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This April 11, 2013 photo shows the Olympic Park under construction in Rio de Janeiro, Brazil. With financial backing for the 2106 Olympics drying up, Brazilian organizers are scrambling to raise record amounts of local sponsorship money to cover any budget shortfall and avoid a government bailout. (AP Photo/Felipe Dana)
2016 Rio Olympics aim for record sponsorship haul
First Published Nov 06 2013 08:57 am • Last Updated Nov 06 2013 09:10 am

Rio de Janeiro • With public money for the 2016 Olympics getting tougher to find, Brazilian organizers are scrambling to raise record amounts of local sponsorship revenue to cover any budget shortfall and avoid a government handout.

In an exclusive interview with The Associated Press, the chief commercial officer for the Rio de Janeiro Games, Renato Ciuchini, said his new goal is to generate between $1.3 billion and $1.5 billion in domestic sponsorship income. This would double what’s been sold to date — $650 million — and easily surpass the $1.1 billion raised for the 2012 London Olympics.

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"I may have this calm face but there is a lot of pressure here," Ciuchini said. "There is no question about it. Our target is very high. ... We are increasing the team. We are bringing in a lot of senior guys to the team."

Just a few months ago, a top Rio official said $700 million in government aid would be needed to make up for a shortfall in balancing the local operating budget. That’s no longer politically tenable.

On-going violent street protests, which began five months ago during the Confederations Cup, the warm-up for next year’s World Cup, have focused on Brazil’s poor schools, shabby hospitals and soaring costs. Protesters have questioned why the country is spending $15 billion on the World Cup and a similar amount on the Olympics.

The protests, at their peak, brought 1 million people to the streets across Brazil on a single day. They have grown smaller, but more violent, and show no sign of going away. Neither do charges of political corruption, which President Dilma Rousseff is sensitive to as she faces re-election just after the World Cup.

Ciuchini said $1.5 billion was the level at which government aid might not be needed to meet the Olympic budget. With "luck," he might raise even more, he said.

"Even at this level ($1.5 billion) we cannot guarantee," he said. "We are working with all the variables of the budget to make sure that we have no need for public money."

Ciuchini was upbeat, saying Brazil’s sluggish economy — and distractions such as the World Cup and the threat of violence — did not harm potential sales. He pointed to Brazil’s large population of 200 million and described the famous Olympic brand as one that allows "you to ring anybody in the world and they will take the call."

The countdown to the Rio Olympics reaches 1,000 days on Saturday, a big reminder the clock is ticking.

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"We love to have this very high target," Ciuchini said. "This is adrenaline for a sales organization."

Income from local sponsorships should make up 20 percent of the Rio budget, which has yet to be announced. The operating budget was $2.8 billion in the original bid in 2009, but is expected to rise to at least $4 billion. Some think it could be much higher. Other major income sources are ticket sales, licensing, merchandising and a large contribution from the IOC.

The operating budget is to run the games themselves, not to build supporting infrastructure. Olympic host cities are bound by contract to pay for any cost overruns and deficits.

Rio organizers met an early sponsorship target of $500 million — including deals with Nissan, Banco Bradesco and Claro, a telecommunication company operated by Mexican billionaire Carlos Slim. Since then, things have slowed, which is worrying the top marketing official of the Switzerland-based International Olympic Committee.

"It started out very well, but they unfortunately had some economic challenges in Rio and the situation is not as it used to be," Gerhard Heiberg, head of the IOC marketing commission and an IOC member from Norway, said in an interview with the AP. "It is challenging. We still think we will get sponsors in Rio. It hasn’t come up as quickly as we had hoped."

Heiberg said protests were apparently making some local sponsors skittish.

At least six deaths were connected to June’s Confederations Cup protests. Jerome Valcke, the top FIFA official in charge of the World Cup, said recently the soccer tournament would have "the highest level of security you can imagine" to contain any violence.

"I know that some sponsors are waiting to see how things are going to be at the World Cup." Heiberg said. "Will it be a success? Will it be chaotic? If people feel things are going to be very good for the games, it’s easier to get the sponsors. If people feel things are not going to be 100 percent, they will hold back on the Olympics. First they want to see what’s going to happen with the World Cup."

FIFA announced six months ago in Rio that sponsorships for the World Cup had sold out, with total revenues of about $1.6 billion. FIFA said the last sponsor to sign up was Brazilian sporting goods chain Centauro.

Ciuchini said new Olympic sponsorships could be announced before the end of the year, bringing the total to about $900 million. He said negotiations had begun in the categories of airlines and steel, and said an oil and gas category would be opened soon.

"This is a very hot market for oil-gas," Ciuchini said. "There is a lot of interest from global companies, not only from the domestic companies."

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