By Geoff Dembicki, 8 Jan 2010, TheTyee.ca

On June 16, 2006, 1,000 Dutch soccer fans were forced to strip to their underwear in Stuttgart, Germany. They’d waited in 25 minute lines, shuffling step by step towards the Gottlieb-Daimler-Stadion. At the door, stern FIFA World Cup officials ordered them to remove their bright orange lederhosen. One Dutch man threw his over a fence. A stadium steward approached his waiting friends, likely tossing the confiscated pants into a rubbish-filled storage bin with all the others. Bare-legged Dutch fans ambled to their seats, leg hairs bristling from the draft.

Absurd? Not in the bloodied-nose arena of international sports marketing, where no punches are held and most are below the belt. FIFA was merely protecting the $1.1 billion investment of official World Cup sponsor Budweiser. Dutch brewery Bavaria had circulated thousands of branded orange trousers to beer-loving soccer fans.

Despite the best efforts of FIFA’s pants-police, Budweiser’s dollar signs couldn’t match the simple ingenuity of its rival. Worldwide media exposure meant everyone was talking about Bavaria’s crazy stunt. And FIFA and its sponsors looked profoundly uncool.

Now jump three years into the future. In October 2009, two well-known Olympics critics sued the city of Vancouver. New bylaws, passed partly to protect the rights of official 2010 Winter Games sponsors, would trample local civil liberties, the pair believed.

It sounds like a bad joke: What do bare Dutch legs and litigious activists have in common? A lot, as it turns out.

Both crown a story as old as the modern Olympics. A tale of financial need and corporate hunger, culminating in crisis in the late 1970s. With the very future of the Olympics movement at stake, a logo-covered phoenix took flight. Its journey is far from over.

This February, get ready for a 21st century Games, where the big spending battles of corporate titans could overshadow the rivalries of the ice rink and ski slope. And the supreme prize is the eyes, minds and ultimately, pocketbooks of the entire world.

Start of a movement

It wasn’t always like this. The modern Olympics began as the idealistic vision of a romantic dreamer. His name was Pierre de Coubertin. The moustachioed French aristocrat grew up during his country’s humiliating defeat in the 1870-1 Franco-Prussian war.

He spent most of his young adult years campaigning for better physical education. Sports could instill positive values, he believed. And possibly prepare a new generation of French youth for combat.

Coubertin adored ancient Greece. There had been modest Olympics revivals before him. None had the benefit of his superb political connections. He proposed an international celebration of youth, culture, tolerance and peace. It was a convincing sell in a tumultuous era.

Athens was the test run. Its 1896 Olympics were largely funded by the private donations of patriotic Greek businessman scattered across the planet. At least 60,000 spectators and dignitaries attended. By all accounts, the festival was a complete success. Yet Coubertin’s fledgling International Olympic Committee (IOC) soon ran into a recurring problem: Who would pay for future Games?

The world of big business showed little interest. For instance, readers of the official race programme at London’s 1908 Games would have perused full-page advertisements for Wawkphar’s Antiseptic Military Foot Powder and Vaughton’s Medal and Badge Makers.

Each new Olympics begat more athletes, dignitaries and spectators. Costs got higher and riskier. The 1920 Antwerp Games handed a 625,000 franc deficit to its Belgium hosts. Four years later, the first Winter Olympics in Chamonix, France, became the financial equivalent of a 30-skier pile-up, leaving organizers two million francs in debt.

Still, cities continued to host. “I don’t think the expectation was there in terms of profit,” said Stephen Wenn, co-author of Selling the Five Rings: The International Olympic Committee and the Rise of Olympic Commercialism. “But whether you’re talking the 1900s or 21st century, you’re always going to find civic leaders who see these as something beneficial for their city — not to mention their own reputation.”

Coubertin died in 1937. His heart was buried at the ancient ruins of Olympia, according to orders in his will. The movement he’d fathered was growing fast, but headed for an identity crisis. No one would exemplify it better than a millionaire businessman from Chicago named Avery Brundage.

Crusade against commercialism

Brundage’s own dream of Olympic gold died at the 1912 Stockholm Games, where he competed and finished well back in the pentathlon and decathlon. The failures haunted him as he went on to amass a fortune in the world of heavy construction. When he eventually did return to the world of athletics, it was in the role of administrator. By 1938, Brundage was head of the United States Olympic Association (USOA).

Brundage began a protracted crusade against Helms Bakeries that year. The Californian company sold lucrative “Olympic Bread” branded with the five-rings logo. It’d registered the word “Olympic” and all accompanying insignia in nearly every U.S. state. Essentially, a private company had scooped the USOA.

Brundage huffed and fumed. There was little else he could do. “You cannot imagine how many attempts there are to capitalize on the Olympic Games and the difficulty we have in preventing promoters to use the Olympic Movement for their own personal gain,” he wrote to a colleague in 1938.

