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McDonald's drops Olympic sponsorship

McDonald's and the International Olympic Committee are ending a long-standing commercial partnership three years early.

The Oak Brook-based hamburger giant is exiting the Olympics' top sponsorship program effective immediately, giving up category-exclusive global marketing rights that were set to run through the 2020 Games.

With McDonald's shaking up its marketing as part of a broad transformation, the IOC agreed that that the fast-food giant deserves a break from its Olympic commitment.

"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," McDonald's Global Chief Marketing Officer Silvia Lagnado said in a joint news release issued Friday.

McDonald's became a top-tier partner in 1996 and has been an integral part of staging every Olympics since 1998. The company also is dropping its 40-year sponsorship of the U.S. Olympic Committee.

The highest level of Olympic sponsorship, the Olympic Partners program, brought in more than $1 billion in revenue during the last four-year cycle between 2013 and 2016, according to IOC financial reports. Other partners in the program include Coca-Cola, Alibaba, Bridgestone, Dow Chemical, Samsung, Toyota and Visa.

"In today's rapidly evolving business landscape, we understand that McDonald's is looking to focus on different business priorities," said Timo Lumme, managing director of IOC television and marketing services. "For these reasons, we have mutually agreed with McDonald's to part ways."

The financial terms of the early termination were not disclosed.

In addition to revenue, program partners provide goods, services and industry expertise for staging the Summer and Winter Olympic Games.

While the agreement to end its partnership is effective immediately, McDonald's will operate Olympic Park and Olympic Village restaurants at the upcoming 2018 Winter Games in Pyeongchang, South Korea.

The IOC has no immediate plans to appoint a replacement in the retail food operations sponsorship category.

McDonald's partnership began with the 1997 to 2000 Olympic cycle, which included the 1998 Winter Games in Nagano, Japan, and the 2000 Summer Games in Sydney.

The Golden Arches have been an Olympic Village fixture ever since.

In 2012, McDonald's signed an eight-year renewal, which was to run through the 2020 Games.

A lot has changed for McDonald's since then as sales stagnated amid increased competition and changing consumer tastes. The company acknowledged recently that it had lost 500 million U.S. customer transactions to fast-food rivals since 2012.

McDonald's has been transforming its image, menu and operations under the leadership of Steve Easterbrook, who was elevated to CEO in 2015. The ongoing process has included turnover of top executives, such as the April ouster of U.S. Chief Marketing Officer Deborah Wahl, who was replaced by former PepsiCo marketing executive Morgan Flatley.

In addition to the IOC partnership, McDonald's also is ending its long-standing sponsorship of the U.S. Olympic Committee, a relationship that dates back to 1976.

"The relationship with the USOC will also end with our (IOC) affiliation," McDonald's spokeswoman Terri Hickey said Friday.

Beyond McDonald's, all current top-tier partnership agreements go to 2020 or beyond, with Bridgestone, Panasonic and Toyota signed through 2024, Alibaba through 2028, and watchmaker Omega until 2032, according to the IOC.

rchannick@chicagotribune.com

Twitter @RobertChannick

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