olympics cost - You know, for example, here in Tokyo, the government of Japan and the Tokyo metropolitan government, I mean, they're paying upwards of $8 billion.

And most of the money coming into the local organizers are going toward covering those costs. Now at the IOC level, at the sort of global level, those revenues are slightly less important because they make so much money from broadcast rights. So about 80% of revenue actually come from broadcast rights to the overall IOC.

NIALA: Hope when you were reporting out the story, what did companies tell you, these sponsors, what are they saying about us?

HOPE: I thought the sponsors were being very careful on how they were responding. So for example, Airbnb, in a statement to me said, well, we have these partnerships, but they were quote, “designed to specifically support the individual Olympic and Paralympic athletes and not organized around any particular city or games.” And I took that to really mean that they wanted to distance themselves from potential controversy around Tokyo specifically, and just trying to support the spirit of competition of the athletes.

NIALA: It sounds like the 2021 summer Olympics are a long way from the Wheaties commercials of Olympics past

HOPE: A long, long way, Niala.

NIALA: Axios’ Hope King - thank you, Hope.

HOPE: Thank you, Niala.

NIALA: We’ll be back in 15 seconds with how local politics in Charlotte, North Carolina point to a national trend.

NIALA: Welcome back to Axios Today. I'm Niala Boodhoo.

As major U.S. cities get bluer, elected Republicans in those areas are fighting to keep conservative values alive. One place where this is playing out is Charlotte, North Carolina where we're seeing a new kind of urban Republican.

Danielle Chemtob is an investigative reporter with Axios Charlotte and joins us now. Hey Danielle.

DANIELLE CHEMTOB: Hey, Niala thanks for having me.

NIALA: Danielle, what can you tell us about council member Tariq Bokhari?

DANIELLE: Tariq is a Republican here in Charlotte on the city council. He's one of only two Republicans out of 11 members, and he is really determined to fight for what he sees as the future of Republicans in major cities.

TARIQ BOKHARI: The top 20 cities in America are the front lines of an ideological war that’s happening right now.

DANIELLE: So back in 2017, he was first elected in a wave of millennials being elected to Charlotte city council. And, you know, he worked with some of his colleagues originally around like transparency, economic developers bent, but those divisions between the parties have begun to show and he has spoken about things like police reform. He is a staunch defender of the police and he feels like voters may actually come back to the conservative candidates.

NIALA: What does his council membership say to you or the story say to you about the future of the Republican party in cities across America?

DANIELLE: On its surface, certainly the data does not look good for Republicans in major cities. I mean the top 11 cities are all led by Democratic mayors. And then the top 25, there were only two that have Republican mayors. So, you know, we've been seeing this growing urban-rural divide over and over again. And even with the suburbs, we actually have seen that becoming more and more blue as well here in Charlotte and across the country. So, you know, I think a lot of people even in his own party are not as hopeful about that future, but at the same time, it remains to be seen - You know, for example, with those suburbs, whether or not those voters are going to stick with the Democratic party in the long run post-Trump.

NIALA: Danielle Chemtob is an investigative reporter with Axios Charlotte. Thank you, Danielle.

DANIELLE: Thank you, Niala.

NIALA: Wall Street had one of its worst days in months yesterday. And the Dow had its biggest drop of the year, as the market reacted to fears over the Delta variant’s spread. U.S. COVID cases are up 70% from last week. One fifth of all new COVID cases are from Florida alone. Axios’ senior editor Sam Baker is here to talk to us through how the U.S. is doing. Hey Sam!

SAM BAKER: Good morning, Niala.

NIALA: Sam, Florida is where we're seeing the most cases, but where else are we accounting for this new spread?

SAM: We are seeing it in states with a particularly low level of vaccination. Uh, so a couple that the CDC has singled out our Arkansas, Florida, Louisiana, Missouri, and Nevada.

NIALA: And what's the context here? I said, cases were up 70% from last week. How are we doing compared to say last month at this time?

SAM: Still worse. I mean, you know, there was that moment in the early summer where cases were so low, it really seemed like, wow, all right, we've got this thing licked, but then the Delta variant gained ground and vaccinations plateaued at too low of a level. and so between those things, now we have this-this new round of infections, almost exclusively among unvaccinated people, uh, because we have a more transmissible varian-variant and too many unvaccinated people.

NIALA: So to be clear, if you are vaccinated, what are your risks of contracting the Delta variant?

SAM: They're very low. These things are measured in terms of symptomatic infections, the idea being, you know, if you technically contracted it, but you never felt any symptoms, you're vaccinated, you probably didn't get tested, so we don't know what those cases are. Uh, so 97% of people who have been hospitalized with COVID infections, uh, here recently, were unvaccinated.

NIALA: Axios’ senior editor, Sam Baker. Thanks Sam.

SAM: Thanks Niala.

NIALA: Here’s one last story we’re watching - Yesterday, a federal judge sentenced Paul Hodgkins to eight months in prison for his role in the Jan. 6 Capitol riot. Hodgkins is the first rioter to be sentenced for a felony -- which could set the benchmark for the hundreds of other cases related to the insurrection.

That’s all we’ve got for you today! You can reach our team at podcasts at axios dot com or reach out to me on twitter. You can also text me at (202) 918-4893.

I’m Niala Boodhoo - thanks for listening - stay safe and we’ll see you back here tomorrow morning.