For reasons best left to marketing psychologists and tenured sociology professors, when a company teams up with the right sports star, its fortunes can soar. Sales of Nike sports apparel doubled after Tiger Woods started wearing the swoosh, even though the same duds had been draping professional golfers Peter Jacobson and Curtis Strange years before Woods ever took his college boards.
But athletes like Tiger Woods, Michael Jordan and John Elway -- successful, popular competitors who also appear to be model citizens -- are the exception rather than the rule. So what happens when sponsorships go bad? How fast will your sneakers/jackets/sports drinks fly off the shelves when your poster boy is photographed slam dancing nude with a porn star or gets busted outside a nightclub at 3 a.m. with enough crack rocks to pave a driveway?
It's not unheard of. Baltimore linebacker Ray Lewis reportedly booted several lucrative deals last year when he turned up at an Atlanta nightclub that also happened to become the scene of a murder. Five years ago, Opel, the GM car subsidiary, canceled a $1.2 million-a-year sponsorship pact with tennis player Steffi Graf because of her income tax difficulties. (It was really her father's fault, but Graf suffered collateral damage.) In 1997, retailer Kmart jilted Fuzzy Zoeller without a backward glance when the golfer let loose with some off-the-cuff remarks about Woods that were construed as racist.
Indeed, the athlete who abandons any earning power from endorsement deals because of less-than-role-model behavior off the playing field is an increasingly common story. Yet a couple of recent lawsuits suggest that companies that tie their fortunes to a sports star are raising the bar for their representatives' comportment. They are now canceling endorsement deals based on an athlete's sportsmanship while he is still on the field competing.
One of the lawsuits was filed two months ago in U.S. District Court in Denver. AT&T Broadband, which is based in Englewood, sued NASCAR driver Mike Borkowski for dragging its image through the mud by what the telecommunications company determined was overly aggressive behavior during a race last year.
Borkowski arguably did nothing that other drivers haven't done before -- he clipped two cars at last May's Busch 200, causing them to crash. Nevertheless, AT&T decided that the 26-year-old driver was not the sort of icon it wanted. This past November the company filed suit, demanding reimbursement of $600,000 in endorsement money from Borkowski for his bad driving.
When a button-down corporation decides to ally itself with a (usually) young, undereducated man who suddenly discovers that he is worth more money than he has ever seen and is adored by millions of fans, there's bound to be a few spots of trouble. That's why finding the perfect athlete to represent a product is considered such a marketing coup.
It's a jagged line between marketing magnet and model citizen. Seeking the precious younger demographics, many companies like to appear as though they have an edge -- without actually getting too close to anything sharp, of course. Canon built an advertising campaign around tennis player Andre Agassi for its Rebel camera. Agassi was just the right sort of outlaw for a multinational optics company: He gave the impression of being a nonconformist (black socks at Wimbledon?!) while acting as a perfect gentleman (Brooke would tolerate nothing less).
When it comes time to ink a contract, all a company can do is sign the deal and hope for the best. Sometimes the money is enough to ensure that it will work out. Other times, the player's true personality will come out no matter what the pay. A few years back, Wilson took a chance with golfer John Daly, a charismatic player with a towering drive and a bucket of potential. But when Daly's well-known drinking problem started becoming more of a story than his putting, the company pulled the plug. Similarly, Dennis Rodman lost a deal with Converse shoes because, well, he insisted on acting like Dennis Rodman.
That's not to say that corporations are unrealistic prudes. Dean Bonham of the Denver-based sports marketing company the Bonham Group points out that, generally speaking, executives are about as tolerant as the general public, since that's the group of consumers the company is trying to impress in the first place. Take the case of Brian Griese. Even though the Broncos quarterback was picked up last year for driving under the influence of alcohol, "he was humble, apologetic, contrite and polite," Bonham says. "I think corporate America will forgive and forget because that's what fans want it to do."
