SACKED

Celebrity athletes have taken some serious hits lately, getting caught in any number of unflattering situations. And marketers who’ve chosen them as sponsors are scrambling to minimize the fallout.

It’s been a tough season: Atlanta Falcons quarterback Michael Vick went to the dogs. San Francisco Giants left fielder Barry Bonds set the all-time home run record under a steroid cloud. And several Tour de France competitors were again accused of doping.

When Vick was indicted on charges of being involved in dogfighting, he crossed one of those inviolable lines that even ardent football fans have difficulty fathoming. Advertisers reflected the public outcry about Vick’s perceived outrage, with Nike, Reebok and Rawlings quickly suspending their respective associations with the football star.

Vick’s deals with the three companies were estimated to be worth $7 million annually. Nike’s was the biggest.

Vick also had a deal with Upper Deck, which pulled his memorabilia and cards from its Web site.

In the high-stakes game of athlete sponsorships, marketers roll the dice on every deal. So it’s vital for them to chart a ready exit strategy in case some kind of personal scandal threatens to blacken the brand’s public image by association.

Nike killed a multimillion-dollar ad campaign to promote Vick’s new signature shoe, postponed production and suspended him without pay. Reebok pulled Vick’s jersey from retailers. None of them ditched Vick permanently, but that situation was subject to change at press time after the quarterback entered a guilty plea.

If Vick does play pro football again, most observers agree that short of a character transplant, he won’t have a commercial comeback in his playbook. “I think he’s going to disappear,” says Jeff Bliss, president of Javelin Group, a sports marketing company. “He did something reprehensible. There are billions of people who have pets and they see dogs as childlike.”

Vick stands in a long line of marketable sports celebrities who went south, like O.J. Simpson, who once sprinted through airports for Hertz before he stood accused of killing his wife, and Mike Tyson, who drank Diet Pepsi in a TV ad with then-wife Robin Givens before he went to jail for rape and then chewed on Evander Holyfield’s ear. But sports endorsements remain a vibrant market.

Nike alone spends $1.9 billion on advertising and promotion every year.

At the top of their games, New York Yankees shortstop Derek Jeter currently draws $7 million in annual endorsements and teammate Alex Rodriguez earns $6 million.

The overall sports sponsorship market is projected to hit $9.9 billion this year, a 10.8% jump over 2006, according to sponsorship research firm IEG.

REDUCING THE RISKS

Many advertisers court risk in relationships with athletes to distinguish themselves in the media despite the obvious dangers. “Some people recognize that controversy creates a louder story quicker than a sustained effort at being a good guy,” says Phil de Picciotto, president, athletes and personalities at Octagon, a sports and entertainment consultancy.

While he hasn’t seen any general disinclination among clients to involve star athletes in marketing campaigns, de Picciotto believes there’s an acute sense of caution in the air. Octagon is being consulted much earlier in the planning process to offer its opinions about the potential risks of athletes being considered for a particular campaign.

The typical modus operandi of prospective sponsors also has changed. “Companies tend to be focused on the short term,” de Picciotto says. “They want to be able to exit a relationship that’s gone awry and they want shorter-term relationships.”

But a crucial element is the research needed to detect pitfalls before signing an athlete. “The agencies need to speak to people in the industry and get a 360-degree view so they have a better sense of the individual and have a crisis plan in place,” says Javelin’s Bliss.

Javelin recommends a multiple-athlete approach to its clients, according to Bliss, who points to Gillette’s current deals with golfer Tiger Woods, tennis star Roger Federer and French soccer standout Thierry Henry. “Companies need to look at this as a strategic, not a tactical move,” he says.

Detailed background checks on athletes being considered for lush deals are a necessary pre-emptive measure, according to consultants. Javelin pushes agencies to conduct “much more thorough” investigations that are “not just criminal but personal checks,” Bliss notes.

And companies are carefully scrutinizing morals clauses included in their agreements these days. William Heberer, a partner in the law firm Manatt, Phelps & Phillips, says the nature of the clauses varies from broad behavioral bailout language to very specific parameters, depending on the leverage of the parties involved. But there’s no question about the purpose.

“It’s a big loophole or a big hammer the sponsor holds over the athlete to end the relationship,” he says. “If [the athlete’s] association with the brand is no longer a positive one, the brand is going to want an exit.”