The most frustrating part was Helms Bakeries had every legal right on its side. None of the threatening letters Brundage wrote for 12 years could change that. Yet Helms Bakeries did let go of control of the Olympic brand in 1950. As a big supporter of American athletes, the company probably tired of so much ill will. Federal legislation soon granted the USOA wide jurisdiction over Olympics trademarks. It was official recognition of an obvious fact: the five rings had become a marketing goldmine.

That worried Brundage. He feared corporate dollars would destroy the ideals at the heart of the movement — or at least, his version of them. He adhered to an unyielding belief in amateurism, the concept that athletes shouldn’t be paid professionals.

Brundage assumed the IOC presidency in 1952. He was stubborn and dictatorial. International controversy followed his decision to ban Austrian skier Karl Schranz from the 1972 Winter Olympics for receiving sponsorship dollars. There were many like it.

“Let’s be blunt,” said David Wallechinsky, vice-president of the International Society of Olympic Historians. “He was quite a tyrant. He was a very wealthy man who had no tolerance for athletes trying to make money.”

It wasn’t just athletes. With the first major television rights deals and the advent of satellite technology in the early 1960s, a perpetually broke IOC was suddenly awestruck by wealth.

Brundage could see the huge benefits of TV coverage, as marketing tool and revenue stream. It still made him uneasy. “I’m not sure we should ever get into [the TV] business,” he declared in 1955. “But on the other hand certainly we should not give millions of dollars away.”

Financial disasters and terrorist attacks

The value of TV rights deals shot skyward. The 1960 Squaw Valley, U.S.A. Winter Games brought US$50,000. Four years later, Innsbruck, Austria Olympics organizers sold rights worth US$936,667. Televised broadcasts let millions identify with the universal ideals and ancient symbolism at the heart of the Olympic movement.

That kind of exposure helped create the perfect consumer, ready to buy anything linked to the Games. Indeed, organizers at Tokyo’s 1964 Olympics licensed official cigarettes with a five-ring logo stamped on every package.

Yet greater interest meant bigger spectacles. And new revenue streams couldn’t necessarily pay the bills. In 1970, financial worries prompted Colorado voters to reject Denver’s successful bid to host the 1976 Games. A flustered IOC pleaded with fourth-ranked bidder Whistler to take over. The resort didn’t want them either. They were finally given to Innsbruck, three years later.

More crises followed. In 1972, Palestinian radicals in black track suits took 11 Israeli athletes hostage. Sniper bullets, machinegun rounds and grenade explosions left 17 dead, forever linking the Munich Games to politically-motivated violence. Brundage stepped down as IOC president that year.

Montreal’s 1976 Games were no less calamitous. Mayor Jean Drapeau famously promised the spectacle “can no more have a deficit than a man can have a baby.” He was only half right. Montreal finally settled its $1.5 billion tab in 2006.

Only months before the 1980 Moscow Games, Soviet tanks ploughed into Afghanistan. U.S. President Jimmy Carter retaliated with a full American boycott, the largest in Olympics history.

“A lot of people were questioning the Olympic movement,” Wenn said. “There was a chill in municipal councils all around the world — whether there was any viable reason for going ahead with the Games.”

Was Coubertin’s movement in jeopardy? Would the flaming ideals of the five-rings be snuffed out by warring political ideologies and financial fears?

First commercial Olympics

When Los Angeles won its bid to host the 1984 Summer Olympics, nobody was surprised. It was the only serious contender. Peter Ueberroth, head of the Los Angeles organizing committee, told a reluctant city council not to worry. He was going to raise all the operating money himself.

At Montreal’s 1976 Olympics, organizers had sold sponsorship rights to anyone who asked. The result was 628 “official” partners clamouring for attention at the least exclusive party in town.

Ueberroth in effect kicked out the riffraff. He sold sponsorship rights to a small cadre of multinational corporations. Everybody won. Companies such as Converse projected their brands through the global Olympics lens. Organizers were left with a record US$225 million surplus. Even a Soviet boycott went largely unnoticed.

The IOC launched TOP, its worldwide sponsorship program, the next year. Nine corporations paid huge sums for global marketing rights. It was wild success. The first four years alone generated revenues of US$96 million. (The program brought US$866 million in 2005-08.)

It appeared the financial disaster of Montreal was largely forgotten. Six cities jostled to host the 1992 Summer Olympics. Five battled for the next. “Once Peter Ueberroth demonstrated a way to carry off the enterprise on the backs of the private sector, there was renewed interest,” Wenn said.

But the model was vulnerable. Converse had paid millions to partner with the 1984 Olympics. Its rival Nike plastered huge murals of swoosh-wearing athletes all over Los Angeles. Forty-two per cent of Americans confused Nike as an official partner.

“If you sponsor a big [sporting event], people will ultimately buy more of your products,” said Simon Chadwick, founder and director of the Centre for the International Business of Sport at Coventry University. “Ambush marketing is about creating a misperception in the minds of consumers.”

