Sports, Politics and Brands: A Volatile Mix at the Olympic Games

Within days of Djokovic’s deportation from Australia, Lacoste requested a postmortem with him, a “we need to talk” of sorts. Hublot, another Djokovic sponsor, is so far sticking with its candidate. Brands like these face increasing pressure to take a stand on social issues based on investments and sponsorships in sports and athletes.

Nowhere is this playing out on a grander scale than at the 2022 Beijing Winter Olympic Games. The U.S. government fired the first shot across the bow by pulling diplomatic participation in opposition to China’s human rights record and policies. But while countries such as Canada and the U.K. have followed, the armada of Western brands have not fallen in line behind their governments.

Not a single major sponsor of the 2022 Games has taken any steps that may be perceived as condemnation. Most have gone radio silent, while a few (like Omega, which has kept time for the Games for nearly 100 years) have indicated that they support athletes and the Olympics institution in general rather than any host country.

The brands’ reticence and unwillingness to take a stand—despite significant activist pressure, Congressional efforts and a climate that seems inhospitable to neutrality—is not surprising.

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The Chinese market is not to be trifled with

The lead sponsors of the 2022 Olympics comprise an elite TOP (The Olympic Partners) group, collectively contributing what is expected to be about $2 billion in exchange for privileged access and exclusive assets such as the hallowed five-ring logo. These TOP companies are estimated to generate over $100 billion in revenue from the Chinese market, which puts a lot at stake for these brands.

For example, more than a quarter of Intel’s revenue is from China, and Toyota and Samsung generate over $30 billion in revenue from that market. Companies will think long and hard before jeopardizing an opportunity of this magnitude.

Retribution will likely be swift

This isn’t the first time the conversation about taking a stand against Chinese policies on human rights has invaded the brand sphere. When brands have taken a position that is perceived as anti-Chinese, they are swiftly met with denouncements, social media backlash and boycotts, all of which have amounted to tangible financial impact.

Adidas endured revenue declines after raising concerns about forced labor allegations, and Burberry faced backlash for its stance on not using Xinjiang cotton. Considering that China is the world’s largest apparel and footwear market, soon to be the largest luxury market, and a veritable behemoth in just about most categories, taking a position may come with a hefty price tag for a company.

The backlash will likely be muted in America

There is growing antipathy toward China—67% of Americans have a negative outlook concerning the country, up from 46% in 2018. The allegations of human rights abuse have a sympathetic ear, and in the post-George Floyd era, brands are expected to take a stand on social issues.

But there is plenty of evidence that consumers’ bark may be worse than their bite. Research shows that social values-motivated consumers who make purchase decisions based on principles comprise 18% of the U.S. population—not a number to be trifled with, but certainly not the social tsunami one might expect. In terms of cancel culture and similar boycotts, consumers quickly call out the issue yet seldom follow through with meaningful action.

Consumers, however, are not always apathetic. The reaction is very different when the issue at hand is core to a company’s operation, such as intentionally misleading customers. But Olympic sponsorship is too far removed from the nucleus of the brand relationship to provoke a strong enough response.

An important stakeholder

Companies construct cost-benefit analyses to guide their decision-making. In that calculus, customers and revenue usually have primacy. But another stakeholder has gained tremendously in consideration in recent years: the employee.

In the era of The Great Resignation, talent is scarce and employees hold the bargaining chips. In the era of the great social awakening, identity and value alignment matter as much as compensation and opportunity for advancement. Put the two together, and you have an activist workforce that will storm out of the building if something doesn’t sit right with them.

At McKinsey, over 1,000 employees caused a public furor over the firm’s work with companies deemed to be polluters. The employees at these Olympics-sponsoring firms may have a different view of their company’s implicit endorsement of a position that their government has condemned.

Today’s conversation is about the Olympics. This summer, we will likely be talking about Lacoste and the French Open, whose vaccination policies may thwart Djokovic yet again. The conversation will not stop any time soon, and brands cannot escape the social spotlight.

For some brands, taking a position is easier because their founding ethos powers their philosophy, as in the case of brands like Patagonia. But for most, it’s walking a tightrope, leaning to one side and then another. As unlikely a triumvirate that sports, politics and brands make, they will continue to be part of the same heated conversation for quite some time.

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