Tale of 2 cities: Olympics sponsors in Pyeongchang and Tokyo

SEOUL, South Korea (AP) – The Winter Olympics coming to South Korea in February offer an example of the Olympian efforts often required to meet corporate sponsorship goals.

Tokyo tells a different story: The coffers are already overflowing for the 2020 Summer Games.

It’s a tale of two cities and two Olympics – winter and summer.

Pyeongchang is a little-known destination in one of South Korea’s poorest provinces. It is the ‘little town that could,’ bidding twice unsuccessfully for the Winter Olympics before winning on its third try.

A final push enabled it to reach its sponsorship target of 940 billion won ($830 million) in September, with just five months to go.

Tokyo is an established global capital, and the Summer Games usually generate more excitement – and more money.

Organisers have raised 300 billion yen in sponsorship, twice any previous Olympics. International Olympic Committee (IOC) Vice President John Coates describes it as a remarkable achievement.

The divergent experiences of two Asian host cities illustrate the challenges that smaller bidders face, as well as South Korea’s dependence on the big family-owned companies that dominate its economy.

Not that Tokyo is home-free. The cost of the 2020 Games has nearly doubled from initial projections. As with most Olympics, taxpayers will have to foot a good part of the bill.

An aerial view of the Pyeongchang Olympic Stadium in Pyeongchang, South Korea. – PHOTOS: AP
An electric sign advertising the 2018 Winter Olympic Games is displayed at Seoul Railway Station in Seoul, South Korea

Starting with the 1988 Seoul Olympics, South Korea has used mega-events such as the soccer World Cup to raise the profile of the country and its manufacturing exporters.

Pyeongchang is different. The project was initiated by local politicians in an area long alienated politically and economically in South Korea’s rise to prosperity. Some feared people would confuse the city’s name with Pyongyang, the North Korean capital.

They couldn’t count on the automatic support of the huge family-run conglomerates, known as “chaebol,” such as Samsung, Hyundai and LG.

“When such mega-events were the nation-state’s key project, the chaebol were called on and were expected to become the leading participants,” said Joo Yu-min, a professor at the National University of Singapore who co-authored a book on South Korea’s use of mega-events.

In the end, the national government brought the conglomerates in, first in the bid process, and then for sponsorship. That underscores both the outsized role they play in the economy and their close ties with government.

They owe a debt to special treatment from the government, which in turn used them to industrialise the country after the devastating 1950-53 Korean War.

After Pyeongchang’s bid was rejected a second time, the government called on Samsung and others to help.

The president even pardoned Lee Kun-hee, the patriarch of the Samsung founding family who had been an IOC member but voluntarily suspended his membership after being indicted for tax evasion.

The IOC reinstated Lee in 2010 with a reprimand and some restrictions, allowing him to lobby heavily for what became Pyeongchang’s winning bid in 2011.

It took three years for the organising committee to sign its first domestic sponsor, KT Corp., the country’s second-largest mobile carrier.

Again, the national government asked the conglomerates for help. All the major ones signed on, after the office of then-President Park Geun-hye made a special request and multichannel pressures for financial assistance, Joo said.

Elsewhere, companies may weigh sponsorship decisions based more on the marketing benefits.

“In South Korea, companies make donations out of a sense of duty that they are being part of the national event,” said Park Dong Min, the executive director overseeing membership at the Korea Chamber of Commerce and Industry.

Sponsors who signed up late weren’t willing to give as much, because there was less time to enjoy the marketing benefits.

A bank that signed on less than a year before the Games significantly reduced its sponsorship.

To top it off, a massive sports-related political corruption scandal rocked South Korea in 2016, just when Pyeongchang was making last-ditch efforts to raise sponsorship.

“Companies showed some reluctance” to sponsor the Olympics, said Eom Chanwang, director of the Pyeongchang organising committee marketing team. “Nevertheless, they still joined.”

The scandal brought down Park, the president. Lee Jae-yong, the heir to the Samsung group, received a five-year sentence for bribery.

Lee, who has appealed, had become de facto chief of the Samsung group after his father Lee Kun-hee, the IOC member pardoned in late 2009, fell ill.