Transfer Pricing Associates

Armstrong - Sports Sponsoring Impacts the Value of Brands

post Friday October 26, 2012

Rider; FreeDigitalPhotos

As a follow up on the Great Scandal which surrounds Lance Armstrong, many of his high-profile sponsors decided to retrieve. Not all sponsors abandoned the 7 times prize winner and Olympic bronze medalist immediately, since Mr. Armstrong’s agent, Bill Stapleton, first declared that “Lance’s primary sponsors have been incredibly supportive and have remained supportive throughout”. Though Nike, Anheuser-Busch Inbev and Trek did not act as impulsively as the Dutch Rabobank that immediately upon the breach of the story decided to retrieve from sponsoring, they announced last week to drop the cyclist from their sponsoring list nonetheless. In doing so, Nike took a 180 degree turn from its previous statement in which it was “incredibly supportive”.

Armstrong is one of the best paid athletes. His income through endorsements was estimated at $15.3m from sponsors. Since 1996 Armstrong has been a face of Nike and played a crucial role in Nike’s expansion into the cycling industry.

Lance Armstrong founded the Livestrong brand, which is part of the Lance Armstrong Foundation, an organization for the improvement of life quality of individuals suffering from cancer. By cheating he could have put also this institution at risk, because many of his personal sponsors likewise support Livestrong. However, the sponsoring brands retrieved only from the supporting of Armstrong himself, and not that of the Foundation.

After the incident, Armstrong’s images were retrieved from an Australian cancer treatment center which cooperated with Livestrong as well. His acts also had an effect on the sport’s credibility, as it appears from the Rabobank’s motivation for ending the financial support of a European team. The Dutch bank declared that it is “no longer convinced that the international professional world of cycling can make this a clean and fair sport.”

Lance Armstrong’s case is an example of how remarkable sport talents can influence the value of brands. The sponsors, even those with a long history of cooperation, took distance from Lance, driven by the fear that the association with him might shed a negative light on their brands, as it might suggest that the sponsors agree with the sportsman’s wrongdoing. Paul Swangard, managing director of the University of Oregon’s Warsaw Sports Marketing Center said that “Brands forge partnerships with athletes for the benefit of shared equity, and Lance as a brand is probably just not worth the trouble for anyone who is not currently attached to him.” He also added that this might mean that Armstrong’s marketability has plummeted forever.


The Washington Post

The Washington Post

The Washington Post

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