When should a crisis lead to sponsorship termination?

Marion Jones and Nike. Tiger Woods and Nike. Joe Paterno and Nike. Soccer giant Wayne Rooney and Coke. Lance Armstrong and Nike.

Watch Nike Head Coach Phil Knight’s defiant eulogy for diminished [some would say disgraced] Penn State football coach Joe Paterno last winter and you can tell the man has heart and soul. Nike also has some of the highest-profile sponsorships around and in recent years that heart and soul had to deliberate on and decide when to cut loose a fallen star.

Knight’s nothing if not loyal, especially when the likes of Woods, Paterno, Armstrong, Jones and others brought the company millions upon millions of dollars. And, choice of endorsements is usually tied to their supposed character as much as their athletic excellence.

Armstrong survived cancer, started Livestrong and Nike came up with the yellow wristband idea. Paterno’s rolled-up chinos and throwback black Nike football shoes were iconic beyond college football. The ultimate irony? Nike named its company day-care center after Paterno, who was then caught up in a child abuse scandal by a former coach. These endorsements are bonds more than simple business relationships.

As my savvy colleague Chuck Beeler noted: “When to stick with them (publicly)? When to hold tight (and go dark for a while)? When to cut bait (and how long to wait before doing so)? Do they cut the person lose willing/proactively, or react/succumb to public pressure? It’s a juicy one.”

Juicy indeed. Nike is perhaps the most high-profile athletic sponsor, but down to the local level companies give money to people and organizations so each can benefit from the other’s reflection. This could be a non-profit whose ties to a local athlete sour; or a spokesperson and public face of a company who gets into trouble, potentially tarnishing the sponsor’s image.

There’s clearly no one answer. Nike stuck with Tiger after most of his sponsors abandoned him in the wake of revelations about multiple extra-marital affairs. Nike dropped Armstrong today after he resigned from Livestrong following his decision to plead nolo contendre to extensively documented doping allegations. But it held out for years, implicitly backing Armstrong despite more than a decade of whispered and then shouted accusations of his cheating.

Nike dropped Michael Vick when a jury convicted him of animal cruelty and the NFL suspended him. Nike re-upped when Vick re-joined the league. Remember Kobe Bryant’s trial for rape? He’s now the center of Nike basketball. Shaun White recently trashed his hotel room in a drunken outburst. Did his endorsements disappear?

A lot depends on your product mix and consumer base. A big beer company is going to drop a high-profile spokesman for one DUI than might an edgy line of clothing sold to 21-30 year-olds. An anti-cancer organization might be more willing to keep using Armstrong due to his survivor status and outstanding work with Livestrong than an organization promoting fair play and youth sports. And so on.

With today’s sophisticated polling, no doubt research plays a major role — and should. When does a sponsored athlete or actor become a negative for a company? How much patience can a company show to keep the revenue flowing from an endorsement before crossing the line of moral weakness and outright greed?

Consider the Rolling Stones, the first rock band to use corporate sponsors of their tour, in 1981. Admitted heroin users; multiple affairs, some public, and divorces; a stabbing death at their Altamont concert in 1969. A critic called them “corporate whores.” Nonetheless, their sponsors have included Sprint, Jovan, Budweiser, RadioShack, and Ameriquest, among others. The bad boys of rock ‘n roll actually benefit from the bad-boy image.

Obviously a case-by-case basis works. Nike stuck with Tiger and while he’s not back atop the golf world he’s just below the pinnacle. Paterno’s case never came to trial in a Nike boardroom because he died, but Nike still sponsors Penn State’s football coach, Bill O’Brien — to the tune of $350,000 a year — and the team.

This is one area of crisis management where planning ahead doesn’t really gain you much. It all has to be carefully weighed. Loyalty vs. nature of the crime or bad behavior. Revenue with vs. revenue without. Message sent maintaining the endorsement vs. message sent dropping it.

One aspect of this is sure: Nike, Rolex, Milk, Apple, Go-Daddy.com, and a thousand other brands that favor and endorse high-profile personalities, are surely going to study their character much more closely before signing up, and the out clause is going to have a hair-trigger.

The content of this blog is about crisis management and mismanagement in a digital age. It originates with Steve Bell, who spent 30 years as a journalist for the Associated Press and in four top editor positions at The Buffalo News. He is now Partner/Director of Public Affairs at Eric Mower + Associates, one of the nation’s largest independent advertising, integrated marketing and public relations agencies, with seven offices in the Northeast and Southeast. Learn more about EMA at http://www.mower.com. Steve’s blog is based on his own opinions and does not represent the views or positions of Eric Mower + Associates.


About steveoncrisis

The content is about crisis management and mismanagement in a digital age. It comes from Steve Bell, who spent 30 years as a journalist for the Associated Press and as managing editor and editorial page editor at The Buffalo News. He is now Partner/Director of Public Affairs at Eric Mower and Associates, one of the nation's largest independent advertising, integrated marketing and public relations agency with six offices in the Northeast and Southeast.
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