BT to sign £80m Olympic sponsorship deal

The company is in exclusive talks with Olympics marketing chiefs after gaining an edge over its rival for the deal, Orange. Both companies have spent seven-figure sums on legal advice.

Negotiations with the 2012 organising committee, Locog, have lasted more than two years as the telecommunications deal is the most complicated of all the Olympic sponsorship packages.

Although BT will pay a substantial cash fee, most of its offer is "value in kind", kitting out the main Olympic stadium-and other venues with communications equipment. The company, which helped to fund the Olympic bid, now has "preferred bidder" status, although an announcement is not due until April.

BT will spend the next few months discussing with Locog the details of the service it needs to offer during the Game . In return it will have exclusive 2012 marketing rights in the UK - including use of the London Olympics logo - and first refusal on tickets and hospitality packages. The Olympics tie-in is thought to dovetail with the business strategy of BT, which last year launched a sports channel on its broadband BT Vision service.

A spokesman for BT said: "No decision has been made. Becoming an official sponsor is something we are interested in but any sponsorship undertaking on this scale includes a multitude of commercial considerations which need to be looked at in a lot of detail."

Meanwhile, Locog is expected in the coming weeks to announce an official airline, thought to be British Airways. So far it has signed up Lloyds TSB, EDF Energy, adidas and accountancy firm Deloittes as it aims to raise £ 625million from sponsors.

Tesco and Sainsbury's are vying to become 2012 backers in the "clothing and homeware" category. The official supermarket is expected to be prohibited from including Coca Cola products in its 2012 promotions, as the company is the Olympics' long-term global sponsor.

Olympics chiefs will be eager to complete sponsorship deals in case the worst economic forecasts for the UK are vindicated. Many sponsorship experts believe the smaller firms that Locog hopes to sign up in the next two to three years may be less enthusiastic during a downturn. But Michael Payne, a former marketing director of the International Olympic Committee, said: "The last major economic wobble in the Nineties had a negligible effect on selling partnerships for the (1996) Atlanta Games."

UK Sport has recruited military scientists from BAE Systems in a £ 1.5million five-year deal to help British athletes win Olympic medals. Olympians and their coaches will have access to 18,000 engineers specialising in aerodynamics, simulation and mathematical modelling. Cycling, sailing, canoeing and rowing are set to benefit.