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This summer's Olympic Games in Athens is supposed to be one of the quadrennial events that will kick-start global advertising and marketing growth in 2004, according to WPP chief executive Sir Martin Sorrell. While the two others he identifies - the US presidential election and Euro 2004 - are running according to plan, Athens is in disarray.

Construction problems, speculation over participation by the full US team, questions over security arrangements and last week's bombs in the Greek capital have put the world's biggest sporting and marketing event under a cloud.

Fears were heightened last month when the International Olympic Committee (IOC) took out a £100m insurance package to protect itself should the Games be called off. It is the first time the IOC has taken out such cover.

Giselle Davies, director of communications at the IOC, denies that the insurance has been purchased specifically in response to concerns over Athens. 'The IOC has been looking to do this since 2001,' she says. 'We needed a policy to manage the risk inherent to our core business, the Olympic Games.'

According to Davies, the IOC plans to negotiate cancellation policies for future Olympics, including the 2006 winter Games in Turin and the 2008 summer event in Beijing.

In response to safety fears, Greece is investing £640m in security for the event, more than three times the amount spent on Sydney 2000.

'Athens will be ready to offer the world a safe and secure Games,' says Seraphim Kotrotsos, a spokesman for Athens 2004. 'We are working with NATO and the seven-nation Olympic Advisory Group to put in place the biggest, most comprehensive and best-funded security effort in Olympic history.'

Crisis simulation

Kotrotsos says organisers have held seven major exercises simulating a variety of crises, including biological and chemical attack. 'Whatever happens,' he adds, 'we believe we will be ready.'

Mike Lee, director of communications at the London 2012 bid, points out that cities hosting the Olympics regularly face such issues. 'There are major challenges in Athens, but there have been before at Olympic Games,' he says. 'Issues such as terrorism and security are faced by all sporting events and political gatherings. They almost come with the territory now.'

Kotrotsos believes part of the problem has been the intense media coverage of even the smallest details of the preparations. 'We expect close scrutiny; every host city has experienced it. But we also expect that the media focus will shift to the athletes and their events.'

Despite the IOC's confidence, sponsors such as McDonald's, Coca-Cola and Visa - with deals worth up to $85m (£47.6m) each - must be wondering what their return on investment will be if it all goes wrong.

Athens will be the 10th Games Visa has sponsored since signing up with the IOC in 1986. Colin Blount, Visa's vice-president in charge of Olympics project marketing, insists the problems in Athens have been exaggerated.

'We have had some concerns, but over the past six to nine months we have become increasingly reassured,' he says. 'Bombs going off in Athens are not good news for us or anyone, but it is clear they are isolated.'

The IOC denies that it has lined up a back-up city or alternative locations for events if necessary. 'Our view is that the Games will be successful and everything will be ready on time,' says Davies. 'There is no question that the Games will be in Athens, opening on 13 August. They cannot be moved elsewhere.'

For sponsors there is little choice but to take a wait-and-see approach and roll out marketing as planned. Blount points out that even if there are problems with the Games, they will have little effect on sponsors, as most of the investment and promotional work is completed before the start of the event. 'At this stage, we have no option but to assume it will go ahead,' he says. 'From a marketing perspective, we have done what we need to do to leverage our sponsorship.'

That said, Visa is still making preparations for a worst-case scenario at this summer's Games. 'We would be naive if we didn't have contingency plans,' Blount adds. 'Our major concerns are for our staff in Athens.'

Future sponsorship

The success of this summer's Games has much wider implications for the IOC, which nets an estimated $890m (£500m) from its total sponsorship programme. An incident-free Athens Olympics is crucial for the IOC to maintain the prestige and attractiveness of the event, allowing it to charge future sponsors a premium rate.

'At the moment it is more damaging for the Greeks; it is not so embarrassing for the IOC brand and the Olympics as an event,' argues Richard Berry, managing director of sponsorship research firm S-COMM. 'But if the Games don't go smoothly, there will be a negative impact on how brands view the Olympics as a marketing vehicle in the future.'