By Dave Doroghy
The main challenge we faced in landing sponsors for the 2010 Olympic Winter Games was cost: The Olympic rings came at a heavy price.
Prior to the lead-up to the 2010 Ggames, our investment levels for sponsors were unheard of in Canada. In every single industry category we were asking companies to invest up to 10 times more than they had ever put into any previous sponsorship program. Once it took on an Olympic sponsorship that decision would have huge implications for a company, not only in terms of funding, but also in terms of resources the company would have to apply to its Olympic sponsorship. This was a decision that had to be well thought out and carefully analyzed; a time-consuming exercise that could sometimes take years.
These time-and-money considerations were most evident on February 12, 2006 when I walked into Vincor, the largest winery in Canada
As fate would have it, precisely four years later we finally popped the cork on one of Vincor’s bottles of bubbly at the 2010 Olympic Games Opening Ceremony celebration.
In fact, a lot of corks were popped all across Canada in the months leading up and during to the games. Olympic Games are all about entertaining and celebrating with hundreds of thousands of people coming together in social settings to eat, drink and paint the town red. So we needed lots of wine and bubbly.
From my three years working for the 1994 Victoria Commonwealth Games acquiring sponsors in a wide variety of categories, I had some very relevant and useful experience in the wine category.. For those much smaller games we needed about $200,000 worth of wine and champagne both to offer to guests at events and to give away as gifts. Back then, I met with and was turned down by every major winery in Canada; : . even $200,000 was too steep a threshold for our Canadian wineries. At that time, the highest amount that wineries would put toward sponsoring events would be about $25,000 to $50,000. (In 2010, that investment level was still reflective of the industry norm.)
Back in 1992, I finally got my foot in the door with a regional winery by cold calling the president of Calona Wines, Ian Tostenson, with a hook he couldn’t resist. Over the phone I explained to him that Queen Elizabeth would be coming to Victoria for the Commonwealth Games and that we needed a good quality wine to serve her Highness. Ian bit my hook and invited me down to see him. After a few more meetings with him I explained that for that right to serve the Queen their tasty merlot, they would have to become an Official Sponsor of the Commonwealth Games and supply us with 24,999 additional bottles of wine, at no charge, and a certain amount of cash. Eventually, we closed the deal but in the process I learned a number of lessons on the fundamentals of what it took to do a wine deal.
An oenophile I am not. I don’t like wine snobs and I actually enjoy the cheap wine that comes out of a cardboard box. But through working on the sponsorship deal at the Commonwealth Games, I learned that I like the industry. It’s colorful, fun, and totally driven by the creation of an illusion of quality through advertising and branding. It’s an industry that is ideal for sponsorship.
The wine business is all about moving cases of product through in-store displays and restaurant and pub promotions. The brand of wine you choose is often an impulse purchase: if you see a giant display at a liquor store promoting the Commonwealth or Olympic Games it may well catch your eye and entice you to pick up and purchase a bottle. Lesson number one: in-store displays equal sales. The next lesson involved the other distribution channel for liquor: bars and restaurants. A winery’s sales representative could call on accounts where the company’s product is served and offer bar or pub or restaurant managers Commonwealth or Olympic Games’ promotional posters, table-top cards, coasters and other items. Promotional material can be a powerful tool to have in front of a consumer just as he or she is placing a drink order. Throw in a consumer contest to win tickets to the games and the promotion becomes just that much more powerful. Lesson number two: the ability to leverage a wine sponsorship into every bar, pub and restaurant across Canada equals increased sales. Finally, lesson number three: the designation of “Official Supplier” to a prestigious event, printed boldly on each bottle label (along with the Commonwealth Games logo or Olympic rings) is another huge benefit to a winery. In many consumers’ minds the buying decision boils down to, “If the Olympic or Commonwealth Games chose this wine as the official wine it must be good”. So with a parity product like wine, where many companies produce a very similar product, the distinction of being the “Official Wine” or “Official Supplier” can help to push the company’s sales needle even higher.
