McDonald's reins in Chicago pride to keep Rio Olympics fans

Chicago's bid to host the 2016 Olympics puts McDonald's Corp. in a pickle.

McDonald's is a corporate citizen of the Chicago area, with 2,000 employees at its headquarters in Oak Brook. Chairman Andrew McKenna served as co-head of fundraising for the Chicago 2016 organizing committee. A Summer Olympics in the city would offer opportunities for marketing to U.S. consumers.

Yet McDonald's, the world's biggest restaurant company, is forbidden by the International Olympic Committee from actively campaigning for Chicago. The IOC will pick the winning bid for 2016 from Chicago, Rio de Janeiro, Madrid and Tokyo on Oct 2.

"They have to be cool," said Rick Gentile, who supervised CBS Corp.'s television coverage of the 1998 Olympics in Nagano, Japan. "If the games are in Rio, they don't want people in Rio to be mad."

McDonald's isn't endorsing one of the four candidate cities over the others, said Dean Barrett, senior vice president for global sports marketing.

"We have a great McDonald's presence in any of the cities," Barrett said. "We have stayed totally out of the decision-making process."

McDonald's involvement with the Olympics stretches back to 1968, when it airlifted hamburgers to homesick athletes during the winter games in Grenoble, France. The company signed on as an official sponsor in 1976 and a TOP partner in 1998, and has served as the official restaurant of the games seven times. TOP, for The Olympic Partners, gives sponsors exclusive worldwide marketing rights.

Backyard Favorite

A possible hometown bias surfaced a year ago when John Lewicki, McDonald's director of alliance marketing, suggested at a symposium in New York that the decision on whether to extend the company's role as a TOP sponsor to 2016 might depend on the city selected.

"They were comments that he deeply regrets and he knows that they don't represent McDonald's position on the Olympic sponsorship," said Walt Riker, a McDonald's spokesman. The company hasn't yet decided whether to be a TOP sponsor for 2016.

McDonald's may not have to officially say a word about its city preference. Its size and headquarters location speak louder than its neutral position, said Darren Tristano, senior vice president with Chicago-based restaurant consultant Technomic Inc. About 14,000 McDonald's restaurants are in the U.S. out of a global total of 32,000.

"They're a large corporation based in an area that's hoping to get the Olympics," Tristano said. "That's indirect support for getting the games."

Salt Lake Scuffle

The IOC has guarded against perceptions of favoritism since a bribery scandal erupted involving cash, gifts and scholarships given to its members by some supporters of the bid for the 2002 Winter Games in Salt Lake City. The IOC in 1999 banned its members from visiting cities that were bidding to host the games.

"It wouldn't make it a fair process" if sponsors tied themselves to one bid city, said Mark Adams, an IOC spokesman.

Supporters of the Athens bid for 1996 complained that Atlanta-based Coca-Cola Co., another TOP sponsor, helped bring the summer games to its city that year instead.

Coca-Cola "marketed like crazy" after Atlanta was chosen, and undertook a similar campaign during the Beijing games last year, said Susan Stribling, spokeswoman for Coca-Cola North America.

"It was great because it was our hometown, but we would have loved any of the cities because we're a global brand," Stribling said.

Private Roles

In Chicago, McKenna, 79, is a board member for the Lyric Opera of Chicago and Children's Memorial Hospital, and a trustee for the Museum of Science and Industry. He was involved with Chicago 2016 as a private citizen and is no longer on the committee, said Heidi Barker, a McDonald's spokeswoman.

McKenna declined to comment, citing the potential conflict between his roles, Barker said.

"He's a member of the community who happens to be chairman of McDonald's," said Gentile, who is now director of the Seton Hall University Sports Poll in South Orange, New Jersey. McKenna's son, also named Andrew McKenna, serves on the Chicago 2016 committee, said Lance Trover, a spokesman for the younger McKenna's campaign for Illinois governor.

President Barack Obama's wife, Michelle, is leading the U.S. delegation to the Oct. 2 IOC meeting in Copenhagen to support her hometown's bid. Fellow Chicagoan Valerie Jarrett, a senior adviser to the president, and television talk-show host Oprah Winfrey also will attend. The White House sent an advance team to assess security in case the president joins them.

Salad and Yogurt

McDonald's could use a Chicago Olympics and athletes' appeal to market its salads and yogurts as nutritious options alongside fast-food fare, said Larry Miller, an analyst with RBC Capital in Atlanta.

"They do sell products to kids, and they've been aggressive in trying to promote a more healthful view for moms to remove that objection," said Miller, one of nine analysts who recommend holding the stock, while 12 recommend buying it and none say sell. "The Olympics makes people feel better about making that choice."

The Olympics are unlikely to bump up McDonald's earnings or stock price, Miller said. Its first-half net income of $2.07 billion topped analysts' average estimate, while revenue of $10.7 billion fell short. About a third of 2008 revenue came from U.S. operations.

The stock has lost 9.8 percent this year. Analysts forecast that the shares will climb 6.9 percent to 25 percent in the next year, according to Bloomberg data.

"If the U.S. bid wins, McDonald's will get every single store in the area involved," said Michael Yoshikami, chief investment strategist at Walnut Creek, California-based YCMNet Advisors, which manages about $850 million including McDonald's shares. "It would be a promotional opportunity for McDonald's that is unprecedented since the Olympics was in Los Angeles."

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