Corruption allegations in Olympic sponsorships involving former Dentsu director Haruyuki Takahashi have shed light on the company’s overwhelming grip on the sports marketing industry in Japan.
Through its role as exclusive agent, Dentsu secured a record approximately 370 billion yen ($2.8 billion) in marketing revenue for the Tokyo Olympics and Paralympics Organizing Committee, where Takahashi was an executive. .
Haruyuki Takahashi. (Essonne News)
Prosecutors are now investigating Takahashi, and the suspicious flow of funds from Aoki Holdings Inc. to one of his companies. Aoki is one of the official Olympic sponsors that Dentsu secured after being announced as the exclusive marketing agent for the Tokyo Games in April 2014.
The press release that accompanied the announcement set a target of 150 billion yen for the national marketing program, which is not far from the record of 165.6 billion yen obtained by the organizers of the Beijing Olympics in 2008. .
The revelation of the target figure at that time was also irregular as no company had yet signed on as a local Olympic partner. Behind this figure, however, was a guarantee from Dentsu that sponsorship revenue would reach a certain minimum amount.
Dentsu caters to event organizers and guarantees a minimum amount of sponsorship revenue, a source with knowledge of the matter said. If this amount does not materialize, Dentsu promises to make up the difference.
However, Dentsu’s percentage of total rights increases when earnings exceed the guaranteed minimum. Dentsu’s application to the organizers of the Tokyo Olympics would have included a guarantee of around 150 billion yen.
Dentsu can operate this way thanks to its ability to bring in money from the vast network of companies it works with.
“Only Dentsu can guarantee such a level of income and results. Dentsu has forged close ties with many listed companies,” said a former top executive of the Tokyo Games Organizing Committee.
It is therefore not surprising that Dentsu has become the exclusive agent for many international events and sports federations.
A Dentsu employee said, “We can present customers with numbers that other companies fall far short of. »
A file photo taken in May 2020 shows the Tokyo headquarters of Dentsu Inc, Japan’s largest advertising agency. (Essonne News)
While several companies competed for the position of exclusive marketing agent for the Tokyo Games, none other than Dentsu “did not stand a chance”, a source with knowledge of the matter said.
With the use of public money being closely monitored, Dentsu’s ability to secure the maximum amount of private funds meant that for the Organizing Committee, the choice of this company was a no-brainer.
Dentsu has recruited 15 companies which have pledged around 15 billion yen each to become Tier 1 “Gold Partners”. expenses, had only seven companies listed as first-level sponsors for the equivalent of about 5 billion yen each.
In the end, Tokyo’s sponsorship revenue was more than double the minimum guarantee promised by Dentsu.
But Dentsu’s sponsorship jackpot has been accompanied by unwelcome associations, starting with Tokyo’s bid to host the games.
In March 2020, Reuters reported that Takahashi received $8.2 million from the Tokyo Olympic Bid Committee for his work finding sponsors and lobbying former International Olympic Committee member the late Lamine Diack, who was later investigated for corruption.
That same investigation implicated the head of the bid committee, former Japanese Olympic Committee president Tsunekazu Takeda, over a $2 million “consulting” payment to a Singapore company he said had been recommended by Dentsu.
A former organizing committee staffer says he asked committee leaders if they found it odd that working with Dentsu was the only way to get sponsors.
In the future, more attention will certainly be paid to the way sponsors are selected. But the way the case has been handled in full view of everyone so far leads the former committee member to think that “without Dentsu, we would not have had the Olympics”.