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McDonald's just signaled the end of the Olympics as we know them

McDonald's just signaled the end of the Olympics as we know them

McDonald's Olympic village

REUTERS/Edgard Garrido

Cuban team members eat McDonald's food inside the Olympic village in Rio de Janeiro, Brazil August 2, 2016.

  • McDonald's has ended its longtime sponsorship partnership with the Olympics.
  • The fast-food chain has been a sponsor for the US Olympic Committee since 1976 and a TOP partner with the International Olympic Commitee since 1996.
  • It is the latest big-name sponsor to depart from the Olympics, following Budweiser, Citi, Hilton, TD Ameritrade and AT&T.
  • The move comes as it focuses on its new global growth plan and reviews its marketing spend.

After a long standing affair with the Olympics, McDonald's is no longer lovin' it.

The fast-food giant has ended its 41-year long sponsorship deal with the International Olympic Committee, as part of a review of its marketing spend and a "new global growth plan." The company has been sponsoring the US Olympic Committee since 1976 and been a TOP partner with the IOC since 1996. Both these relationships have ended, effective immediately.

While both McDonald's and the IOC said that the decision to end the worldwide TOP Partnership was "mutually agreed" upon, McDonald's has been rethinking its marketing strategies and business goals.

"As part of our global growth plan, we are reconsidering all aspects of our business and have made this decision in cooperation with the IOC to focus on different priorities," Silvia Lagnado, global chief marketing officer at McDonald's, said.

While McDonald's worldwide TOP Partnership will end effective immediately, it will continue to be a domestic sponsor of the Olympic Winter Games PyeongChang 2018 with marketing rights in the Republic of Korea, with restaurants in the Olympic Park and the Olympic Village.

McDonald's is the latest big-name sponsor to walk out from the Olympics. Anheuser-Busch InBev's Budweiser ended its sponsorship of the US Olympic Team earlier this year, while Citi, Hilton, TD Ameritrade and AT&T have also ended their Olympics sponsorships in recent months.

The move follows the appointment of Steve Easterbook as McDonald's new CEO in 2015. Under his tenure, the chain has not only revamped its menu and experimented with features such as digital kiosks, but it is also on target to cut costs up to $500 million by the end of 2018.

Sponsoring the Olympics is hardly cheap. Top global sponsors like McDonald's easily shell out close to $25 million per year for the rights, adding up to $100 million for a four-year period. So it's no surprise that brands are reconsidering the decision, said Brian Cristiano, CEO at Bold Worldwide, an agency that specializes in sports marketing.

"It's clear that the rising costs of sponsorships and extremely high cost to put on the event are making some sponsors think twice,' he said.

Another factor is Rule 40. John Lewicki, who oversees global Olympic sponsorship deals for McDonald's, said last year the company would reevaluate its Olympic relationship, reported Reuters. The revaluation was prompted after changes were made to the rule, which ended a marketing blackout for companies that sponsor athletes rather than the event itself.

"When you see how they've been subverted by smaller brands like Under Armour, who have won as big by hacking the Olympics, it makes sense," said Mario Natarelli, managing partner at branding firm MBLM. "They have proven that you don't need to spend millions of dollars to win at the Olympics."

Still, the move may help McDonald's save $25 million a year, but it isn't necessarily a smart branding move, said Cristiano.

"You are talking about a worldwide brand whose arches have become somewhat synonymous with the Olympic rings," he said. "The lack of visibility in the games moving forward could impact the brand negatively if a major competitor decided to use this as an opportunity."

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