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Gold licenses

The London Olympics could generate revenues of $1.6 billion in licensed products


Adidas expects revenues of $160 million in licensed products

Hornby will manufacture toys and collectibles

The first Olympics that closed with profits were Los Angeles 1984. And nobody expected it: until then, these events were useful to renovate cities infrastructures, as well as a showcase for global advertising, but closed losing millions that were considered as an investment.

Since then, even more ways to make money have been tested and developed: selling tickets, of course, but also broadcasting agreements, sponsorship, and the manufacture and sale of licensed products. Business opportunities are many, both for the organization of the games as well as for all companies participating in the event.

The 2012 London Olympic Games could generate one billion pounds (about $1.6 billion) in revenue from licensed products during the six weeks of the event, and more than $80 million in the following 20 months, as estimated by the organising committee.

To put these figures in context, we could remember that the licensing business moved more than five billion dollars in 2010 in the US.

Ten thousand licensed products
So far, the organization of the games has signed about forty agreements with licensees to manufacture ten thousand products in a wide variety of categories. For example, Adidas will manufacture apparel, including bags and caps, Hornby will take care of toys and collectibles; Panini is one of the licensees of stationery products, and Tandem Group will do wheeled toys and bikes. There are even more categories: souvenirs (Touch of Ginger), books (Time Out Guides and Carlton Books) and house wares (Spearmark), for example and among others.

How to make and sell licensed products
The London Organising Committee of the Olympic and Paralympic Games (LOCOG) controls the rights to manufacture and sell products with the London 2012 brand, and opened an online system to opt to work as a licensee. This system, CompeteFor, allows the search of business opportunities for both manufacturers and distributors who want to find suppliers of specific products.

This committee also published a guide addressed to retailers, explaining how to offer the product at the point of sale to get better results, as well as posters and advertisements to explain that the store sells official branded products.

LOCOG will open its own stores offering licensed products in stadiums and tournament locations, and also in other places such as Heathrow airport and the Paddington train station. IMG, The Retail People and Event Merchandise operate these stores. LOCOG hopes to open a total of 80 outlets.

The experience of other games
The figures forecasted by London may seem optimistic, but not so when compared with those moved in Beijing. The 2008 Olympic Games reached to record highs, which is understandable considering that in addition to tourism, the country had a middle class estimated in 300 million people.

The organization of the Beijing games had 68 licensees, and sold over 8,000 different products in 10,000 stores, and also online. The consultancy firm CSM estimates that sales of licensed products reached between $4 and $6 billion, against an initial forecast of $2 billion.

Although Athens 2004 and Sydney 2000 were important sources of income (about $700 million each), and Australia also introduced online trading, the first modern Olympics fully oriented towards the generation of business was Atlanta 1996, with more than $800 million in licensed products revenue and with a record 130 licensees. It was the first organization to open its own shop to compete with other retailers.

In fact, figures for 1992 Barcelona seem lacking ambition when compared with what was achieved only four years later. Although new techniques were tested as a TV series for the mascot (Cobi), and gold and silver coins were sold for a total $49 million, revenues were well below half of those of Atlanta.

The business of mascots

Mascots often appear in many licensed products: as plush toys, in t-shirts, cups, books ... And therefore it is important that they connect with the audience and are liked enough. London mascots are Wenlock and Mandeville, " the last two drops of British steel used for the London 2012 Olympic Stadium."

There are some success stories: the five mascots of China, the Fuwa, brought in revenues of $163 million. But also failure cases: the Sydney Olympics were the first to incorporate more than one character to increase product variety and collectibles sales. But Millie the echidna, Olly the kookaburra, and Syd the platypus sold for $52 million, well below expectations.

Anyway, the strangest case is Izzy, the mascot of the Atlanta Games and the first computer-generated mascot. Few mascots have been so criticized and even insulted. It was called "Post Chernobyl Navel Lint," and "Quasismurf”, and even Time Magazine called Izzy "a sperm with sneakers."

Not that it mattered: Izzy products sold for $250 million.

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