When Sponsors Go Rogue

In our last post, we examined a few instances of brands dealing with the fallout emerging from their sponsored properties falling on the wrong side of law and/or public opinion. This time, let’s take a look at the other side and see what properties do when the brand that’s sponsoring them meets the same fate. 

Northern Rock was the jersey sponsor for Newcastle United from 2003 to 2012. In 2007 the bank had to be bailed out by the UK government after the sub-prime mortgage crisis, the aftermath of which led many to question the ethics of such financial institutions spending public money on sponsorships. The outcry was heightened further when the bank spent £10 million to renew the deal in 2010. The backlash did hurt some of the PR surrounding the club, which at the time was not finding great amounts of success on the pitch. When the bank finally decided to end the deal, the club was left looking for sponsors within a very short time frame considering that jerseys for the new season had to go into manufacturing.

The case with Manchester United was not very different when they had to wear the AIG logo on shirt for an entire season, despite the bank’s reputation suffering massive blows due to the multiple bailouts it was handed by the US government.

Closer to home, NASCAR had to state that they needed more oversight into sponsor selection when the NRA was announced as the naming rights partner for the Sprint Cup event. While the political aspect of this deal is something that we as a sports marketing firm cannot comment on, the fact that the deal was announced mere days after the Sandy Hook massacre was a definite blunder for all parties.

While these incidents demonstrate that sponsor selection can sometimes lead to unhappy fans, sports properties and teams also need to make sure they are financially viable, which thus requires them to often handle situations such as these delicately. The best way to navigate such proverbial minefields is to know and build relationships with their consumers, or in this case, fans. Keeping an active dialogue with the fan community and conducting research are two ways that will help keep fans updated and will give the property enough time to craft their justification for controversial sponsorship decisions.

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.  

$$$ Dollar for Dollar $$$

 Viewing sponsorship as a cost-effective method of achieving specific marketing objectives, has been the driving factor behind the dramatic increase in Naming Rights over the last decade. Sponsorship marketing is particularly valuable because of its effectiveness in introducing new products, helping new or established products contend with competitive brands, and increasing corporate brand awareness. Increasing brand awareness is a primary factor behind a significant sub-trend within the sponsorship industry over the last several years. It has been proven that "Dollar for Dollar" Naming Rights is the best investment a corporation can make.

Corporate Benefits

• Enormous brand exposure
• Strong connection to iconic civic facility
• Demonstrate commitment to community
• Increase sales through direct access to property's audience and prime hospitality opportunities
• Ability to target specific demographic groups/audience
• Credibility (sponsorships have greater credibility than straight advertising)
• Interactive marketing platform

Property Benefits

• Generate immediate and annual revenue
• Build image/profile of property through linkage with prestigious corporate entity
• Create marketing synergies for an expanded marketing reach
• Eliminate various line-item expenses

General Naming Rights Benefits

• Impactfull branding exposure
• A prestigious association with the property and its tenants
• the ability to rise above the advertising clutter normally associated with sports and entertainment properties
• The opportunity to pre-empt a company's competition from an association with the property 
• The potential for lucrative direct and indirect business relationships 

Naming rights occupy the highest point on the sponsorship pyramid and typically carry with them a number of major benefits for all parties included. This is why we will continue to see these investments increase across industry categories, sports and entertainment venues, events and properties around the globe.