Nike’s brazen murals were only the beginning. Each Games saw bigger and more sophisticated branding battles. When Visa sponsored the 1992 Barcelona Olympics, American Express retaliated with a simple slogan: “You don’t need a Visa to visit Spain.” Host cities — and countries — were becoming corporate war zones.

For the Olympics movement, the stakes were high. Unregulated ambush campaigns threatened a now vital revenue base. Why would sponsors invest tens of millions of dollars when their rivals could win the same market exposure for way less?

‘Draconian’ measures

The IOC wasn’t the only one worried. In 1996, Nike ambushed the UEFA European Football Championship, snatching all outdoor ad space in and around London’s Wembley Park tube station. Official sponsor Umbro was incensed.

Yet maybe Nike was on to something. UEFA decided to rent every advertising property within a one to three kilometre radius of soccer venues at future competitions. With the IOC’s urging, local Olympics committees began to go even further. Organizers of the 2004 Athens Games literally reserved every outdoor ad space in the city. The billboards they couldn’t sell sat blank.

The Vancouver 2010 organizing committee (VANOC) spent $38 million to give official partners the same protection, snapping up every outdoor ad property in the Lower Mainland. (Selling the inventory has been tough. And organizers freely admit they probably won’t unload it all).

Over the past decade, ad monopolies have been fortified with tougher trademark legislation. Legal guarantees are now a vital part of any successful Games bid.

“The Olympic Symbol and the terms ‘Olympic’ and ‘Olympiad’ and the Olympic motto” must be defended, the Manual for Candidate Cities for the XXI Olympic Winter Games 2010 stated. All bidders promised to “obtain from their government and/or their competent national authorities, adequate and continuing legal protection to the satisfaction of the IOC.”

VANOC gained “considerable powers” from legislation passed by the Canadian government in 2007. Organizers could now seek lightning-fast court injunctions against unauthorized attempts to profit off the Olympic brand. For instance, a local jewellery store holding an “Olympics sale.”

Did recent Vancouver bylaws go too far? Anti-Games activists Chris Shaw and Alissa Westergard-Thorpe sued the city in Oct. 2009. Temporary new rules imposed maximum $10,000 fines for unauthorized signs during the Games. The activists saw a blatant attack on their right to protest.

Vancouver relented in late November. The city promised to clearly distinguish between political and commercial signs. Yet most temporary powers remain. If someone were to hang a Pepsi banner from their balcony, bylaw officers could legally enter the residence within 24 hours to remove it. (The same rules apply to signs of official sponsors.)

During the 2010 Games, a team of 60 city inspectors will patrol Olympics corridors, venue zones and local celebration sites. VANOC is deploying about nine personnel to keep venues commercial-free. Their mandate could include taping over “blatant” logos on the shoes of volunteers.

The team will also monitor the city. “We’ll hop on the Skytrain and ride out to Metrotown mall and go out around Vancouver to see how the brand is being used,” said Bill Cooper, VANOC’s director of commercial rights management.

It’s worth mentioning domestic and international sponsorship revenue pays for about $1 billion of VANOC’s $1.75 billion operating budget. Also notable are the billions of provincial and federal dollars necessary to widen the Sea-to-Sky highway, tunnel a new rapid transit line, construct the official media centre and secure the Games.

The United Kingdom just passed legislation protecting official sponsors during London’s 2012 Olympics. And South Africa has done the same for the 2010 World Cup. Chadwick sees an escalating trend with some troubling implications.

“Some of the legal rights it gives the authorities are becoming increasingly draconian,” he said. “So inevitably there has been a natural rise in concerns about people’s civil liberties.”

Are crackdowns effective?

Let’s return to Germany’s 2006 World Cup, home of the rubbish bins overflowing with bright orange lederhosen. Bavaria’s ambush became one of the most famous of all time. Nike’s innovative use of social media was no less effective.

In the months leading up to the World Cup, the apparel giant told people to video themselves juggling a soccer ball. The only rule was the ball had to enter from the left of the screen, and leave on the right.

Thousands of amateur directors uploaded content to Nike’s official site. The company spliced the best clips. A soccer ball got bounced, kicked and head-butted across entire continents.

“This became a real phenomenon, particularly in Europe,” Chadwick said. “In the end, more people were talking about Nike in 2006 than Adidas, even though Adidas was the official sponsor.”

And there’s the problem, according to Chadwick. New rules to control ambush marketing are getting stricter all the time. But cities, event organizers and the international committees that direct them may be in a perpetual game of catch-up.

Last December saw Lululemon and Pepsi launch inventive ambush-style campaigns.

The same month, Vancouver police seized a million dollars worth of illegal goods that brazenly displayed the Olympics logo without official permission. The product? More than 100,000 ecstasy pills.

Who knows what branding battles await Vancouver next month?