SBD/August 27, 2012/Marketing and Sponsorship

Sporting K.C. Sticking With Livestrong Despite Its Founder's "Downfall"

Sporting K.C. officials say they will continue relationship with Livestrong
MLS Sporting K.C. on Friday announced that it “will not change its partnership with Livestrong,” a day after founder Lance Armstrong said that he would “no longer fight U.S. Anti-Doping Agency’s allegations that he used performance-enhancing drugs,” according to Tod Palmer of the K.C. STAR. Sporting K.C. named its $200M soccer stadium Livestrong Sporting Park last year “as part of a deal that would donate at least $7.5 million in revenue over six years to the foundation, which Armstrong formed.” Sporting K.C. CEO Robb Heineman in a statement said, “The naming rights partnership between our stadium and Livestrong provides an opportunity to spread health and wellness messages that emphasizes the spirit of cancer survivorship. Livestrong’s focus is the fight against cancer and the support of 28 million people around the world affected by this disease, and we believe strongly in this mission” (K.C. STAR, 8/25).

THE FALLOUT: In Boston, Jessica Van Sack wrote the “shocking downfall of Lance Armstrong has not yet had a measurable effect on his brand” (BOSTON HERALD, 8/25). In N.Y., Richard Sandomir noted Armstrong’s “loyal sponsors are not stripping him of their support.” Anheuser-Busch InBev, for whom Armstrong has starred in Michelob Ultra commercials, said that “nothing would change in its relationship with him, which began in 2009 with a three-year contract.” Energy gel maker Honey Stinger also said that Armstrong’s refusal to fight the doping allegations is "of no consequence.” One reason for Honey Stinger’s “unchanging embrace of Armstrong is that he owns a piece of it, promotes its products, meets with its retailers and helps the company build its brand.” Last week he “ran a marathon sponsored by the company.” Sandomir noted the success of Livestrong “has, for now, shielded sponsors from dropping him.” Univ. of Oregon Warsaw Sports Marketing Center Managing Dir Paul Swangard said, “Whether or not his cycling success was pharmaceutically-engineered, Lance has used his fame for so much good. I think a large segment of consumers still finds that a bigger piece of his brand equity, and it’s why companies will still support him” (N.Y. TIMES, 8/25).

STAND BY YOUR MAN: The WALL STREET JOURNAL’s Suzanne Vranica cited sports marketing experts as saying that despite the “strong sign of support from some of his corporate sponsors," Armstrong may have "trouble luring new endorsement deals.” Harvard Business School professor Stephen Greyser said, "New endorsement deals for Lance Armstrong will not be happening for the foreseeable future, because he is damaged merchandise right now" (WALL STREET JOURNAL, 8/25). AD AGE’s Michael McCarthy wrote USADA’s move has “further damaged his already weakening brand,” but things have to be “pretty far gone before Nike bails on an endorser.” Marketing Evaluations Exec VP Henry Schafer said that Armstrong's “positive Q scores have dropped by two-thirds since he won his last Tour de France in 2005.” His negative Q scores “have more than doubled since then -- and for the first time they outweigh his positive scores.” Schafer said, "He's been in a downward spiral. All these doping allegations are not helping him by any stretch of the imagination. I know he's going to rest his laurels on the LiveStrong organization he founded. But I don't think it will be enough" (ADAGE.com, 8/24). In Portland, Allan Brettman wrote under the header, “Lance Armstrong Spared Nike From The Difficult Choice.” By walking away, Armstrong “may very well have preserved some of his marketing appeal as well as continued donations” to Livestrong. Brettman: “Without doubt, he preserved his relationship with Nike, the biggest sporting goods company in the world” (OREGONLIVE.com, 8/24).

STEEP HILL: In Austin, Harmon & Plohetski wondered if Livestrong -- and "Armstrong's personal brand -- survive the cyclist's public branding as a cheater by the U.S. Anti-Doping Agency?” In the charity world, opinions “vary on whether the Livestrong Foundation's fundraising capabilities will take a hit.” Charity Navigator VP/Marketing & CFO Sandra Miniutti, whose nonprofit “rates charities and gives the Livestrong Foundation its maximum four-star rating,” said, "I think it's going to be a rough road." Charity Watch President Daniel Borochoff, whose national rating organization “also has given high ratings to the foundation,” said, "They have a very steep hill to climb. People feel like they were duped by the heroic story of Lance Armstrong, and credibility for a nonprofit or charity is really vital." Livestrong said that since its founding in ’97, it has “raised close to $500 million to support people affected by cancer.” Livestrong VP/Communications & External Affairs Katherine McLane said that the foundation “had seen a 700 percent increase in the number of gifts -- from 15 to 370 -- between Wednesday and Friday afternoon.” McLane: "It's just been a tremendous outpouring of support, and it's really meant a lot to the staff here at the foundation" (AUSTIN AMERICAN-STATESMAN, 8/26).

THE RESPONSE: Livestrong CEO Doug Ulman on Friday said that “unsolicited donations were up almost 25 times as compared to Thursday.” Ulman said that “$3,200 came in Thursday to the organization's website, which was in the range of what it typically receives.” He said that as of 4:30pm ET on Friday, “$78,000 in donations” had come in. ESPN.com’s Darren Rovell noted Livestrong on Thursday “had 45 people donating through the website.” After the news broke Friday, “411 people felt compelled to donate.” Merchandise sales were “up almost threefold, from $4,000 in gear sold on Thursday to $11,000 sold on Friday” (ESPN.com, 8/25). In N.Y., James Covert noted Livestrong last year had “revenues slip 2.6 percent to $48.6 million.” The decline was “tied to a drop in funds raised at special events -- whose past successes had hinged on appearances by Armstrong.” N.Y.-based PR firm MMW Exec VP/Reputation Management Carreen Winters said, “Having your integrity questioned as an athlete is never a good thing. But he’s taking pressure off the organization, and you could say he’s saving the foundation by sacrificing himself.” Indiana Univ. Center on Philanthropy professor Leslie Lenkowsky said, “For the past couple of years, Livestrong has clearly been distancing itself from Lance Armstrong.” He said that it is “practically a secret … that Livestrong’s official name is still the Lance Armstrong Foundation” (N.Y. POST, 8/25).

SURVIVOR: In London, Fariha Karim reported Armstrong on Saturday was riding at the Power of Four bike race in Aspen and commented on the controversy, saying, “Nobody needs to cry for me. I’m going to be great. I think people understand that we've got a lot of stuff to do going forward. That’s what I’m focused on, and I think people are supportive of that. It’s great to be out here" (LONDON TIMES, 8/26).
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