Yet because the investments can be huge, in recent years corporate sponsors have been trying harder to cover their bets. "Any corporation has to be concerned how the actions of a team or an individual's image will be linked to it," says Bonham. As a result, says Paul Anderson, assistant director of the National Sports Law Institute at Marquette University, so-called moral-turpitude clauses in sponsorship deals are now standard. They permit a company to back out of a deal for any behavior on the part of the athlete that executives feel reflects poorly on their business. (Presumably, it was this clause that Hertz decided to exercise when longtime spokesman O.J. Simpson ran into domestic troubles.)
Last spring, one of the only remaining major sports sponsorship deals without a morals provision fell into line. In April, financial-services giant John Hancock announced that because of the bribery scandals surrounding the Salt Lake City Olympics, it was yanking $50 million worth of endorsements and advertising. Only after the International Olympic Committee agreed to include a first-ever morals clause in an Olympic contract did the Boston company agree to recommit its money to the 2002 Winter Games. Even that concession is unlikely to apply to the athletes on the field, however.
It's not surprising that the new, stricter judgment by sponsors is taking hold in the sport of car racing. If a corporation were to set about trying to invent the perfect sport from the perspective of selling its product, it could do no better than automobile racing has done on its own. Sponsorships, which can cost a corporation up to $12 million annually, cover the majority of the racing team's expenses. Racers readily acknowledge that without big companies paying their bills, they simply could not compete.
Yet companies get plenty for their money. The hard sell begins with the cars, essentially moving billboards. Advertisements and emblems cover virtually every square inch of the vehicles, which stay within view of the fans and cameras for the entire duration of the race. The cost to the company for this exposure depends on placement; trunk (known as the "TV panel") or hood space is more expensive to buy than a fender or door.
Then there are the fans. Auto racing is the fastest-growing spectator sport in the country. Add to that the coveted demographics -- young men, in particular -- and the sport becomes advertising heaven. This was confirmed fourteen months ago, when NASCAR signed a $2.4 billion television deal with NBC, Fox and TBS for broadcasting rights over six years.
Even more compelling -- from an advertising point of view, of course -- is that race fans are intensely loyal consumers. Surveys consistently show that NASCAR fans are far more likely to make an effort to buy the products advertised by their favorite team. And it's not even close: Racing fans beat out the second-most-devoted consumers, NFL fans, by a double-digit margin.
Finally, there is the crucial complicity of the media. Race announcers help crank up the product exposure even higher with a longstanding agreement to identify the cars by their sponsors' names ("the Kmart/Kellogg's/Tide car enters the far turn...") as they circle the track. Although seldom admitted to outright, this practice is common knowledge in racing circles and was hinted at last year when Fox television announced that sponsors would have to begin paying the network for each on-air mention of their company.
In fact, it was precisely because of NASCAR's superior sponsorship exposure that Mike Borkowski ran into trouble with AT&T. Last May 13, while racing in the Busch 200 at New Hampshire International Speedway, Borkowski banged into two other cars, causing them to crash, and then crashed himself. That was bad. Worse, however, according to the lawsuit filed six months later, was the play the incidents received on television and in newspapers -- the same coverage that, needless to say, would have been heralded as a marketing dunk if Borkowski had done well.
Following the first crash, for instance, AT&T complained that "TNN's coverage zoomed in to show [opposing driver Lyndon] Amick exiting the wreck and screaming/gesturing at the AT&T car...Amick's disgust with Borkowski was also captured in an Associated Press wire service photograph showing Amick gesturing to Borkowski's car prominently displaying the AT&T logo."
The second Borkowski crash took driver Jason Jarrett out of the race. The lawsuit recounts, "TNN's coverage focused on a very upset Jarrett exiting his wrecked car and twice throwing things at the AT&T car." Borkowski himself drove into a wall during the final lap of the race.
In short, from an advertising point of view, the race was a bust. "During and after the May 13, 2000, race, Borkowski was criticized by the NASCAR community," the lawsuit concludes. "Much of that criticism was directed at the 'AT&T car,' which at one point during TNN's coverage was referred to derisively as the 'black and blue' car. Obviously, these events resulting from Borkowski's actions portrayed AT&T Broadband Management and the AT&T Car in a bad light, negatively impacting AT&T's reputation and undermining the purpose of the racing sponsorship."
