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Last Updated: Sunday, 2 April 2006, 19:05 GMT 20:05 UK
Olympics lining up financial rewards
By Bill Wilson
BBC News business reporter

British Olympic logo and St Paul's Cathedral, London
London has six years to prepare its tourism and sponsor plans

The London Olympics are more than six years off, but plans are already well under way to try and maximise the earnings potential of the games.

The commercial department of the organising committee, Locog, is set to name its first major sponsors after being "inundated with interest" from firms hoping to be associated with the 2012 games.

And UK tourism body Visit Britain has laid out what it sees as the opportunities the sporting jamboree provides, ahead of a three-month consultation which it will launch in May.

Speaking at a Sports Business-organised seminar at London Cass Business School, Phil Beard, Locog's marketing and sponsorship director, said the organisation had already identified the first sectors they wanted to approach for sponsorship.

'First sectors'

UK sponsorship deals will be just one of the income streams used to raise the 2bn needed to stage the games, accounting for about 35% of monies raised.

The other main sources of income are ticketing, licensing of merchandise, money from the International Olympic Council's (IOC) top sponsor programme, and a share of IOC broadcasting rights' monies.

"The first four commercial sectors we have identified for attracting sponsorship are the utilities, motoring, telecoms and banking sectors," Mr Beard told the BBC.

The response and interest from UK plc since we won the games has been fantastic
Philip Beard, Logoc

"Historically, they have been the first sectors that games organisers look to for sponsorship.

"They are the sectors that give us an initial right arrangement with companies."

No sponsors have been named yet, but British Telecom and British Airways were among 25 sponsors of the London bid.

Sponsor firms will have to help organise community and schools programmes connected with the Olympics. In return, they will be able to use the London 2012 logo on their material.

There will be ten sectors in total in this top tier of sponsorship - although they will not be able to get into deals with rival firms of those in the IOC's own "top partners" programme.

Artist impression of London Olympic Park at games time
There will be sponsor opportunities at the new Olympic park

"We are going to have a limited number of companies that will be allowed to get involved, and will offer exclusivity in each sector," says Mr Beard.

"We have had been inundated with interest - this is the biggest opportunity, in fact the only one, that companies have got to associate themselves with the games in the UK."

Successful firms will have to pay at least 50m for a six year association with the games.

"Early indicators are very strong," says Mr Beard. "The response and interest from UK plc since we won the games has been fantastic."

Firms from outside the UK are also allowed to bid to take part, Mr Beard said.

And all sponsors who do sign up will be protected by one of the strongest campaigns against ambush marketing ever seen at a sporting event.

'Stimulating sponsorship'

When the second and third-tier sponsors are added, there could be as many as 100 firms sponsoring the cost of the games.

"In the next two to three years we will launch our second tier, which will be for firms providing goods and services to the games," Mr Beard said.

A third tier of basic-level suppliers, including firms such as caterers, will also be launched nearer the start of the games.

UK Sports Tourism
Grown five-fold in past decade
Accounts for 7% of overseas visits
Accounts for 9% of overseas spend

There have been misgivings that by making sponsorship such a major plank of its funding, the 2012 is draining sponsorship opportunities that other sports may have enjoyed.

But Mr Beard insists: "We think it will actually stimulate sports sponsorship in the UK. If a bank finds it is not the Olympic sponsor it may then look around to get involved with other sports, rather than risk an impression of being left behind."

As well as direct sponsorship, the government has been keen to flag up the broader economic benefits the games can bring to the UK, with tourism one of the sectors expected to be given a fresh impetus.

Crowds at Trafalgar Square celebrate London getting the games
Now London has the games it wants to attract more tourist visitors

Kenny Boyle, director of commercial and marketing services at tourist organisation Visit Britain, told the BBC: "The games will enable the UK to attract new visitors and encourage existing visitors to spend more.

"Sports visitors stay longer, spend more and are younger. We have a great deal to offer these visitors and the games can be a fantastic catalyst to attract even more people to Britain."

Mr Boyle said that early estimates suggested the games could generate 2bn for the UK economy.

But if that is to be the case, new markets will have to be cracked, since at present two-thirds of all visitors come from the US and western Europe.

The games, featuring over 200 countries, might present a one-off opportunity to sell London and the UK around the world.

'Long-term investment'

Already there is a major tourist push in China, host of the 2008 games. And in May a three-month consultation period opens, which will lead to an international tourism strategy being drawn up by the end of the year.

"We see the games as a long-term investment opportunity, and not just a short term money-spinner," Mr Boyle says.

He said if tourist chiefs do things properly the benefits will come before and after 2012, and will have a positive effect over anything up to 10 years.

Meanwhile, Locog is looking at delivering the best games possible to enable such tourist opportunities, but has reiterated that the money it raises from sponsorship cannot be siphoned off to help UK athletic training programmes.

"The organising committee job is to stage the games, but clearly everyone want to see Team GB be successful," says Mr Beard.

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