New Year’s resolutions will be easier for ambitious sports business leaders in 2014. That is because the 2016 Summer Olympic Games organizers have decided to use global sourcing. This is a notable change from the 2012 Summer Olympics in London and the 2008 Summer Olympics in China, where over ninety-five percent of goods and services were purchased from local firms. The planned expenditures of nearly US$1.5 billion present a large opportunity for American and Canadian suppliers of everything from archery targets to zoom lenses.
Fernando Cotrim, Rio 2016 Procurement Director, cited several encouraging success stories in an Examiner.com exclusive interview on Monday, December 16. The new global procurement program was launched just three months ago and an American firm has already secured a prestigious contract that could lead to even more business by training more Brazilians how to use the software. That contract is for provision of computer automated design software for simulating building plans for sports venues.
Another important Rio 2016 contract award went to an Italian edutainment company which won the bid for executive production of both the opening and closing ceremonies for Rio 2016. This recognition of Italian talent should motivate Hollywood’s best and brightest to keep up with global competition in creative services.
This is literally just the beginning, according to Fernando Cotrim. Ninety-five percent of the Rio 2016 procurement contracts will be awarded in the next two years. Much of the big ticket procurement will start soon, because test events in about forty different sports are scheduled for 2015, a year ahead of the next Summer Olympic Games.
Bidding on these big business contracts is literally just a click away. Rio 2016 has launched a procurement portal at the site called “Rio 2016 Suppliers Portal.” Registration is free and that is an advantage suppliers new to sports business should not take for granted. It is very common for procurement bids by vendors to major sports events like marathons to pledge a sponsorship of $25,000 or more just for chance to compete on contracts. The multi-lingual procurement site supports applications in English and Spanish, as well as the national language of Brazil, which is Portuguese.
Competitive prices will help suppliers get a serious look at their proposals, but the final selection will be based on the estimated total cost of ownership. So it will help most bidders to make arrangements for local partners who can arrange for installation, training and product support. And lining up a follow-on customer like a university or sports training center to buy reconditioned equipment after Rio 2016 can also give a bid an advantage in selection. Planning ahead for the legacy use of goods and equipment is an important facet of the procurement team’s goal of sustainability. The other four team goals are transparency, cost reduction, risk management and operational excellence.
The goals in transparency are pioneering for both sports and for host country Brazil. Almost all major sports competitions are organized by private clubs and sports federations or non-profit academic organizations like the NCAA. Procurement decisions have not only had a tradition of being kept private, keeping them trade secrets has also been considered essential for many best in class sports organizations. The Saint Andrews Golf Course in Scotland, founded six-hundred years ago, has just recently veered from tradition for the first time and entered into an exclusive sportswear alliance with Brooks Brothers of the United States.
Transparency has become especially important in Brazil following public demonstrations at 2013 FIFA Federation Cup matches, where thousands of Brazilians showed concern that sports fans deserve to have the costs of sports events held to the minimum.
Are there any disadvantages to bidding on sports business contracts for the Rio 2016 Olympics and related test events? Yes. Just as many components and design companies experienced at London 2012, it is official Olympic policy that only official Olympic sponsors can promote their Olympic experience in advertising and sales presentations. For many vendors selling in the business to business or business to government markets, that should not matter much. It is easy to confirm that Autodesk is the American company that won the automated design software for simulating building plans for sports venues for Rio 2016. That is because the success story is already a case study for teaching graduate students and participants in executive education programs. This kind of educational use is officially endorsed by Olympic organizations, which cite education as one of the Olympics’ foremost goals.
Are there any businesses that will not be able to bid on official business at Rio 2016? The outlook for advertising agencies is not good. American advertising agencies typically earn commissions of twelve to fifteen percent for selling print and online advertisement at sports events and onsite banners and illuminations at sports arenas. The current policy of Rio 2016 is that its own staff will manage all of these contracts without engaging agents.
Are there any disadvantages to winning multi-million dollar business contracts from Rio 2016? Yes. Rio de Janeiro is so beautiful and its quality of life is so enticing that many companies report they have great difficulty convincing their installation and project support staff to come home after their assignments. This challenge can be managed by planning ahead with project completion bonuses that are paid when the American staff report for work when they return home to the U.S.A.