Demonstrators in Berlin protesting against the Sochi Olympics. Image by Adam Groffman via Flickr.

LGBT rights demonstrators in Berlin. Image by Adam Groffman via Flickr.

When Russian President Vladimir Putin passed a law this summer banning the exposure of minors to “gay propaganda,” he added fuel to the flames of controversy surrounding the Winter Olympics in Sochi.

Historically, the Olympics are a magnet for controversy, but what sets these Games apart is the breadth of scandals bubbling up in the headlines. Alleged human rights abuses, terrorist threats, accusations of environmental damage caused by the Olympic site construction and geopolitical tensions are making the 2012 London Olympics look like a cakewalk – especially for sponsors.

Brand backlash

The controversy is threatening to knock Olympic sponsors, including Coca-Cola and McDonald’s, off the podium of brand excellence, raising the question of how they will cope with negative media attention. And so far there has been plenty of negative media attention.

McDonald’s #CheersToSochi Twitter campaign backfired when LGBT protesters hijacked the hashtag, using it to mock not only McDonald’s but other Olympic sponsors, including Coca-Cola, Visa and Procter & Gamble.

Gay rights supporters emptied and crushed Coke cans during a #DumpCoke demonstration in New York City’s Times Square, demanding that Coca-Cola withdraw its sponsorship of the Sochi Olympics.

In another incident, Coca-Cola faced criticism after it was discovered that the word “gay” was banned from a personalized Coke can campaign in South Africa, adding to the mounting criticism that the brand isn’t taking a strong enough stance on LGBT issues heading into the Games.

And two days before the opening ceremony, protests were organized in 19 cities around the world to pressure sponsors to take a public stance against LGBT discrimination.

How brands are weathering the Sochi storm

None of the members of The Olympic Partner program have revoked their sponsorships so far, choosing instead to declare their support for LGBT rights and the Olympic movement while staying silent on Russian politics.

In August, Buzzfeed contacted all 10 Olympic partners and found that General Electric was the only one publicly pressuring the IOC for action.

In a blog post, AT&T stated that “Russia’s law is harmful to LGBT individuals and families, and it’s harmful to a diverse society.”  While not a TOP member, the brand is sponsoring the American Olympic team.

McDonald’s, meanwhile, released a statement acknowledging the #CheersToSochi hijack: “We believe the Olympic Games should be open to all, free of discrimination, and that applies to spectators, officials, media and athletes.”

The brand has not included the hashtag in a @McDonaldsCorp tweet since January 24.

For Michael Payne, who was head of the marketing division of the IOC from 1983 to 2004, it makes sense that the sponsors are keeping a low profile: “The sponsors are not supporting the host country and its politics, they’re supporting the Olympic Games and the competing teams,” he said in a phone interview. “The host country dynamic takes, more often than not, a back seat.”

Samsung so far has remained silent on the issue of gay rights in Russia. Image by Kristina Velan.

Samsung so far has remained silent on the issue of gay rights in Russia. Image by Kristina Velan.

Risky business

As tough as it is for sponsors to maintain a positive image in the media while continuing to support the Games, the risk could be even greater if they decide to pull out, says Richard Pound, former vice-president of the IOC.

He told me that the Olympic partners would be taking a huge reputational gamble if they were to turn their backs on the Sochi Games: “the sponsors have already paid their sponsorship fees and signed contracts for television advertising so there would be no financial impact on the Games whatsoever, just on their own worldwide reputations.”

What’s more, the Olympics present a powerful opportunity for sponsors to expand into emerging markets. As a BRIC nation, Russia is hard to resist.

And because it’s politics, it’s also complicated. Western activists, led by celebrities like Lady Gaga and organizations like Queer Nation NY, are vehemently pushing politicians and sponsors to turn their backs on the Games, but many members of the gay community in Russia are opposed to a boycott. They view the worldwide event as an opportunity for a peaceful show of support for gay rights.

Attendees of the 2014 Olympic Games line up at Coca-Cola vending machines in Sochi. Image by Kristina Velan.

Attendees of the 2014 Olympic Games line up at Coca-Cola vending machines in Sochi. Image by Kristina Velan.

Outlasting the competition

As for the brands, one need look only as far as Coca-Cola, the Games’ longest continuous sponsor, to understand the power of the Olympics’ so-called “halo effect.”

The last time the Games were held in Russia (Moscow, 1980), more than 50 countries participated in a boycott. Coca-Cola stuck by the Games and now owns the majority of the Carbonated Soft Drink (CSD) market share in Russia.

Michael Payne, who continues to advise the IOC, has seen his share of controversies and says it’s normal for sponsors to find themselves in the firing line. “In the end, the Games will be remembered by the athletic performances that occur between the opening and closing ceremonies.”