The scandal over Russian doping in athletics could send sponsors running for cover and turn off fans worried that their track and field heroes may be cheats.
Several major brands are already dealing with the fall-out from the corruption scandal engulfing FIFA, world soccer’s governing body.
“Sponsors are very nervous of controversy and scandal, and this is as big a scandal as you can get,” sponsorship consultant Nigel Currie said.
“I think there will be an awful lot of sponsors looking at their tie-ups with athletics and thinking, ‘We possibly need to review this’.”
Nike NIKE.N, which is listed as an official partner on the Russian Athletic Federation’s website, did not immediately respond to a request for comment.
Marketing experts said fans might be prepared to shrug off back-office bribes, such as in the FIFA scandal, but they are likely to be much more concerned about wrongdoing that can influence athletes’ performance on the track or pitch and effect the result of competitions.
“People will switch off if they think they’re watching a bunch of cheats,” said Andy Sutherden, head of sports marketing and sponsorship at H+K Strategies.
More than 90 percent of the $5 billion commercial revenues for the London 2012 Olympic Games came from TV and broadcast rights and from commercial sponsorship, Sutherden said, and both Olympic and athletics sponsors will now be very closely assessing the impact of the scandal on their reputation.
Major sponsors such as German sports equipment makers Adidas ADSGn.DE and Puma also declined to comment on the situation.
Adidas sponsors the International Association of Athletics Federations (IAAF) and national teams such as Australia, Ethiopia, and Trinidad and Tobago, but not that of Russia.
Puma is not a partner of the IAAF or of the Russian Athletics Federation but the German sports equipment company, a subsidiary of France’s Kering, sponsors the national athletics organisations of Jamaica, Cuba, Switzerland and others.
“Modern-day sponsorship brings as much reputational risk as it does opportunity. Any company entering sponsorship today that does not have sufficient plans around crisis management is asking for trouble,” Sutherden said.
While most major sponsorship deals now have “embarrassment clauses”, or terms protecting sponsors against damaging activities by those sponsored, companies may have difficulty opting out if there is any ambiguity on what constitutes a breach of contract, the experts said.
Contracts tend to run for three to four years, Currie said, and sponsors might be nervous about renewing athletics deals.
Companies such as Coca-Cola COKE.O and Visa V.N that sponsor both the soccer World Cup and the Olympics are facing a double hit to their reputations, Sutherden said, and are likely to be reviewing their continued investment in sport.
The state-controlled Russian energy group Gazprom in 2014 signed a memorandum of cooperation with the Russian Olympic Committee to support the national team at the 2016 and 2018 Olympic Games.
Currie said that athletics was facing a similar dilemma as cycling, whose reputation has been tarnished by doping in the Tour de France and other contests.
“For the longest time, (cycling) has been telling us it’s going to clean its act up, and then every year something new comes out.”
“I think there is a fundamental problem for certain sports where it’s really just about the athlete’s body — it’s really about getting the best out of your body physically. With the money involved in those sports now, there’s an ever-increasing temptation to cheat.”
Note: Russia has dismissed the allegations and the country’s athletics federation has re-affirmed its commitment to the struggle against doping, saying it will provide the International Association of Athletics Federations (IAAF) with a detailed response to WADA’s claims in the coming days.