HomeSponsorship & MarketingAthletics

Damage Limitation

The Decisions by Adidas and Nestlé to end their associations with the International Association of Athletics Federations (IAAF) has intensified the debate around the way that sports should be governed and the role that brands can play in the process. 

Adidas had been a sponsor of the IAAF and its key events, paying a reported $8m (€7.2m) per year for its deal, while Nestlé sponsored the Kids Athletics programme designed to address the sport’s dwindling participation base by encouraging youngsters into track and field.

Adidas was the first to quit, announcing its decision little more than a week after publication of the second report from the World Anti-Doping Agency’s Independent Commission, which revealed corruption at the highest level of world athletics under the long presidency of Lamine Diack. Few reports into sports governance have been as lacerating and the picture it painted of a global sport run with criminal intent to satisfy self-interest suggests that any associated brand runs the risk of serious reputational damage.

However, data from SMG-Insight’s BrandIndex, which monitors changing public perceptions of brands internationally, suggests that the impact on Adidas’ reputation was less pronounced than might have been expected.

Impact

BrandIndex, a daily survey of 400 people, produces scores based on responses to particular questions. During the period from November 1, 2015 to February 7, 2016 its monitoring of Adidas’ reputation showed a great deal of fluctuation, but few marked movements to suggest a major antipathy or empathy based on the IAAF scandal, or the company’s approach to it. For comparison, the research also examined perceptions of rival Nike – itself closely associated with athletes and athletics but not an IAAF partner. The question was ‘Which of the following companies would you be proud/embarrassed to work for?’

Richard Brinkman, director of growth and strategy at SMG-Insight, reflected on the results. “Since November the damaging noise around the IAAF is as likely to have affected Nike as well as Adidas because of long heritage,” he told SportBusiness International. “By that I mean it had the potential to hurt everyone. However, in the grand scheme of things, the damage done to such monolithic brands overall is very slight. “

That said, since the announcement on January 25 that Adidas was to end its association with the IAAF, its reputation in its home market (Germany) has improved. That is likely to be because of the public response to the company’s decision to ‘do the right thing.’ However, we did not see the same impact in either the US or UK markets.” 

Brand tracking

While brand tracking over such a short period may not reflect long-term reputational damage, officials at Swiss food-sector company Nestlé were clearly concerned that it could be adversely impacted by its relationship with the IAAF.

Nestlé, a sponsor of the IAAF since 2012, said: “We have decided to end our partnership with the IAAF Kids programme with immediate effect. This is our decision given the negative public perception regarding corruption allegations and doping in sport against the IAAF. We believe that this could adversely affect our reputation and image, and therefore have terminated the existing contract.”

Nestlé’s corporate reputation has had its ups and downs over the years, particularly in relation to its sales of baby formula to African markets, and the company also remains a sponsor of the Tour de France, which has been subject to many doping scandals over the years. Perhaps unsurprisingly, the IAAF hit back at the apparently hypocritical stance.

However, with two prominent brands severing their ties with the disgraced IAAF, a sponsorship vacuum has been created, raising the question of whether the time is right for new brands to occupy the vacant spaces and benefit from association with a bright future rather than a murky past?

The notion was put to Tim Crow, CEO of Synergy Sponsorship. “I would give a qualified yes to the idea that there may be an opportunity for a new brand to come in and present itself as part of the solution and the way forward for athletics,” he told SportBusiness International.

“However, importantly, I think the whole issue underlines why we are seeing the end of the sponsorship template created years ago, where there was an inextricable link between the governance and promotion of a sport. “

De-coupling the functions and keeping the money and governance roles separate is important. In publishing they talk about the ‘separation of church and state’, so that there is one set of people in one corner looking after editorial and in another there are those responsible for the money. Keeping them separate allows publications to retain their integrity. Now it is time to apply that to sport so that governance is divorced from money and there can be no political conflicts of interest.

“Brands that come into sport should not have to worry about governance issues and while everybody needs to do due diligence before signing a deal, it shouldn’t be a major issue. When a commercial deal is done, it is important that the person on the other side of the handshake can be trusted to deliver.”

‘Disastrous advice’

Crow believes that the challenge for Lord Coe in rebuilding the IAAF has become “immeasurably harder, partly because of the disastrous PR advice he is getting.” Crow added: “He is having to do u-turns on a daily basis and it will be a long time before consumers can suspend their disbelief.

“When you look ahead to the Rio Games, you know they will throw up huge issues. Given the findings of the Wada report about systematic doping in the country, how can any consumer look at an event with a Russian athlete and have a real belief in the outcome? Restoring confidence in athletics is a huge challenge and will be ongoing after the Coe presidency.”

Sports marketing veteran Patrick Nally, who was closely associated with the creation of the sponsorship model that has been a blueprint for most world-class events and governing bodies for the past 40 years, agreed in principle with Crow.

“In this day and age everything is more sophisticated,” he told SportBusiness International. “Social media is a powerful tool for brands, but also a powerful voice for dissent and dissatisfaction if the public are unhappy with a governing body. I believe that the commercial operations of a major governing body need to be guided and managed by professionals, although the rights should not be owned by an agency, which is effectively what used to happen. What they need is a professional group that takes a creative approach to sales, marketing and promotion, and all the processes need to be managed in a transparent way.”

According to Nally, it is time for the IAAF to get back to basics. “They have to re-package and re-present their rights, and they don’t have the skillsets in house to be able to do that. But before they do anything else, they have to focus on the brand and change the image in the minds of the public and of major brands,” he said.

Brinkman summed up the need for better and more transparent governance. “On the whole, people’s expectations of governing bodies are low,” he added. “There have been scandals at the IAAF, Fifa, in cycling and in cricket, where there has been match-fixing. There’s a tendency for the public to tar them all with the same brush.” 

Most recent

As the end of May approaches and the Premier League continues to work on ‘Project Restart’, Adam Nelson examines the legal issues facing English football’s operating bodies as they push for football’s return.

US Olympic national governing body has suffered declining revenues and membership numbers since the onset of the health crisis but large financial reserves coupled with a move to put competitions and coaching courses onto digital platforms have stemmed losses.

Tom King talks to Razlan Razali, team principal of Petronas Yamaha SRT MotoGP team, about the growth potential for motorcycle racing in Southeast Asia.

Mitchell Sports, chief executive of boutique sports advisory firm Tipping Point Sports LLC, examines the key elements of the industry's recovery from the pandemic