So while I knew that being a sponsor for the world’s biggest sporting event would pay off big-time for a winery, I also knew that the fun-loving industry would just laugh at the figures I’d be suggesting. I was tasked with getting a winery to give us a whopping $ 3 million worth of product and cash in exchange for the right to call itself the Official Winery of the 2010 Olympic Winter Games. That’s a lot of grapes and green. But what a toast I would be giving to my team if we could close a deal of that magnitude! And what a hangover I would have if we came up empty handed.
First we had to figure out just how much wine we needed. In November of 2005, after seven months on the job, I sat down with the food and beverage people at VANOC and we crunched the numbers. We assessed just how many events we would be hosting leading up to and during the games where we would be providing our guests with a glass or three of wine. We looked at our gifting budget for athletes and VIPs and tried to determine if wine could be used as gifts, to reduce expenses. We also looked at the amount of wine that was going to be sold to spectators at Olympic sporting events at the hundreds of concession stands VANOC would run. By selling the wine that we got at no cost we could apply those profits toward our sponsorship revenue target.
We also examined the wine sponsorship deal at the 2006 Torino Olympic Games in Italy. They established a Tier III wine sponsor deal with a company named Fontanafredda. I e-mailed my contact, Primus Matteo who had worked for the Italian organizing committee, and discovered that Fontanafredda supplied 250,000 bottles of wine at no cost as part of their sponsorship deal. I had a suspicion that was far too much product for our needs. Canadians prefer beer over wine while Italians are known for really loving their wine and drinking lots and lots of it. After carefully analyzing all of the Italian numbers I went two steps further in my quest for empirical data: I researched the 2004 Athens and 2002 Salt Lake City Games to determine how they stocked their massive wine racks. In the end, to minimize our risk of having too much wine that we couldn’t use when the Ggames were over we determined that we would require about 150,000 bottles of wine to stage our Ggames. At a wholesale cost of $10 per bottle, however, the free wine contribution would only get us halfway to the $3 million threshold that we required as the entry level to become a Tier III sponsor. We would need a cash top-up and I knew from my past experience that this was starting to look like a pretty tall order.
I identified the five largest wineries in Canada and wrote them all letters outlining the Olympic sponsorship opportunity. One of the companies on my list was Vincor which, in 2000, had been a sponsor of the Canadian Olympic Committee (COC). This meant that in the past, one of their products had displayed the Olympic rings so I felt they would be predisposed to listening to my pitch. That deal, however, carried a price tag of only about $100,000 a year. I wondered how their marketing director would react when I showed up at his office with a proposal that was 30 times more than what he had paid in the past for the Olympic rings. I worried that if I wasn’t careful he would throw me out of his office so quickly my briefcase would ignite. I knew that the Olympic rings take on a whole new value when the Ggames are hosted in your home country. As well, this was a seven-year deal. Just the same I knew there would be some sticker shock that I would need to manage very carefully.
My first meeting with Vincor, in February of 2006, was with a young guy named Dan Rabinovitch who was the marketing director for some of Vincor’s brands. I sensed that he probably didn’t have enough influence in the company to push the deal forward, but I knew I had to start somewhere. The meeting with him went well and I was given the green light to come back and meet with someone a bit further up the ladder: His boss, the vice-president of marketing.
Three weeks later I sat down with Vincor’s Vice-President of Marketing Steve Boliger
We hit it off right away. He was my age and had been in the wine business for a long time. We even knew some of the same people in the industry. In sales it is important to immediately establish a rapport with people and it helps if you can find some common ground. We met in Vincor’s Mississauga boardroom that doubled as a high-end wine cellar. Hundreds of bottles of their finest vintages adorned the custom-made, dark, antique, oak shelves. The room had an old-word charm and a musty wine odour that made me imagine it could be the storage den of a Spanish castle. As it turned out I met with Steve and other Vincor executives in that same room five or six more times negotiating the terms of the deal but strangely I was never offered a glass of wine until we finally signed the deal.