Morals clauses are already one of the most contentious negotiation points in athlete sponsorships deals, and Heberer says that will only intensify in the post-Vick era: “You are certainly seeing companies looking at these provisions much more closely and being more rigorous in their standards. Athletes are likely to find sponsors tougher with these standards going forward.”

But consultants say they don’t detect any real reluctance among clients to sign athletes for sponsorships, and they don’t anticipate anti-athlete angst to prompt sudden tactical shifts.

“I don’t think much changes. For generations there have been athletes getting in the headlines,” says David Grant, a principal at Velocity Sports and Entertainment. “We don’t see people shying away from the NFL because of the behavior of a few bad apples.”

Marketing consultants say they’re persistently advising clients to spread their risk with multiple sponsorship deals.

Velocity designed a program for FedEx aimed at avoiding sponsorship problems which eliminated protracted associations with individual athletes. For the past several seasons, FedEx Air and Ground has tied its core business to the outstanding weekly performances of NFL players, who are selected by fan vote online.

“We’ve really minimized the risk because we’re linking to the athletes for this particular week,” Grant says. “If someone’s in trouble, they’re probably not on the field.”

An athlete’s character has become an important aspect of the equation, he adds. Narrowly targeted campaigns attempt to match brand attributes with the player.

Most experts concur that in the prevailing glare of the paparazzi environment, high media profiles fueled by stratospheric salaries make athletes targets of intense public scrutiny for both their on-field performance and off-field peccadilloes.

“There are degrees of bad-boy imagery,” says consultant Bob Cramer. “Something like riding motorcycles is one thing. Something that’s immoral is another thing.”

A murder accusation crosses that line, as the case of Baltimore Ravens linebacker Ray Lewis demonstrated several years ago. Lewis pled guilty to a misdemeanor in the double-homicide case. But his sponsors summarily dropped him and he was conspicuously absent from the Wheaties box that featured a group of his Ravens teammates after their Super Bowl triumph.

THE BONDS BROUHAHA

As a marketing executive for MasterCard, Cramer pulled the plug on sponsorship negotiations with Barry Bonds two years ago when it became clear that the slugger would be mired in baseball’s growing steroid scandal for a long time.

Some things clearly are forgivable in the realm of public opinion, and others are not, with star athletes regularly putting themselves in crises that can put the kibosh on a marketing deal with the suddenness of a slam dunk.

“You can do whatever you want and come back and do pretty well,” Javelin’s Bliss says. “But when it comes to cheating, that’s a whole different thing.”

As the Vick case unfolded, Bonds set the landmark home run record that might have elevated him to near-mythical stature. While ESPN hyped the impending milestone, one primary Major League Baseball sponsor — Bank of America — refused to participate in promotional plans involving the record.

Just five years ago Bonds made the Wheaties boxes as National League home run champion. But he won’t be seen on cereal boxes anytime soon.

“If everything was clean and pure, this would have been one of the biggest marketing bonanzas we’ve ever seen,” says Cramer. “He may get the benefit of the doubt over time, but it doesn’t erase his abrasive personality.”

Last year, Bonds reportedly made $2 million in endorsement fees on top of his $15.8 million salary. Shattering the single-season home-run record in 2001 spawned short-term deals with KFC parent Yums Brands and discount brokerage Charles Schwab. But since 1999 he’s made only two notable endorsements, for Fila’s spikes and Franklin Sports’ batting gloves.

CUTTING LOSSES

Meanwhile, the NFL is set to kick off its annual player-image campaign, featuring five socially conscious players yet to be named. “Often the media will focus on a couple of players,” says NFL spokesman Brian McCarthy. “Collectively, we’re focusing on a lot of players working with kids or visiting the military.”

And as one star fades, others begin to glow. Nike’s “Quick Is Deadly” campaign for its new Zoom running shoe includes a striking TV spot featuring San Diego Chargers running back LaDainian Tomlinson. Tomlinson is a compelling figure for sponsors, not only for the athleticism depicted in the Nike ad, but for his image as a young athlete who’s active in his community.

The Vick debacle won’t turn off the NFL faithful or the advertisers who seek their favor.

But baseball’s steroid scandal, with Bonds as its all-too-public poster boy, may be having a dampening effect on sponsor interest. “If you’re really conscious and concerned about it, you stay away from baseball personalities right now,” says Marketing Evaluations’ executive vice president Henry Schafer.

