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China Digital Future Trends Partnerships | 6.02.18

Inside Alibaba’s Olympic Deal

How the biggest sponsorship deal in Olympic history came together and why its objectives could revolutionise the sports industry.

On 19 January, 2017, Chinese internet giant Alibaba joined the International Olympic Committee’s top-tier global sponsorship ranks, becoming a TOP partner, sitting alongside the likes of Coca-Cola, Dow, P&G, Samsung, Visa, and Omega, in a 12-year deal reportedly worth some US$800 million to the IOC.

By James Emmett

While not the first Chinese company to partner with the Olympic movement at the highest level – computing company Lenovo was a TOP partner in the lead-up to Beijing 2008 – Alibaba is the first of the new wave of Chinese technology giants to become an Olympic sponsor.

According to Hong Li, Founder and Chair of Shankai Sports, which helped to broker the deal between Alibaba and the IOC, the scale of Alibaba’s ambition is such that it is unlikely to be until the 2022 Winter Games in Beijing that truly transformational work is likely to be seen.

Alibaba is known as an ecommerce giant, and while the organisation does intend to benefit through this vertical as part of the Olympic deal, the real focus and driving force behind the agreement lies in Alibaba Cloud, which powers its ecommerce operation, but also computing and streaming.

Hong Li, who worked for the IOC as its chief representative inside the local organising committee for the Beijing 2008 Games before founding the Shankai agency in 2009, is joined by her colleague Julian Gornall-Thode to discuss the genesis of the partnership, the objectives behind it, activation plans for PyeongChang and more.

Shankai Sports Chairwoman Hong Li

How did the deal between the IOC and Alibaba come together?

Hong Li: This whole deal started from a request from the Alibaba team to set up a meeting between Jack Ma and the IOC president, when Jack Ma was in Switzerland on the occasion of the World Economic Forum in Davos in 2016. The only possible window of opportunity to meet was Saturday morning so I made a few phone calls and helped to make the meeting happen. It was January 23 of 2016 when Jack Ma and Thomas Bach met in Chateau du Vidy and they clearly had a great conversation, because the meeting lasted twice as long as planned. At that time, no-one was talking about a TOP deal yet, but both sides left the meeting seeing a lot of potential for partnership. After that, we spent several months working with both sides to work out a potential deal. Once we had found the right direction, I went to Hangzhou to meet with Daniel Zhang, the CEO of Alibaba Group on June 23, Olympic Day.

After the meeting I spoke to Michael Payne, one of our advisers and key people involved in this deal. On the same day, he was in the company of President Bach at the Olympic Day reception at the Olympic Museum. The stars seemed to have aligned to move forward with the discussions in earnest.

The negotiations were highly confidential. On the Alibaba side, only a handful of people around Jack Ma were even aware of the discussions. Alibaba CMO Chris Tung took the lead on the discussions. Even though he’s responsible for hundreds of staff throughout the organisation, he came to all the Olympic meetings by himself. So for months only about five in the organisation people knew what was going on.

What are Alibaba’s objectives with the deal, and have those objectives evolved as both sides have got to know each other?

Hong Li: When the deal was first presented to the board, their main concern was: ‘Can we deliver what it takes? Can we use our technology to help take the Olympic Games to the digital era?’ So their main objective is to apply Alibaba’s technology make a meaningful contribution to sports.

Alibaba is best known as an e-commerce company. Throughout the discussions it became clear that their budding cloud computing business would also be a focus of this partnership. Alibaba Cloud and associated data technology is the foundation that supports all the Alibaba platforms. So far, much of the Olympic activation has been led by Alibaba Cloud. You will also see this at the showcasing in PyeongChang. The theme is ‘Olympic Games on the Cloud’. Anyone who is at the Games should go and take a look, it promises to be a spectacular showcase.

What can we expect to see from Alibaba’s sponsor showcase in PyeongChang?

Julian Gornall-Thode:  Jack Ma likes to say that Alibaba is in the business of data technology. If you think about the huge amount of data that is generated at every Olympic Games, and the potential if all that data could be harnessed and applied, it could transform the way that the Games are experienced – by athletes, organisers, spectators, media and viewers around the world. Of course PyeongChang is only a beginning: Alibaba came on board too late to get deeply involved in the technology operation of the Games there. But the showcasing will provide a glimpse of the power of Alibaba’s technologies and the impact it can have on the Olympic Games in the future.

The showcase will be an opportunity for many to familiarise themselves with Alibaba. They are a hugely impressive company: On Alibaba’s annual Double 11 shopping festival on 11 November 2017, the gross merchandise value sold in 24 hours was $25.3 billion. The PyeongChang showcasing will show the technologies at work to make that happen, and how they might be applied to sport and the Olympic Games. The true value of the cloud is not just storage and computing power, it’s really about big data and the ability to analyse and apply that data. Think about the computing power and data insight, which currently enables the hugely successful Alibaba’s e-commerce platforms, being applied to sport: changing the way that spectators visit and experience and the Games, the way that fans consume sport, the way that organisers manage and operate events, the way that athletes prepare for competitions – that’s the vision that Alibaba will present in PyeongChang.

Are we still at showcase and future-gazing stage, or have there been some tangible changes made to how the IOC does things thanks to IOC technology?

Julian Gornall-Thode: There have been tangible things. If you think about the nature of the way the Olympics are run, it’s a travelling circus. There are plans to put technology solutions in the cloud and create new technologies that can be applied across multiple Games. This will be hugely valuable in terms of providing a service to the organising committee – the IOC won’t just be putting requirements on an organising committee, they’ll be able to offer them turnkey solutions. This will help to reduce costs and increase efficiencies: we’re not reinventing the wheel every time at every OCOG. This is also very much in line with President Bach’s Agenda 2020, to increase the sustainability of the Games.

Hong Li: One of the biggest initiatives from President Bach is the Olympic Channel, which is a media platform available 24/7 all year round. Alibaba owns Youku, the major Chinese video sharing site, and will support to bring the Olympic Channel to audiences across China and innovations to the global Olympic Channel.

Looking ahead to Tokyo 2020 and Beijing 2022, what further tangible steps can we expect to see made in this partnership?

Hong Li: I think when we truly mobilise Alibaba’s power and see a new technology-infused Games – I think that should be by 2022. Alibaba came a bit late to get deeply involved in the technology delivery of PyeongChang, so their focus at these Games is to learn about the Olympic Games and do some showcasing and hospitality. Alibaba as a company is very active in Japan. They will likely be able to get more involved that in PyeongChang. But for Beijing 2022, we’re going full speed ahead. They arrived at the right time to be fully involved in the technology planning of the Games. And of course it’s a home Games, so they will be able to fully apply all of their experience and technology.

How will Alibaba measure the success of this deal?

Julian Gornall-Thode: From the highest levels of Alibaba, there is a huge willingness to make a positive impact on the Olympic Movement and contribute to the development of the Games. Clearly there are business objectives behind that. Alibaba is a very ambitious company, particularly its cloud business is expanding very rapidly all over the world. Already it is the dominant Cloud service provider in China, and it is growing rapidly. The headquarters of the international operation are in Singapore. There are over a dozen data centres around the world and more scheduled to open soon. They are taking on the competition to become a major cloud service provider worldwide. In the other pillars of the partnership, in terms of ecommerce and the partnership on the Olympic Channel, there are similar ambitions to take the company overseas and grow the Alibaba brand across the world.

Leaders Week New York

21-24 May 2018


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