Olympic Pillage: Why Rule 40 Needs to Go

At the end of September, President Obama hosted the 2016 Rio Olympic team at the White House, hailing the athletes as American role models. In particular, he honored 5000 meter runner Abbey D’Agostino for exemplifying what he said “the Olympic spirit and the American sprit should be all about” when she helped up a competitor after both had fallen mid-race.

Only through years of grueling training and sacrifice have D’Agostino and the rest of Team USA become model Americans, or at least model athletes. But achieving this success also requires financial support. Corporate sponsors partner with athletes to give them the monetary support to pursue the mastery of their sports—in a sense, sponsors are partially responsible for facilitating the high-quality performances at the Olympics. However, Rule 40 from the International Olympic Committee (IOC), the governing body that sets rules for the Olympic Games, restricts athlete-sponsor relations during the Olympic period, hurting those same athletes that the IOC is trying to promote. Just as President Obama supports Olympians, so should the IOC support the sponsors that enable the successes of so many American athletes.

Specifically, Rule 40 states that athletes’ personal sponsors cannot launch advertising campaigns featuring the Olympics for a set period surrounding the summer games, from late July to late August. The only companies that can use their athletes’ images as Olympians have to be official Olympic sponsors—and becoming an official sponsor costs between $20 – $100 million, a sum only affordable to major companies. For example, Nike has been the official uniform supplier to the IOC since the Sochi Winter Olympics in 2014, and, as such, it can use Nike-sponsored Olympic athletes in its advertisements. However, New Balance—D’Agostino’s sponsor—could advertise a new model of training shoe with a print ad featuring her running on the beach, but could not say this was a beach in Rio. During what Rule 40 dissenters call the “blackout period,” nonofficial sponsors cannot launch new advertising campaigns that reference their sponsorship of an Olympic athlete. They are further banned from using specific terms such as “summer,” “victory,” “games,” or “gold” in ads or tweets.

This limitation on commercial language makes it difficult for companies to express that they sponsor athletes competing in the Olympics, thereby curtailing any economic benefit they could get from the public realizing their brand is the choice of champions. Slate Olson, the chief marketing officer of Specialized Bikes, argues that Rule 40 restricts entire sectors of the sporting goods marketplace. Even the biggest cycling brands like Pearl Izumi are much smaller and can sponsor fewer athletes than corporations like Nike. Therefore, silencing their advertisements limits public knowledge of less mainstream sports’ Oympic successes. Sally Bergesen, CEO of the up-and-coming running apparel company Oiselle, laments that IOC Rule 40 means “we’ve spent four years investing in an athlete that’s now made the Olympic team, and we cannot get any visibility on the biggest stage.” If a small company is unable to publicize a sponsorship during the Olympics, the economic incentives for sponsoring additional athletes are curtailed.

Rule 40 hurts not only corporations’ bottom lines, but also the athletes themselves, who, as Bergesen argues, now have a limited ability to earn money from ad features. This gravely impacts professional runners, most of whom rely on sponsorships for income. Compared to the twelve members of the US Olympic men’s basketball team that earned a collective $257 million in the past year in salary and endorsements, half of 2012 US track Olympians who ranked in the top ten in their events earned under $15,000 annually, which includes prize money and sponsorships.

Rule 40 restricts athletes’ incomes by limiting their ability to be paid for ad features.

Many professional runners even have to hold other jobs to sustain a livable income, like three-time American record holder Shalane Flanagan, who published her own cookbook of nutritious recipes for runners, and hurdler Kerron Clement, who spends his time off the track as a model and an actor. By limiting how athletes’ images can be marketed, Rule 40 ironically pushes runners to capitalize on their images through other avenues. The running apparel company, Brooks, cited this tension over the blackout period by releasing an ad campaign during the track and field Olympic Trials with the slogan, “Not pictured here, an athlete living below the poverty line to bring glory to their country.” When athletes have to supplement their income with other employment, this could impede their ability to train and represent their country to their full potential.

There certainly is an argument to be made for uniformity. Team USA would present an unprofessional and unconnected face to their competitors and the rest of the world if they did not compete in matching uniforms. If Nike wants to pay to supply the uniform, all athletes should be compelled to wear them in competition. However, the desire for uniformity should not extend to advertising; here consistency veers toward monopoly. The sponsors who back athletes should be celebrated and allowed to grow, instead of being silenced by larger companies with more access to capital.

Rule 40 sought to streamline the number of advertisers, allowing the IOC, as a nonprofit organization, to capitalize on their profits from large sponsors. This would make the IOC more likely to have the funds to “grow long-term revenue streams for the Olympic Movement.” However, as a nonprofit, the IOC should be more focused on promoting athletics, not their pocketbooks. Although it is true that more funding allows the IOC to expand the global reach of the Olympics, this price gauging draws into question its commitment to supporting all events and athletes.

Ironically, Rule 40 also began as a backlash against Nike. In 1996, when Reebok was the official sponsor for the Summer Games, sprinter Michael Johnson broke two Olympic records in a pair of gold Nike racing spikes. The shoes captured the awe of NBC viewers and commentators nearly as much as his performance.

Back then, Nike was the underdog; today, Nike is featured in every sporting goods store, while Reeboks are a far less popular choice. If Rule 40 had been in effect 20 years ago, perhaps Nike would not be the giant corporation and Olympic sponsor it is today. Although Rule 40 now artificially props up Nike’s influence, the brand’s rise to prominence exemplifies how enabling sponsorship and competition can allow up-and-coming companies, and subsequently their athletes, to flourish.

IOC Rule 40 should be revoked, as its effect runs counter to its goal of “preventing over-commercialization” of the Olympics. In practice, the rule only limits the ability of smaller companies to support their athletes, while letting the few official sponsors monopolize the global stage. Repealing Rule 40 would give athletes the freedom to associate how they wish, making companies compete to support them. In the end, the Olympics is all about the spirit of competition—and what is more competitive than letting market forces, rather than monopolistic policies, determine the brands and athletes featured in the global arena?