Schafer feels unpredictable shifts in the public’s perception of an athlete is a mercurial element in the mix: “The risk you run when you connect yourself with a high-profile personality is how that personality is trending over time.”

Several publicly chastened athletes have managed to keep sponsorship deals and recoup their public images in recent years. Nike stood by Los Angeles Lakers guard Kobe Bryant after he was accused of rape — Coca-Cola didn’t — and his jersey remained among the top sellers of NBA stars. Nike also kept its links with Lance Armstrong in the wake of doping accusations after his Tour de France triumphs.

Nike declines to discuss what standards it applies to its athlete endorsements. “We really don’t discuss how we determine which athletes we work with,” says Nike spokesman Brian Facchini.

Some sports personalities have a commercial endurance based on a charisma that transcends their personal shortcomings. Despite media reports alleging his predilection for gambling, retired NBA star Michael Jordan remains the most popular American sports figure, ahead of Tiger Woods, according to Marketing Evaluations research.

Schafer points to another former NBA great, Magic Johnson, as the prime example of an athlete who turned his HIV-positive predicament into a public relations coup through the electric appeal of his affable personality.

Some observers think on-field performance trumps character in most fans’ perceptions. “I don’t believe that the character card plays as well as one might think,” says marketing consultant Richard Laermer.

On-field performance may impress the purist fan, but companies often seek personalities who spawn their own off-field hype as well. Observers point to former NBA forward Dennis Rodman, who played with unbounded intensity on and off the court.

“Being famous is about being memorable,” says Laermer. “I think they’re looking for characters. Buzz is about who talks about who.”

And buzz clearly sells. So it’s probably not surprising that Kobe Bryant’s jersey was the top seller among NBA player jerseys last season, and bad boy Allen Iverson’s was fourth best.

The act of burnishing a company’s public façade with an athlete’s face requires strategic forethought. “It all has to start with the company and the brand and what you’re trying to accomplish,” Cramer says. “The whole idea of sponsorships is to latch onto a large, passionate consumer base.”

Striking that passionate chord through links to a colorful sports celebrity holds endless appeal for sponsors, until there’s a disconnect between the athlete’s radiant public persona and a darker side that unexpectedly emerges.

“The private persona can be very different from the public persona as long as the private one doesn’t become public,” says Javelin’s Bliss.

With the media in pursuit, companies need recourse to a set of option plays any heady quarterback would call under pressure.

THE BUZZ ABOUT BECKHAM

British soccer star David Beckham personifies the yin and yang in sponsorship risk factors. He’s a sports celebrity with lots of glitz, despite questions about how much game he’s still got.

Hailed as the latest savior of professional soccer in America, Beckham signed his 10-year, $250 million contract with the Los Angeles Galaxy on the downside of a career that saw him riding the bench through much of the last two seasons with Real Madrid. Incentives tied to broadcast rights and ticket sales could boost that figure considerably.

“The Beckham case is unique in that the $250 million is partly for his soccer skills, but it’s also for his off-the-pitch marketability,” comments Eelco van der Noll, senior vice president for event sponsorships and marketing at promotions agency Momentum Worldwide and the former head of marketing at FIFA, the international soccer organization. “If he were to fail on the pitch, he would undermine his own credibility.”

But Beckham’s already proven he’s an impact player here off the field: The Galaxy sold 250,000 David Beckham jerseys before he ever struck one of his signature free kicks. That covers the $5.5 million base salary the lackluster team is paying him to play this season.

Beckham is known by two-thirds of American sports fans, but only 14% say they like him, according to Marketing Evaluations research. “It’s just not a situation where he’s got a high level of likability,” says executive vice president Henry Schafer. “He’s got to earn that, to show he can still play and help turn the franchise around.”

Few sports fans in this country have seen many of Beckham’s matches in his storied career, but they know about him and his celebrity wife, the former Posh Spice.

But their interest won’t be sustained by glitz alone. If Beckham can’t bend his shots past goalkeepers as consistently as he used to, he could become a commercial Kohoutek for sponsors along for the ride.

Marketing consultant Richard Laermer puts it this way: “If he doesn’t do really well on the field, he’s going to be the biggest flame-out in sports history.”
— Richard Tedesco