During that all-important first meeting with Steve, I needed to give him enough information about the upcoming Olympic Games and the power of the Olympic brand to intrigue and excite him and, most importantly, have him invite me back for another meeting. For this initial meeting, I felt that it would be best not to talk about the quantity of wine or the money we required. At the time, in the early days of 2006, we were still finalizing the entry levels for sponsors and hadn’t totally finalized our minimum sponsorship investment levels for official suppliers. I also wanted to get to know him and give him a chance to warm up to the proposition of being a sponsor, before unveiling the gigantic rights fee that we were after. Three weeks after our first meeting I met Steve for lunch. I needed time to create a compelling proposition for him so I still didn’t reveal the intimidating multi-million-dollar number that we would be charging sponsors . First, I had to build industry support for this sponsorship initiative that would translate into vastly increased wine sales for Vincor and help Steve justify the investment to his bosses.
After our lunch, we agreed we’d meet again a few weeks later. That gave me time to meet with representatives of the Canadian retail liquor industry and the British Columbia hospitality industry, to ask them for their commitment to back the Olympic Games. Each Canadian province has its own independent liquor distribution branch. I met with the head of the BC branch, Jay Chambers, who was a big supporter of ours. He told me that we could count on BC liquor stores to allow large promotional 2010 Olympic Games displays in their hundreds of outlets throughout the province. Jay then introduced me to the head of the Association of Provincial Liquor Jurisdictions, a group comprised of representatives from each province’s controlling liquor board. The association also agreed to get behind the 2010 Games, which meant that any Olympic Games promotional displays that would be built at their locations would use our sponsor’s products. The company that ended up becoming our wine sponsor would still need to apply for display space and comply with a myriad of rules and regulations in each jurisdiction, but essentially the green lights I had received would help pave the way with Vincor. With these two endorsements in place, I went for the hat trick.
A big part of your success in the sponsorship business –or any business– is based on your contacts, how you have treated people in previous deals and, most importantly, whether or not you delivered on promises that you made for those deals. The Commonwealth Games wine deal that I did 15 years prior with Calona Wines turned out to be a big success. Calona Wines saw a marked increase in sales for the period leading up and during the Games, which took place in the summer of 1994. As promised, when Queen Elizabeth came to town with the rest of the Royal Family to open the Commonwealth Games she could be seen sipping Calona Wines’ finest from her royal chalice. Following the Ggames, Calona Wines’ President Ian Tostenson went on to become the head of the British Columbia Restaurant and Food Services Association. When I asked him for a letter of support committing that his members, restaurants and pubs throughout BC, to back the 2010 Games and our sponsors through promotions, he completely understood what I needed.
With the support of these three organizations in place it was time to revisit Steve. On that same trip out to Ontario, I decided to meet with a couple of other wineries to test their appetites to become a sponsor. I knew that the wine industry was pretty tight-knit and word would get out that we were pursuing all of our options. It’s always good to work on parallel paths and approach as many potential companies as possible. Competition, or the perception of competition, is healthy for the seller (me) when you are trying to close an exclusive sponsorship deal. There would only be one official wine for the Ggames.
In May of 2006 I was back in the Vincor Wine Cellar boardroom meeting Steve Bolliger and Dan Rabinovitch; this time they had pulled a few bottles of special wine off the oak shelves to show me. These bottles sported the Canadian Olympic Committee motif with the Olympic Rings with labels that were themed for the 2004 Games in Athens. The promotions were very successful, Steve said, and then went on to explain how, since we had last met, he had built consensus on this initiative with the rest of his company; now, everyone from the president on down had bought into the idea of Vincor becoming a sponsor. “Everybody likes the idea of sponsoring the Ggames,” he said. “We all believe in the values of the Olympics and all of the great things that they will do for Canada”. When I outlined the industry support that we had garnered and that would go along with the sponsorship it only increased his interest. So, now the only thing left to discuss was the price. Gulp.