On November 3, AT&T sued, invoking a broadly worded moral-turpitude clause in its 1999 contract with Borkowski. The provision gave the communications company the right to terminate the sponsorship if Borkowski were to commit "any act or become involved in any situation or occurrence tending to bring AT&T into public disrepute, contempt, scandal or ridicule, or tending to shock, insult or offend any class or group of society, or reflecting unfavorably upon AT&T, or its name, reputation, public image or products."
It turns out that the Borkowski lawsuit was the second such action resulting from an auto-racing sponsorship deal turned sour because of a driver's behavior while competing. The day before AT&T filed its Denver lawsuit, another such dispute finally came to a close after more than a year of legal wrangling.
In 1984, a young driver named Roberto Guerrero won the Indy Racing League's Rookie of the Year award. Fourteen years later, he signed a $350,000 sponsorship deal with Pagan Racing, a company owned by two brothers from Corpus Christi, Texas. Unfortunately, 1998 wasn't Guerrero's best year: He crashed three times in his first four races.
Though still early in the season, the Pagans had seen enough. They voided the deal, citing Guerrero's poor on-track performance as damaging to their image. (In the one race he didn't crash, Guerrero, who'd at one time finished second in the Indianapolis 500, dropped out with a mechanical glitch.) "There will be crashes in this business," Allan Pagan explained. "But Roberto -- his percentage of crashes was much higher than the other industry drivers. His constant crashes, early into races, were hurting the team."
A few months later, Guerrero sued the Pagans for $275,000, claiming that that was the amount the brothers still owed him from their sponsorship contract to support him during the previous year. In the lawsuit, he insisted that only one of the crashes was his fault -- that the remainder were the result of mistakes made by other drivers around him.
On one level, situations like Guerrero's and Borkowski's -- athletes sidelined not by injuries or retirement but by advertisers -- are no more than motor sports deserves. Anyone who reads Faust knows that in the end, selling your soul can box you in, and it should come as no surprise that a sport that takes money from -- indeed trumpets its affiliations with -- tobacco companies, alcohol manufacturers and Viagra was bound to confront the Devil sooner or later.
Still, might there be a bright side to advertisers demanding better behavior from their shills on the field? Imagine a world where a sponsor backs away from Roger Clemens after he tosses some split lumber at a batter, or publicly ditches Marty McSorley when he splits a player's face with a hockey stick, or loudly loses Karl Malone when he acquires his second technical foul in a game. In this same advertiser-driven -- and intensely moral -- world, supplement supplier EAS would cut Bill Romanowski loose after he incurred yet another fine for yet another illegal hit.
Naaaah. The real test, of course, is not how boorish an athlete's behavior can get in the whirl of competition before he loses his endorsement, but whether the sponsorship continues to pay dividends in moved merchandise and enhanced corporate profile.
"Of course we'd always like athletes whom we sponsor to display qualities on and off the field of a role model," explains Marlene Patter, a spokeswoman for Golden-based EAS when asked about Romanowski's on-field highlights: a spitting incident and cheap hit netting $27,500 in fines in 1997, and $42,500 worth of fines for three separate cheap hits in 1999.
"But," she adds, "things happen in the heat of battle. We certainly hope that Mr. Romanowski continues to have a long and productive career."
Just so. It's the same thinking that recently led the Marine Corps to sponsor the X-Games. The athletes -- radical, tattooed, pierced, occasionally stoned -- are the epitome of anti-establishment punks, an image they are careful to cultivate. Still, if a few thousand bucks in sponsorship fees continues to bring in the recruits, who in the Pentagon is going to lose any sleep over an image that is everything the military is not?
While Borkowski's lawsuit is only just beginning, two months ago Guerrero settled his tiff with Pagan Racing. The trial was already under way, and negotiations were held in private in the judge's chambers. The moment the deal was announced to the jury, however, two members immediately requested Guerrero's autograph. As he watched other jury members position themselves for a souvenir signature from the famous racer, the judge joked that Pagan's lawyers had probably made a smart decision settling the suit rather than going to trial. In the end, of course, it's always the fans who have the final say.
