This article appeared this week in my Sports, Business & the Law column in the Chicago Daily Law Bulletin. Here is the link to the article on the CDLB website. A subscription is required, but a free trial subscription is available.
The International Olympic Committee (IOC) historically has had heavy control over marketing and advertising in relation to the Olympic Games. The control has provided a significant source of income for the IOC through the granting of exclusive marketing rights. The IOC's marketing and advertising control is formally codified as Rule 40 in the Olympic Charter. In the last three years, the IOC has felt strong backlash by athletes who believe this control is too constraining in the omnipresent world of social media.
During the month-long period surrounding the Games, the IOC and Rule 40 prohibit athletes and their sponsors from advertising sponsor products. This prohibition extends to television and radio advertisements, print media, press releases, personal appearances, and in-store promotions that promote an athlete’s sponsors or sponsored products. It also extends to social media.
Background of Rule 40
The purpose of Rule 40 is to give prominence to the official sponsors of the Games. These official sponsors pay a high price for the exclusive marketing rights. Since an official sponsorship is not inexpensive, Rule 40 is to prevent dilution of the exclusivity provided. It is a broadly written prohibition that restricts virtually all aspects of Olympic marketing. Rule 40 specifically provides “no competitor, coach, trainer or official who participates in the Olympic Games may allow his person, name, picture or sports performances to be used for advertising purposes during the Olympic Games.” The penalties for violating Rule 40 can include both event disqualification and the stripping of medals.
Rule 40 Hurts the Smaller Athletes
Rule 40 has largely worked for decades when advertising was limited mostly to print, television, and radio. However, current Olympic athletes see Rule 40 as a restriction that does not adequately accommodate the current world of social media. The new generation of athletes have lived with social media virtually all of their competitive careers and do not necessarily view their lives in Facebook, Twitter, and Instagram to be “advertising.”
The second problem is that the sponsors of smaller Olympic athletes are significantly hurt by the social media restrictions. Unable to afford tv or other traditional advertising during the Olympic Games, the smaller sponsors often rely on social media as a major part of their marketing platform. These sponsors, often the athletes’ biggest supporters, helped the athletes grow and achieve during the majority of their careers. However, once these athletes are selected for the Olympic Games, the sponsors are not able to reap any benefit from the years of support. The Olympics represent the highest level of competition, and biggest marketing opportunity, for the vast majority of Olympic athletes. While such a prohibition may not materially impact a high profile athlete, it does affect the smaller athletes. During the London Games in 2012, Olympic athletes were seen protesting the rule by using #rule40 hashtags on Twitter.
New Version of Rule 40
To accommodate social media, the IOC Executive Board issued a proposal that would modify Rule 40. Under the rule modification, athletes could promote a sponsor not affiliated with the Games, provided that the promotion does not reference the Olympics. This proposed rule change would permit “generic” or “non-Olympic” advertising during the Games, according to the IOC.
"It has to do with advertising around the games, on a social media site, or newspaper, or whatever," IOC spokesman Mark Adams said to the Associated Press. "So if someone has a contract with a watch manufacturer, [it] may continue as long as the advert doesn't relate to the Games."
Historical Tension with the Amateur Ideal
This proposed change to Rule 40 also represents a continuing shift away from the amateur ideal that historically was a fundamental principle of the Olympics. The amateur ideal traces its roots to the original Olympic Charter of 1908. In the 1980’s, partly in relation to tension between communist and non-communist countries over professional athletes in the Games, the IOC began to loosen the formal amateur-only restriction on competitors.
By 1984, the international federations of the various sports were given some control over the eligibility rules for their respective Olympic competitors. In 1987, professional tennis players were allowed to compete, and the IOC eventually opened the Games to all professional athletes in 1989. Allowing professional athletes into the Games was formally codified as Rule 45 in 1991.
In conjunction with the practical realities of limiting the Games to only amateur athletes, the IOC also realized that having high profile, professional athletes in the competitions would help to increase revenue for the Olympics and the IOC. The professional athletes brought their committed fan base, who increased both television viewership and the related television commercial revenue. The IOC highly benefitted from the increase in television ad revenue, which was another reason – not formally stated – for moving away from amateur-only Games.
Just as the IOC adjusted its policies throughout the decades to accommodate professional athletes, it also will continue to accommodate new forms of technology, shifting marketing platforms, and future athlete concerns.
The proposed change to Rule 40 is scheduled to be formally approved at the next IOC Session this July in Kuala Lumpur. If approved, the modified Rule 40 would be in effect for next year's Olympics in Rio de Janeiro.