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Thursday, January 8, 2009

Home Depot to end Olympics sponsorship

After 16 years as an Olympic sponsor, Home Depot is hanging up its rings.

On Wednesday, the world’s largest home improvement retailer informed 98 employees in its Olympic jobs program that it is ending its sponsorship of the Olympics and Paralympics.

The innovative jobs program had allowed Olympic athletes to work part-time at Home Depot while enjoying full-time pay and benefits, gaining time to train.

Three Georgia athletes will be affected. They are in Morrow, Savannah and Athens, said Home Depot spokeswoman Jean Niemi, who couldn’t immediately provide their names.

Over the course of the retailer’s 16-year sponsorship, more than 660 athletes participated in the jobs program; 300 Home Depot athletes made Olympic and Paralympic teams; and they brought home nearly 150 medals, 95 of them gold.

Athletes will be paid through March 2. After that, they can stay in their current positions for part-time pay, apply for full-time jobs that become available, or leave the company.

Home Depot had been a U.S. Olympic Team sponsor since the 1992 games in Barcelona, followed by the 1996 games in the company’s hometown of Atlanta.

Home Depot, a publicly traded company, doesn’t disclose how much it spends on sports sponsorships. Niemi wouldn’t specify Wednesday night how much money it invests in the Olympic jobs program. “We don’t disclose that at all.”

While other companies also sponsor Olympic athletes, Home Depot’s program was high-profile: It had used its athletes in advertising campaigns.

In May, prior to the summer Olympics, 137 athletes were in the program. At the time, the company had said it was weighing whether to continue its Olympic sponsorship.

Home Depot’s announcement could signal a cascade of ending sports sponsorships, as some big brand names and retailers are suffering from the economic downturn.

Niemi said Home Depot’s decision wasn’t based on the economy, but rather on finding “new ways” to reach out to customers and staffers.

“We came to the decision the time was right to move on and look at other opportunities,” she said. “There are no plans in place as of now as to what to do with the money.”

Summer Olympic games in recent years have been in farflung locations, from Sydney to Athens to Beijing, where the big-box chain has no presence, or only a small one, like its dozen or so fledgling stores in China.

Meanwhile, the company has added on expensive sponsorships for NASCAR and other popular American sports, like college and professional football.

These sports appeal to the main customer base of Home Depot, as the majority of the chain’s stores —- just under 2,000 out of about 2,274 —- are in the U.S. market. Its other three markets are Mexico, Canada and China. Still, the bulk of the company’s revenue and profit comes from its U.S. stores.

Patrick Rishe, director of Sportsimpacts, a St. Louis sports marketing firm and a marketing professor at Webster University, wasn’t surprised Home Depot was cutting back.

“In tough times like these, companies are going after things that are not essential, like marketing and goodwill initiatives,” said Rishe, noting Atlanta-based UPS’ rival FedEx’s decision not to advertise at this year’s Super Bowl. He said the economic and public relations backlash probably won’t be too severe. “I’d like to the think, given everything that’s going on, the general public are probably more likely to cut them some slack,” he said. “If the economy was going well, people might scratch their heads a little, but not now. Besides, a lot of people may not even notice because they’re too busy dealing with their own situation.”

The company’s total advertising and marketing budget in 2007 was $1.2 billion, according to the 2007 annual report, the most recent available.

Several firms track the numbers. One, IEG Sponsorship Report, says Home Depot spent $60 million to $65 million on sports sponsorships in 2007.

The Nielsen Co. reported that Home Depot purchased $25.3 million and $30.1 million in ads during the 2004 Summer and 2006 Winter games, respectively. Nielsen also reports Home Depot spent nearly $12 million on NASCAR ads in 2007, while rival Lowe’s spent $7.7 million.

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