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 Before social media demanded instant responses, sponsors often
waited weeks or months before severing ties with an athlete - giving
them the benefit of the doubt.
With so much invested in a global sponsorship industry IEG estimates
at $60 billion, sponsors now scramble to avoid the taint of scandal
so athletes caught doping at the Olympics this summer should also
expect a quick end to their lucrative contracts.
"Given the attention that use of performance-enhancing drugs in just
about all sports has garnered over the last several years, sponsors
are going to cut as quickly as they can," said Brian Socolow, head
of the sports practice group at Loeb & Loeb law firm, which has
represented both athletes and companies in endorsement deals.
"They don't want to get caught sponsoring the next Lance Armstrong,"
he added, referring to the disgraced cyclist who was stripped of
seven Tour de France titles and banned for life in 2012 after a U.S.
anti-doping probe. Armstrong later admitted using
performance-enhancing drugs in a television interview.
While Armstrong's story took years to play out as he initially
denied reports of his drug use, Sharapova quickly called a press
conference on Monday to say she had tested positive for meldonium,
which she said she was taking to treat diabetes and low magnesium.
The drug was only banned by the World Anti-Doping Agency as of Jan.
1.
Sports apparel giant Nike Inc <NKE.N> and German carmaker Porsche, a
Volkswagen AG <VOWG_p.DE> unit, responded by suspending their
sponsorship deals, while Tag Heuer, owned by French luxury goods
group LVMH <LVMH.PA>, ended talks to extend a contract that had
expired in December.
Sponsor decisions on whether to stick with a spokesperson or team
are driven by money, industry officials said. If they feel the
sponsorship can still work, companies stand by their man, woman or
sports group, like many have done with soccer's world governing body
FIFA or the International Olympic Committee through their respective
scandals.
Industry executives agreed Sharapova was smart to get in front of
the news, announcing the positive test herself and apologizing for
her mistake.
As a result, she will likely get a second chance with the public and
sponsors alike, industry executives said. However, a lengthy
suspension could in effect end her playing career and damage her
status as one of the highest paid off-field female athletes. Forbes
estimates her off-court career earnings at more than $200 million.
"In many ways, she's the ideal spokesperson for a brand. She's very
attractive, highly successful and very competitive," said San Diego
State University marketing professor George Belch, who has used a
Harvard case study about her in his classes to tout her ability as a
spokesperson.
Sharapova's failed drug test at January's Australian Open, one of
four annual Grand Slam events, will likely lead to a ban for the 28
year old. Still ranked among the top players, she has won five Grand
Slam titles in her career.
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While some critics argue a double standard exists for female
athletes, several industry officials said Tiger Woods' sex scandal
or the rape allegations against Kobe Bryant in the past would both
play out differently in today's social media-driven culture.
Issues companies may have waited out not long ago, now demand
immediate attention, and some believe it being an Olympic year only
raises the pressure to move fast.
Consumer products companies like those associated with Sharapova
have even more reason to move quickly to distance themselves from
bad news, industry officials said.
"It takes a lot of time and money to build a lifestyle brand," said
Gary Fechter, an attorney at McCarter & English who has represented
companies in sponsorship deals for almost four decades.
And for sponsors that may have felt they were overpaying Sharapova,
her positive drug test offers a "back-door out," he said.
A source close to the tennis star said her team was encouraged that
Nike and Porsche simply suspended their deals rather than
terminating them, suggesting the door may be open to reopening them
in the future.
In the short term, however, Sharapova's standing will surely take a
hit.
Her "trust" scores in an index created by the Marketing Arm for
clients to measure celebrity influence will likely take a
significant dip, managing director Matt Delzell said.
Sharapova currently ranks in the top third, in the range of former
New York Yankee all-star shortstop Derek Jeter, comedian Seth Myers
and singer Demi Lovato, according to the unit of the Omnicom Group
Inc <OMC.N>, which books sports personalities for companies.
(Reporting by Ben Klayman in Detroit, Additional reporting by Peter
Graff in London; Editing by Lisa Shumaker)
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