With some stars making the news for all the wrong reasons, how can you manage the risks of sponsorship and endorsement while still realizing the rewards?
The power of sport sponsorship in increasing brand awareness and generating product sales is widely recognized.
Their pull stretches far beyond sports goods too: luxury goods, beauty, healthcare and nutrition brands are often keen to align with national and international sporting heroes.
These affiliations can be a game changer in building brand prestige, but there’s also always a reputational risk associated with such high-profile superstars.
In the high-stakes game of sports star sponsorship and management, it seems the higher they fly, the more visibly they fall.
If you’re planning on sponsoring a sportsperson or you already have an affiliation in place, it’s essential to have plans in place to manage the risk to your brand reputation.
“If you’re planning on sponsoring a sportsperson or you already have an affiliation in place, it’s essential to have plans in place to manage the risk to your brand reputation.”
Richard Sheldon | WTW
And if you’re a sports team or club, your changing room is packed full of household names that could hit the front pages at any moment.
Our digital age creates the perfect environment for stars from football, tennis, golf, athletics and all sporting arenas to amass followings that far outweigh the number of fans who could ever watch them on the pitch, court or track.
But there’s the rub: with a huge fanbase and social media following, sports stars must uphold their exemplary behavior to match public expectations.
If the athlete’s brand becomes tarnished, there’s a danger the club they play for and the brands they endorse will suffer reputational damage too.
“If the athlete’s brand becomes tarnished, there’s a danger the club they play for and the brands they endorse will suffer reputational damage too.”
Richard Sheldon | WTW
There have been many examples of sports stars crossing the line by voicing unpopular opinions or behaving unacceptably, with just about every major sport experiencing its fair share of shame and scandal.
Recently, several athletes have hit the headlines not for their sporting prowess but for their views on COVID vaccination, filmed cruelty to animals and prior crimes against women.
In addition to damaging their own reputation, the athlete’s employers and sponsors often find themselves in hot water for misjudging the situation and managing it poorly.
The reputation of football clubs, managers and sponsors plumet very quickly but take far longer to recover.
Even some minor lapses of judgement by an athlete can have a detrimental effect on a sponsorship agreement – shaving your head when you endorse a shampoo or showing off a different brand of watch to your endorsement deal, for instance, demonstrates that the values of the brand and the athlete are incompatible.
The likely outcome is a damaged brand and a parting of the ways.
Unfortunately, there is no rulebook for which level of punishment fits which transgression. The public outcry about a fight in a nightclub might be greater or lesser than a drugs incident, depending on the profile of the perpetrator and how the case is dealt with.
Will a sports icon be forgiven a higher level of transgression or are they treated more harshly because of their status?
When it comes to managing a reputational issue, there’s a real danger of employers and sponsors being slowly reactive instead of proactive, failing to read the room, or mis-reading the public mood.
“When it comes to managing a reputational issue, there’s a real danger of employers and sponsors being slowly reactive instead of proactive, failing to read the room, or mis-reading the public mood.”
Richard Sheldon | WTW
Where an athlete has committed a criminal offence, the decision to end a partnership is usually unequivocal, but more minor indiscretions can generate a ‘wait and see’ approach from clubs and sponsors who don’t want to appear heavy handed if the public feels the individual deserves a second chance.
At the other end of the scale, the backlash from the public towards a club or sponsor that is deemed to let an incident go unpunished is likely to be extremely detrimental to the brand’s reputation.
When an English Premier League football club picked a player following a public outcry about his treatment of a pet, criticism was damning, and club sponsors withdrew support.
“When an English Premier League football club picked a player following a public outcry about his treatment of a pet, criticism was damning, and club sponsors withdrew support.”
Richard Sheldon | WTW
Although managers would like to consider a player’s ‘work’ is entirely separately from their private life, the two are inextricably linked.
Wrong. The reach and income of high-level sport is astronomical and the actions of a wayward athlete can have an impact that lives long in the memory of key stakeholders and a significant impact on the bottom line.
A sports team or club has a multitude of stakeholders to heed:
“The poor conduct of athletes in their public and private life severely impacts the return on investment.”
Richard Sheldon
WTW
Beholden to their stakeholders and consumers, sports organizations and sponsors rely on the on-court and off-court performance of their sports star to endorse brands.
The poor conduct of athletes in their public and private life severely impacts the return on investment.
Understanding how reputational issues can escalate and having plans in place to manage the risks is essential right now.
Sports organizations need a holistic solution to help prevent a crisis happening and support the response and recovery if it does occur.
WTW has partnered with some of the global leaders in this field to develop a comprehensive reputational risk solution that includes:
WTW provides a Reputational Risk Readiness Review to help organizations define and quantify its reputational risks, identify the potential impacts and map any gaps to be addressed in mitigation.
To get ahead of events and prevent potential reputational issues escalating into a crisis, the powerful Polecat platform offers real-time horizon scanning. AI-powered algorithms synthesize data from online and social media channels into dashboards and risk alerts for relevant media.
WTW offers access to experienced crisis communications experts who have managed crisis situations of all types around the world, from advice on media handling and strategy to leadership statements and speeches.
WTW’s reputational risk insurance product, offers up to $50 million cover for loss of gross profit as a result of a significant adverse publicity event, spread evenly over up to 12 months to help you stay afloat during and after a crisis.
WTW experts will work with you over the longer term to develop campaigns and communications to help you turn the tide of public opinion back in your favor.
To find out more about our Reputational Crisis Insurance and Risk Management Solution, please get in touch.
WTW offers insurance-related services through its appropriately licensed and authorised companies in each country in which WTW operates. For further authorisation and regulatory details about our WTW legal entities, operating in your country, please refer to our WTW website. It is a regulatory requirement for us to consider our local licensing requirements.