I still remember looking him in the eye and telling him our fee to become a sponsor. His reaction was critical. I knew that this agreement would probably eat up his entire sponsorship budget for the next 20 years. The Olympics probably wouldn’t be coming back to Canada for another 20 years so this was a rare opportunity. But I knew it was a huge stretch for Vincor, no matter what the potential benefits.
I told Steve: “Although we can be creative in how we get to the $3 million, we need to hit that number. Every deal we do has to be approved by our Finance Committee and the $3 million dollar threshold is non-negotiable. It would be unfair to other sponsors who are paying that much to get into the tent, to cut a deal with you for a lower number.” Then I went on to explain that, compared with past Olympic Games, our sponsorship program was going to have a relatively small group of companies participating. We intentionally raised the admission bar a bit higher but would have only 30 or so official suppliers, compared with other Olympics. We always compared our games to the ones in Atlanta where they had hundreds of sponsors. We would tell potential sponsors that with fewer companies participating in our program, their Olympic messages would cut through the clutter.
After I uttered the two words “three” and “million” together for the first time I carefully watched Steve’s face for a reaction. He paused for a few seconds and looked at me with a poker face that revealed absolutely no hint of what he was feeling. Then he told me, “That number is more than what I expected and it will be a real stretch for us to get there, but I really want to do this.”
I love playing chess and draw a lot of analogies between creating complex sponsorship deals and playing chess. As the meeting was winding down I reviewed in my head where the pieces in this game were sitting. Each meeting that I’d had with Vincor was one more move on the board. With Dan Rabinovitch I had made my first move. Now I was in a position where this VPvp of marketing, a pretty senior guy in the company, had advanced the initiative up his line of command and had gotten buy-in. I could tell from cues that he dropped during the meeting that he knew I had been out in the market talking to other wineries and he didn’t want to loose this deal to one of them. He also knew that the industry support we had received would help him to recoup a significant part of the sponsorship investment through wine sales. The game had advanced significantly since my first meeting four months prior. But as with any game of chess you wait for the right time to bring in your most powerful piece. Our President John Furlong was incredibly compelling, convincing and good in sponsorship sales meetings. But he had to be brought in at the right time. As we wrapped up I casually asked Steve if it might be a good time for John to meet with their President Jay Wright. Steve’s reaction was positive and he agreed to set up the meeting on his end.
President’s calendars are busy and I have learned that any time you expect to bring two titans of industry together you should expect at least a month or two lag time before their schedules allow for a get-together. I had great cooperation from John’s office on all of our sponsorship sales efforts and he told me countless times “I’ll do whatever it takes to help, just let me know what you need me to do”. Usually John’s office would notify me a month in advance of when he would be in Toronto and available for appointments. I would then review the active accounts our department was working on and determine if it would be appropriate for him to meet with their company presidents. We scheduled a meeting between the heads of VANOC and Vincor for a month and a half down the road. Steve wouldn’t have agreed to the meeting if there wasn’t a good chance of doing a deal; whenever I invited John to attend a meeting I made sure that the deals we were working on were sufficiently advanced so that I wouldn’t be wasting his time.
One day, I unexpectedly received a voice message from Steve Bolliger that he urgently needed to discuss some important news with me. When I called him back he told me that Vincor had just been sold to a company called Constellation Brands and the merger could affect the status of our possible deal.
I’ve compared doing sponsorship deals to playing chess. But while working at VANOC I also got to play a version of another board game too: Snakes and Ladders. I would advance a deal up to the top end of the ladder and then hit a snake, taking me back to the start of the process. Companies got sold or merged or my contact got transferred, quit or left the company right in the middle of our negotiations, throwing us back to square one. . Since the average time it took to close an Olympic sponsorship deal was between one and two years I experienced the snake scenario frequently.
