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A gay rights activist stands with a banner near the Olympic countdown clock in front of the Kazan Cathedral in Central St. Petersburg February 5, 2014. With the Winter Olympics only two days away, campaigners have urged major corporate sponsors to speak out about the way Games host Russia treats gay people. (Maxim Zmeyev/REUTERS)
A gay rights activist stands with a banner near the Olympic countdown clock in front of the Kazan Cathedral in Central St. Petersburg February 5, 2014. With the Winter Olympics only two days away, campaigners have urged major corporate sponsors to speak out about the way Games host Russia treats gay people. (Maxim Zmeyev/REUTERS)

Putin’s Games

AT&T scolds Russia for its anti-gay law. Will it be a game-changer for sponsors? Add to ...

Companies pay millions of dollars to be associated with the national pride, aspirational stories and excitement of the Olympic Games. But this time around, that investment has also bought them an unwelcome association with controversy.

Russia’s new law forbidding homosexual “propaganda,” passed just seven months before the start of the Games in Sochi this week, has drawn global outrage and greater attention to human rights concerns in the host country. At the same time, a growing chorus of voices has called on the International Olympic Committee’s top sponsors to speak out more forcefully in support of Russia’s besieged gay community.

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This week, a U.S. sponsor joined that chorus: AT&T Inc. released an unprecedented corporate statement condemning Russia’s new law in the clearest terms. While other sponsors have released more overarching statements about their support for diversity, they have tread more lightly in discussing the law directly.

AT&T, America’s second-largest mobile phone carrier, is not an IOC marketing partner, but has had a narrower sponsorship agreement with the U.S. Olympic Committee for three decades.

“Russia’s law is harmful to LGBT [lesbian, gay, bisexual and transgendered] individuals and families, and it’s harmful to a diverse society,” AT&T said in a blog post on the subject, which also stated that the company wants “to be on record with our support for the LGBT community.”

The post effectively throws down the gauntlet to other high-profile sponsors, urging “others involved with the Olympic Games” to take similar action.

It’s likely an unwelcome challenge: Sponsors have a lot at stake. The IOC’s top-tier marketing partners can pay as much as $100-million a year in multiyear deals to be associated with the Olympic movement and all the emotional stories and global exposure it gives them. Sponsors of Canada’s Olympic team have paid roughly $2-million to $5-million a year for national partnerships, according to a person with knowledge of the deals.

That’s a major investment in the use of intellectual property, like the universally recognized Olympic rings, associations with athletes and the chance to host top executives and clients at a world-class sporting event.

Done right, it is also a perfect opportunity to latch on to the emotional power of the Olympics: The tear-jerking stories of the moms behind the athletes propelled Procter & Gamble Co. to $500-million in additional sales that the company attributes to its global sponsorship during the 2012 London Games.

Being called out in relation to human-rights concerns, in short, is not what advertisers are paying for. But advocates believe it’s something they should be doing with much more gusto.

“We believe strongly that they have a moral obligation to do so,” said Fred Sainz, vice-president of communications and marketing for the Human Rights Campaign in Washington, D.C. HRC was among 40 rights organizations – including Amnesty International, GLAAD and PEN American Centre – who wrote a letter calling on global sponsors such as P&G, Coca-Cola Co., McDonald’s Corp. and others to oppose Russia’s new law. It has encouraged them to denounce the violence that has been documented against gay people in the country and to use their economic clout with the IOC to urge it not to choose host countries where concerns about equality are present, among other suggestions.

The group praised AT&T’s move.

“They also have, in my opinion, an economic interest: Consumers’ decisions are increasingly informed by factors outside of product quality ... [by] how individuals perceive a brand,” Mr. Sainz said. “They can make a lot of people happy by choosing to be on the right side of history.”

Of course, many of these multinational companies also do business in markets where attitudes toward the gay community are more ambivalent – or outright hostile. At the same time, though, popular support for gay rights has progressed rapidly – “more in the last two years than 45 years since Stonewall [riots in New York],” Mr. Sainz said. That means a growing number of consumers who likely do not look kindly on companies that seem unwilling to speak out on the issue.

In response to questions about AT&T’s move and their own plans for response, some of the IOC’s top sponsors reiterated their commitment to diversity, but many did not address the law directly.

“We expect the IOC to uphold human rights in every aspect of the Olympic Games,” said a statement from General Electric Co.

Both Visa Inc. and McDonald’s said in separate statements that they are aware of people calling for sponsors to speak up about the Russian legislation.

“McDonald’s supports human rights, the spirit of the Olympics and all the athletes who’ve worked so hard to compete in the Games. We believe the Olympic Games should be open to all, free of discrimination, and that applies to spectators, officials, media and athletes,” the restaurant chain’s statement said.

“Visa believes the Games should be open to all, free of discrimination, and that applies to spectators, officials, media and of course, athletes,” Visa’s statement said.

A representative for P&G Canada declined to comment on the issue.

During the Super Bowl broadcast in the United States last weekend, Coca-Cola – an Olympic sponsor since 1928 – launched an ad that featured America the Beautiful sung in different languages – to celebrate the country’s diversity. It included a five-second shot of a gay couple roller skating with their daughter, and will run through the Olympics. It earned praise from GLAAD.

“We have long been a strong supporter of the LGBT community and have advocated for inclusion, equality and diversity through both our policies and practices. We do not condone intolerance or discrimination of any kind anywhere in the world,” the company said in a statement.

Cynical observers could argue the issue is no more than a passing headache for marketers. Human-rights concerns were raised during the Beijing Olympics, for example, and advertisers’ brands were not hurt by being associated with those Games.

Mr. Sainz disagrees. “This is not new or novel, it’s just that Russia has created a perfect storm” with the passage of the law, he said. “IOC sponsors are Sochi sponsors. They simply can’t ignore it.”

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