IBM is ending its 38-year marketing relationship with the Olympic Games, deciding after months of negotiations not to sign an 8-year deal with the International Olympic Committee, the company said Friday.
IBM, which spent more than $100 million to sponsor the 1998 Winter Games in Nagano, Japan, and provided much of the behind-the-scenes technology for free, wanted local Olympic organizing committees to share the technology costs.
But the two sides never agreed on how much money should be paid to IBM or how much the company should do for free in exchange for marketing rights. IBM executives were upset by an IOC decision to seek a more profitable sponsorship deal for upcoming Games' Internet services and sites, a role IBM held in the last two Olympics, in Nagano and Atlanta.
"The IOC asked for a significant increase in our sponsorship commitment. We felt that was not commensurate with the marketing benefits we would receive in return," IBM spokeswoman Debbie Gottheimer said, confirming published reports Friday that the company was pulling out.
The IOC concluded that IBM's projected costs were too high, Richard Pound, an IOC vice president in charge of sponsorships, told The Wall Street Journal.
IBM's sponsorship will end with the 2000 Summer Games in Sydney, Australia. At the Nagano and Atlanta games, the company supplied computers and staff to run Web sites, score boards and other technology. It promoted its Olympics involvement in television and print advertisements.
The decision means the company won't be involved in the 2002 Winter Games in Salt Lake City. U.S. Olympic Committee marketing chief John Krimsky expressed some concern about the timing.
"With less than four years to go (before the 2002 Games), it is absolutely essential for the organizing committee to move quickly in replacing IBM's technical capability with a results system necessary for the conduct of the Games," he told The Salt Lake Tribune.
Still, officials of both the Salt Lake and U.S. Olympic committees expect to benefit from the change.
"It increases the chances of revenues from the sales of sponsorships to several parties instead of one," SLOC President Frank Joklik told the Tribune.
He envisions sponsorships worth tens of millions of dollars from separate companies offering computer hardware, software, results or system integration.
"The value of marketing rights in the computer category has increased because technology has expanded so rapidly. It's hard for one sponsor to put adequate valuation into it," he said.
IBM was one of 11 global sponsors of the 1998 Games. Most paid the IOC more than $40 million for their sponsorship packages, but IBM spent roughly twice that to fill the additional role of technology provider.