Surviving a Sports Scandal: Brand Lessons from Past Incidents

Ryan Lochte being dropped by four of his major sponsors makes him the latest in a string of high profile athletes and bodies that have seen premature ends to their sponsorship agreements. Today’s post analyzes some of the incidents from the recent past and looks at some strategies that brands can employ in order to mitigate the damage arising from transgressions from their endorsers.

Starting with the latest story, we at BWA are of the opinion that Speedo’s reaction to the Ryan Lochte controversy was a mastercalss in damage control. Not only did they swiftly drop the swimmer off their roster, they also donated $50,000 of his fee towards the welfare of young children in Brazil. Their quick action helped insulate the brand from any bad PR that might have reached them through the athlete’s off-field antics.

The same can be said about Nike terminating their relationship with Manny Pacquiao for his homophobic comments or for Adidas and Nestle ending their support for the IAAF in response to the doping controversy. By doing this quickly, both brands were able to ensure that consumers all over the world understood what they stood for and how their values do not condone such wrongdoings.

That being said, there have been cases in the past where brands weren’t as trigger happy in breaking up with the endorser in question and in a lot of cases that has had a lot to do with the extent of the offence that was committed. For example, Nike re-signed Michael Vick in 2011 after dropping him when the animal cruelty charges came up. Similarly, Nike has currently suspended, and not ended, its relationship with Maria Sharapova thanks to her suspension with regards to taking performance-enhancing drugs. This demonstrates that the brand does believe that while the tennis player’s actions were unlawful, it also believes in the athlete’s honesty in her statement that her taking the drug was indeed a mistake. Furthermore, brands such as Adidas and Visa put out strong statements with regards to news about the financial irregularities at FIFA. 

When one dives deeper into the reasons by which brands seem to evaluate their damage control strategies, patterns do seem to emerge. For example, Nike dropped Lance Armstrong when he confessed to taking performance-enhancing drugs, however, both Tiger Woods and Wayne Rooney got off easier (with the former experiencing his fee getting halved) when details of their infidelity emerged. This goes to show that the level of offences and whether they are committed on or off the field matters to most brands. 

Another criteria for evaluating a brand’s position in the face of controversy can be looked at by observing the brand’s values. This would explain why Kellog’s did not renew their relationship with Michael Phelps when a picture of him smoking Marijuana emerged back in 2009. However, during that period, Speedo decided to continue their association with Phelps, going to show that a relatively harmless, one time lapse isn’t considered as bad as a one time lapse that almost causes an international incident and tarnishes a country’s reputation.

Perhaps the most the most interesting example comes from Adidas who sponsor FC Barcelona striker Luis Suarez. In last year’s ‘There Will Be Haters’ campaign they referenced the biting incidents that Suarez has had over the years and said that people will always have a dislike for players of his caliber and there will always be some level of name-calling involved. In stark contrast to Adidas’ reaction, one of Suarez’s other sponsors ended his endorsement deal right after his 2014 world cup episode. 

With that, here are some strategies that brands can employ to make sure that they can emerge somewhat unscathed from the situations caused by their endorsers -  

•    Check for brand fit – This means that brands should conduct a thorough examination of the endorser in question, including any past behaviours that might cause backlash with consumers
•    Act Fast – Today’s world is one that requires instant gratification, news travels fast and consumers will look for the brand’s statement as soon as an occurrence is reported. Brands always need to have a say on the matter, even if it means telling consumers “We’re looking into it”.
•    Have an ironclad contract – A contract should be one that includes a moral dilemmas clause, a suspension clause and should not contain front loaded payments. On the other hand, they should have payouts over years and have financial liquidation measures in case the endorser defaults on any commitments.  

Pan Am 2015: ticket sales are up, sponsors' impression values are through the roof, but what about the athletes?

As the 2015 Pan Am games draws to a close, the tide of excitement is at an all-time high. Things started out slow however, with only 850,000 of the available 1.4 million tickets accounted for just days before the grand opening on July 10th at Toronto’s Roger’s center, or the “Pan Am Ceremonies Venue” as it will be known for the span of the Games in compliance with various sponsor exclusivity agreements. Premier sponsor CIBC even facilitated the sale of tickets at a 25% discount days before the event, with dual motives of increasing attendance and consequently upping exposure for their brand.

“Pan-Ampathy” didn’t last long however, as the hype surrounding Canada’s outstanding medal performance intensified, causing ticket sales to jump more than 300,000 since the opening ceremonies. With tickets sales passing 1 million last week, sponsors and Pan Am organizers alike are happy with the rising turnout. Ticket purchases took another jump when it leaked that international superstars Kanye West and Pitbull would be performing at the closing ceremonies, the product of a value in-kind donation by Pan Am partner Live Nation who is footing a portion of the booking fees.

All in, Pan Am organizers expect revenue from ticket sales to reach $40 million, with sponsorship and government subsidies meant to help cover the remaining $2.5 billion price tag of the Games.

Pan Am fever has been a boon for social media and television networks as well, with roughly 16 million Canadians, or 46 percent of the population, tuning in to watch the multi-sport event according to a release by the CBC and its partners. The success has caused CBC up its TV coverage and online livestreaming of the Games, adding 12 more hours of coverage to its original broadcast schedule.

According to organizers, Pan Am 2015 has been a trending topic globally with over 534,000 social media mentions and 1.82 international impressions. Pan Am staff claim that the website has received 7.2 million hits and counting and the Games official app has been downloaded more than 135,000 times in the past two weeks.

With the breadth of local and international exposure, one would expect some of the benefits to trickle down to the hardworking athletes around which the event is built. However, according to Team Canada javelin competitor Liz Gleadle from Vancouver BC, this is not the case.  Gleadle threw an impressive 62.83 meters to win Pan Am Gold this past Tuesday. When asked about any financial kickback resultant from her win, the answer was a little sobering

“None.” She replied.

Unlike the Olympics, there aren’t any financial rewards for placing in the top three at the Pan Am or Commonwealth games. Any money that goes to the athletes does so through sponsors, and according to Gleadle, meaningful sponsorship is not always easy to come by at this level.

“I don’t have any [sponsors] yet. No one has approached me. It’s been a tough road but I am hoping that the Pan Ams might generate some interest”.

To those familiar with athletic partnerships, Gleadle’s difficulty in securing post medal sponsorship isn’t surprising. “The Pan Am games simply doesn’t provide the type of exposure and worldwide appeal the sponsors with the big bucks are willing to throw cash at”, explains Brian Cooper president of S&E Sponsorship in Toronto.

Gleadle said she didn’t know about the post competition experiences of fellow medal winners,  “I’m in the U.K right now and [I] don’t know what is going on with the other athletes post comp. Hopefully they get something. Some athletes easily catch sponsor’s interests, others don’t.”

Overall, Gleadle is positive and hopeful, still riding out the high from her Gold victory and is not letting the lack of funding affect her outlook, “I’ve received a lot of great press though! And a lot of people are recognizing me and giving me their congratulations. That means so much to me”

If only a pat on the back paid for a new pair of training shoes.

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-Erin Beaudoin