Constellation Brands’ acquisition of Vincor postponed our next moves; the meeting between John and the President of Vincor was delayed. In fact, reading between the lines of Steve’s call I could tell the change cast doubt onto bringing the sponsorship agreement to fruition at all. On the positive side, Constellation Brands was the world’s biggest winery and would surely have the financial ability to help back a deal of this magnitude. On the negative side, decisions of this nature would now most likely have to be approved by a management team in New York or some other large, American city where the leadership likely would not be as emotionally invested in the notion of supporting the Olympic Games in Canada. Either way, the chess board that Steve and I had been playing on had just had most of the pieces jumbled up onto different squares.
After a few more false starts we were able to orchestrate a meeting in Mississauga with John Furlong, Dave Cobb and myself representing VANOC and Jay Wright and Steve Bolliger representing Vincor and its new parent company Constellation Brands. I knew that Steve wouldn’t have allowed this meeting to take place if he hadn’t gotten a degree of buy-in from the new senior management of Constellation Brands so I was cautiously optimistic. John was brilliant in sharing his vision of the Olympic Games and what we were setting out to accomplish. Steve responded by saying that, “part of the Olympics is all about Canadians celebrating the achievements of our athletes. And people celebrate with wine. We absolutely need to be the wine that Canadians from coast to coast celebrate with.”
Leaving Vincor after the meeting with Furlong and Cobb, I was pretty confident that we would be doing a deal. But nothing is simple and the process for large complex agreements of this nature is long and slow. At this point we were nine months into the process. I called Steve and he told me, “The meeting with John went great and Jay really liked him. I think we’re getting closer, but I need more time to work on the financial side.” After a couple more meetings in Mississauga and several more phone conversations with Steve we were getting closer. We agreed to the valuation for the wine that we would receive, established innovative payment terms, worked out a formula for sharing profits if sales of the official wine hit certain thresholds and agreed to a myriad of other details that would go on to form the backbone of our agreement.
Finally, when we thought that we were pretty close to signing an agreement, we organized an all-day, show-and-tell session at VANOC for seven of Vincor’s sales and marketing people. I invited VANOC Vice-President of Food and Beverage Nejat Sarp to an hour-long session during the day to share his vision of our upscale approach to hosting the athletes and officials. Najat came from the hotel industry and his goal was to provide nothing short of a four-to-five-star-like setting for all of our guests. The athletes would be housed in million-dollar waterfront condos, sleeping on the finest beds. The quality of the food and wine they consumed was an important part of his master plan. At the meeting in Vancouver Najat also talked about the variety and quality of food services that we also wanted our spectators to experience at each venue. Vincor’s team left impressed and with even more of an appetite to become an Olympic sponsor and showcase their portfolio of wines to the world.
The snakes and ladders game continued for many more months, until the end of 2007. Meanwhile, Dan Rabinovitch left the company to go live on a kibbutz in Israel, Steve was transferred to Southern California (and was taken off of the Olympic file), and Vincor President Jay Wright was transferred to New York. By the time the Games opened none of the original people I had met with to construct the deal were around anymore. It was typical for some of the deals I worked on. My tenure at VANOC was five years and that meant that I would “outlive” many of my original contacts. I also encountered several companies like Vincor that were in transition; either being sold, or being merged with another company. The movement of company executives through a revolving door, and the restructuring of companies always slowed the process of concluding deals. But it’s a systemic challenge that everyone in sales faces; and the longer the sales cycle, the more vulnerable you are to such changes.
The wine deal finally did get done. The Vincor team flew back to Mississauga and within a month or two we received their letter of intent to proceed with drafting a term sheet. A mere 12 months later, after back-and-forth from their lawyers and our lawyers and numerous executives, the deal was done. On the day we were to sign the Definitive Agreement, Vincor came out to Vancouver for a little signing ceremony. And what did they bring with them? A case of their finest wine and a dozen expensive, crystal glasses for us to hoist.
As we toasted the partnership I thought to myself how, like a fine wine, this deal needed years to mature.
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