SBD/May 27, 2011/Marketing and Sponsorship

RadioShack Faces Crucial Marketing Questions As Armstrong Sponsor Amid Allegations

Armstrong noticeably absent from RadioShack's recent batch of TV spots
The latest accusations by former teammates that cyclist Lance Armstrong used performance-enhancing drugs “pose a marketing dilemma for RadioShack,” according to Barry Shlachter of the FT. WORTH STAR-TELEGRAM. RadioShack “has nurtured extremely high-profile links with Armstrong, its most recent celebrity endorser as RadioShack's mock ‘Chief Mobility Officer’ in a series of TV ads.” The electronics chain also has had a “multimillion-dollar sponsorship of Armstrong's Team RadioShack since July 2009.” RadioShack “has made no public statement of support” for Armstrong following last Sunday's "60 Minutes" report, though company Dir of Communications Eric Bruner confirmed it had an "ongoing" relationship with Armstrong. However, Bruner “declined to provide details other than to say the cyclist is not in the current mix of commercials.” Shlachter notes the situation “clearly … puts RadioShack and new CEO Jim Gooch, who took over last week, in a tough spot.” PR firm French West Vaughan CEO Rick French said, "If they jump ship too early and he is later proven to be innocent, they will have a PR problem. If they stay with him and he is proven to be guilty, they look like the ostrich with their heads in the sand and also face a PR problem." French said RadioShack needs to “begin to de-emphasize him without cutting ties until more information is available." Shlacter notes Armstrong sponsors Nike and Anheuser-Busch InBev have both stated that they stand behind the cyclist (FT. WORTH STAR-TELEGRAM, 5/27).

STAND BY YOUR MAN: In Toronto, Josh Rubin notes Canadian sporting goods retailer The Forzani Group “has no plans to yank Livestrong branded sports apparel from its stores despite doping allegations" made against Armstrong. Forzani Group President & COO Tom Quinn: “The Livestrong project itself is raising considerable funds for cancer research, regardless of who its public face is. We look at it as a Livestrong-Nike brand, and not as a Livestrong-Lance Armstrong brand.” Meanwhile, Nike Senior Manager for Global Public Affairs Erin Dobson said, “Our relationship with Lance remains as strong as ever. We are proud to work with him and support his foundation” (TORONTO STAR, 5/27).
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