This is the final post in a three-part series examining different ways in which companies can respond to scandals involving their athlete endorsers. The last two parts looked at what companies have done in the past when their endorsers are both able and unable to repair their images.
Part III – The future
According to Phil de Picciotto, the president for athletes and personalities at Octagon, Woods’ scandal and the rising value of endorsement deals will lead to more companies pursuing insurance on their endorsement deals. Woods’ situation is groundbreaking because he was previously considered too big to fail, and now that his image is tarnished brands are realizing that a scandal can hit any athlete. Companies will also begin to push for shorter contracts in which compensation is more heavily based on incentives tied to athletic performance. According to Bill Duffy, the chairman of BDA Sports Management, companies will also begin to more carefully examine potential endorsers through background checks conducted by private investigators. Another possibility, although less beneficial for companies, is to companies to use former athletes instead of current ones to endorse their products.
As long as young people are given large amounts of money, fame, and power, there will always be scandals involving athletes. Moving forward, companies need to recognize the gravity of the potential risks that endorsement deals present, and work to mitigate them. The aforementioned Tiger Woods scandal is still relatively recent, and it will take many more months before determining if his endorsement career will end up like Kobe Bryant’s or like Barry Bonds’. So far, many of his endorsers have kept him because he is so involved with their brands that terminating his contract would present immense risks. However, if they had insurance on his endorsement deals, I doubt that many would stay with him. Although not as frequently or believably as Bryant, Woods has issued public apologies for his behavior, and has worked to improve himself. He has since resumed playing golf, and will attempt to repair his public image and regain some of his lost endorsement deals. Only time will tell if he is successful or not.
Another high-profile athlete who will be facing many of these issues is Reggie Bush. He has been involved in a four year long investigation by the NCAA into his alleged acceptance of improper gifts worth $300,000 while he was still an amateur at USC. The NCAA recently announced sanctions against USC, and while Bush has so far received relatively little backlash, that could change if the Heisman Trust decided to strip him of his 2005 Heisman Trophy. Bush has said very little about the investigation up to this point, and never met with investigators. As Barry Bonds discovered, this is a very dangerous strategy to employ. Bush has thus far not been damaged by his refusal to comment, but if he is stripped of the Heisman, his refusal to speak about the allegations for such a long period of time will certainly hurt his public image. Bush currently has lucrative endorsement deals with companies such as General Motors, Subway, Adidas, and Red Bull. While none have terminated his deals thus far, I am sure that they are all tirelessly thinking of how to respond to this issue. If he is stripped of his Heisman, there will be immense public pressure to take action.
