Analysts Weigh In on Discipline for Sponsored Athletes + Brand Impact

When high-profile athletes are disciplined for behavior in their professional or personal lives, brands that sponsor them take a hit, too. Footwear-industry analysts believe swift action by brands — including parting ways with an athlete if the situation is dire enough — diminishes the damage to the label.

On Monday, the NFL disciplined superstar quarterback Tom Brady — who has endorsement deals with Under Armour and Ugg Australia — for conduct detrimental to the integrity of the game. The decision came months after the league discovered that Brady had used underinflated footballs in the New England Patriots’ AFC Championship Game against the Indianapolis Colts.

In April, Reebok terminated its contract with UFC megastar Jon Jones following the fighter’s felony hit-and-run arrest in Albuquerque, N.M., just one day after the league stripped Jones of his title and suspended him indefinitely.

“Most of the time, brands do a pretty good job of monitoring the situation, and if the athlete really crossed some serious lines, they’ll cut him off. If it seems relatively minor, they tend to stick with him,” said Matt Powell, an analyst with NPD Group.

Powell said that more often than not, brands will still sponsor an athlete after he or she has been publicly disciplined. Stern Agee analyst Sam Poser believes retaining the superstar athlete typically is the right move by brands because the brands can control how visible the association with the athlete is.

“You can’t give up right away, but it doesn’t mean you need to be marketing with that athlete,” Poser said. “Even though you have that athlete, it doesn’t mean they have to be exposed as much as they were prior.”

Poser referred to Nike keeping its endorsement deal with Tiger Woods throughout his infidelity scandal, which became a public spectacle on Thanksgiving Day 2009. Poser used Nike and Woods as an example of how brands can handle public adversity.

“It’s how brands activate and deactivate these athletes,” Poser said. “With Tiger Woods and Nike, there have been very few commercials where he has been the lead. It’s not that he’s not important, but he isn’t out in front the way he used to be.”

Nike has used Woods in commercials since 2009, with the most recent spots starring Irish professional golfer Rory McIlroy, who signed a 10-year contract with the brand in 2013. The latest commercial by the brand featuring Woods and McIlroy, released in April, shows the Irish golfer from childhood to becoming a professional, from emulating Woods to eventually becoming his peer.

Powell believes the damage to brands from the negative actions of sponsored athletes is making companies more wary of handing out blockbuster deals.

“Every situation is different, with how much exposure a brand has to an individual athlete — it’s a fine line they have to dance every day,” he said. “You’re not seeing a lot of mega-contracts for athletes anymore. There’s still some out there, but not nearly to the degree there were 10 years ago.”

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