How to Achieve Sponsorship Loss: What We Can Learn from Ryan Lochte and the Court of Public Opinion

With seemingly the whole world (okay, maybe just the U.S. and Brazil) engrossed in the Ryan Lochte scandal, one of the dominos to fall on the swimmer’s formerly-silver head was the loss of sponsors. Which begs the question: How does an athlete get dropped by a sponsor? Based on recent years in which the likes of Adrian Peterson and Ray Rice went through the scandal carousel, we’re closer to an answer. 

In the athlete world, the court of public opinion is the judge, jury, and executioner when it comes to a scandal. While the legal system in theory teaches “innocent until proven guilty,” the 24-hour news cycles feeds on teary-eyed press conferences, conspiracy theories, and the fall from grace that every sadistic sports fan loves. Regardless of evidence, when an accusation comes out an athlete’s image is instantly tarnished. And unfortunately, the phrase: “____ is accused of ______” is usually followed by: “_____ has been dropped by sponsor______.” In an “era where consumers are much more demanding of sponsors and want to hold companies to the highest of standards,” executives must be seen acting quickly—even without a presumption of guilt. As athletes become reflections of the brands they endorse, it makes sense when a company distances itself after a sex scandal or drunk driving incident. The repercussions of not dropping an athlete provide a reminder of the alternative.

Take the case of Viking’s running back Adrian Peterson. After fumbling through a suspension and subsequent reactivation of Peterson after he was indicted for child abuse, the Vikings lost Radisson Hotels as a sponsor. Not because of any moral objection to the situation, but because Radisson’s logo was in the backdrop of the press conferences. If a small logo drew suspicions of backlash, imagine if an athlete were to appear in an ad after hitting someone with a car or getting in a bar fight. Companies rarely have anything to lose by dropping an athlete, so the default becomes severing ties. But what are the cases in which a sponsor-endorser relationship has been maintained, even in the face of mounting accusations?

Nike: Goes hand-in-hand with infidelity

Nike: Goes hand-in-hand with infidelity

Nike has a reputation for staying long after others have dropped. With a history of standing by their athletes, they maintained endorsements with Tiger Woods, Kobe Bryant, and Wayne Rooney after their respective sex scandals. Tiger Woods continued an endorsement agreement after his exploits with multiple women came to light in 2009. Kobe Bryant—arguably the most popular basketball player at the time of his 2003 sexual assault charge—also remained with the company. And soccer star Wayne Rooney, even after allegedly cheating on his pregnant wife with prostitutes, stayed in Nike’s good graces. Their nefarious behavior did not affect the company’s bottom line. Executives determined that customers would not be deterred from buying products. After all, Nike is not in the business of his-and-her-matching robes or dinette sets. They sell athletic apparel and shoes, and (according to Nike) customers don’t really care who you are fucking as long as you look cool when you run.

Outside of brand-specific cases, the biggest discrepancies in athlete-sponsorship fallouts occur with those at “the top of their game.” As some have pointed out, it is easy for companies to drop Lochte because he is a 32-year-old swimmer at the end of his career. (Although, this Combos ad really proves that there will always be a market for a dumb, handsome spokesperson who is willing to swim across the Hudson River to deliver pizza-flavored pretzel-snacks. Really, you had better watch the ad because it encompasses all that Ryan Lochte is in 2:18). Despite being photographed with a bong in 2008 and driving drunk on two separate occasions, Lochte’s counterpart Michael Phelps only lost Kellogg’s as a sponsor. Then, there is Ray Rice. At the height of his playing career in 2014, footage surfaced of him dragging his unconscious fiancé out of a casino elevator. It wasn’t until a month later—when the tape from inside the elevator was leaked—that sponsors actually dropped him. Popular athletes with strong careers will continue to sell products, regardless of legal battles or personal lives splattered across tabloids. But eventually, a breaking point is reached. This is either established when an athlete is past his/her prime, or the pendulum of public opinion swings too far in the negative direction.

A young Ryan Lochte circa 2008

A young Ryan Lochte circa 2008

Outside of dumb actions, athlete endorsements are surprisingly dependent on public comments. From the forgotten to the famous, a strongly-worded tweet or an offhand remark can be the end of a paycheck. After the 2011 killing of Osama bin Laden, NFL player Rashard Mendenhall responded with a series of benign tweets lamenting the celebration of someone’s death. He was dropped by his most-prominent sponsor, Champion. World-champion boxer Manny Pacquiao lost ties with Nike after homophobic remarks on Philippine television. Even the beloved senator who sings like a mix of Fergie and Jesus (again, worth a watch) could not escape his deranged comments that people in same-sex relationships are “worse than animals.” Companies have a brand and an image to maintain. As such, they have constructed “moral clauses” to allow for quick exits from a damaging sponsorship.

According to Christopher Chase, moral clauses in athlete endorsement contracts provide advertisers with an easy out. Based on these clauses, they can terminate in the face of any “criminal, scandalous, or otherwise publicly reprehensible” behavior. Such clauses may include the following language: “If at any time, in the opinion of the sponsor, an athlete becomes the subject of public disrepute, contempt, or scandal that affects the athlete’s image or goodwill, the company may…immediately suspend or terminate the endorsement agreement.” Although it is somewhat difficult to completely end a contract without any compensation, athletes stand on precarious ground when it comes to their livelihood. Even outside of sponsorships, players can be terminated from their actual playing contracts based on moral clauses that the NBA, NFL, NHL, and MLB include. The draconian NFL also allows the commissioner to impose any discipline he/she deems sufficient for moral issues. That is a tremendous amount of power when it comes to determining someone’s earnings.

In the face of the one-sided system of sponsor deals, Ryan Lochte has it relatively easy. At least he still gets to enjoy Dancing with the Stars and offers from the Autoblow.