SBD/October 18, 2012/Marketing and Sponsorship

Anheuser-Busch, Trek Among Multiple Sponsors Dropping Armstrong After Nike

Oakley to await ICU's response before a final decision on its Armstrong deal
Anheuser-Busch, Trek BicycleCorp., energy drink maker FRS Co., energy foods maker Honey Stinger and Easton-Bell Sports Inc., which manufactures Giro helmets, yesterday joined the “stampede of marketers" cutting ties with cyclist Lance Armstrong, according to Albergotti, O’Connell & Vranica of the WALL STREET JOURNAL. Trek, which made every bike Armstrong "rode during his seven Tour de France wins,” said it was “disappointed” by the findings in the report the USADA issued last week outlining doping allegations against Armstrong. A company spokesperson said that Armstrong was “given a small stake in the company as a gesture of goodwill during his career, and will get to keep that stake.” Trek, like “most of the others,” said that it “will continue to support Livestrong.” A-B said that it “wouldn't renew Armstrong's contract, which expires at the end of the year.” FRS indicated that Armstrong “resigned from its board.” Meanwhile, Oakley said it is reviewing the USADA report, "as well as our relationship with Lance." The company said that it will “await final decision-making" by the Int'l Cycling Union, with a "response to USADA's file,” before determining the future of its sponsorship with Armstrong. Albergotti, O’Connell & Vranica note Armstrong was “once an endorsement darling on Madison Avenue,” but Davie-Brown Entertainment consumer research shows that Armstrong “has seen his appeal in the eyes of consumers begin to wane as the scandal intensified.” The research showed that “consumers trust in Mr. Armstrong and his worthiness to be a pitchman has fallen significantly” (WALL STREET JOURNAL, 10/18). In N.Y., Thompson & O’Keeffe report Honey Stinger “issued a statement saying it is removing Armstrong’s image and endorsement from its product packaging” (N.Y. DAILY NEWS, 10/18). The moves by the various companies come a day after both Nike and RadioShack announced they were dropping Armstrong as an endorser (THE DAILY).

TOTAL FALL FROM GRACE: PMG Sports President & CEO Evan Morganstein said Armstrong's fall is the "greatest collapse by an American icon, sports or otherwise, in history" (VELONEWS.com, 10/17). The WALL STREET JOURNAL’s Jason Gay writes, “The ascension and validation of today's athletes is not only about the titles they can deliver, but also the products they can reliably pitch, and when that goes away, uh-oh” (WALL STREET JOURNAL, 10/18). CNBC’s Becky Quick said there have been "some questions whether his sponsors would go after him and sue him to come back out of it." Quick: "I think if you’re one of his sponsors, at that point you probably don’t want to keep bringing up the idea and dragging out the idea that you’re affiliated with him” ("Squawk Box," CNBC, 10/18). 

LIVESTRONG FIGHTS ON: In Austin, Ball & Halliburton report the “doping charges so far haven’t dimmed the foundation’s annual Livestrong Challenge weekend," which starts tomorrow. Livestrong CEO Doug Ulman said that he “still expects to raise more than $2 million this weekend.” Ulman said that he has “talked to several of the charity’s other sponsors and none have indicated they will sever ties.” The weekend “includes a sold-out gala for 1,750 people at the Austin Convention Center.” Sponsors “paid between $5,000 and $100,000 for a table of 10” and individual tickets “sold for $1,000.” Armstrong will "host a dinner Saturday night for 152 people who raised at least $10,000 for Livestrong” and will “ride with more than 3,700 cyclists Sunday morning” (AUSTIN AMERICAN-STATESMAN, 10/18). ESPN’s Tony Kornheiser wondered if money "is going to dry up” for Livestrong. ESPN's Michael Wilbon speculated it might "for awhile, but not forever” ("PTI," ESPN, 10/17). But experts said that Livestrong “may continue to prosper.” Charity Navigator President & CEO Ken Berger said, “Nine times out of 10, the charity suffers when something bad happens to the famous person it’s associated with. But Livestrong has been the exception to the rule.” Indiana Univ. public affairs and philanthropic studies professor Leslie Lenkowsky said, “My hunch is they will take a bit of a hit, but they have so many sources of revenue and such terrific partners that it shouldn’t be a big factor for them” (CHICAGO TRIBUNE, 10/18).

BRACING FOR TROUBLE? USA TODAY’s Brent Schrotenboer notes Livestrong “long has shown signs of being able to stand on its own.” But by Monday, Ulman said that Armstrong “was hinting the negative attention was taking away from the foundation’s goal to help cancer survivors.” Nike, Trek and A-B yesterday said that they “would continue to work with Livestrong, even as they carefully distinguished the charity from its founder.” Nike helped develop Livestrong’s yellow wristbands, and Ulman said that “there are no plans to end production of the bracelets” (USA TODAY, 10/18). USA TODAY’s Christine Brennan writes under the header, “Lance Needs To Fade Away.” Armstrong “must sever all ties to his famous ... charity by not only leaving as chairman but also resigning from the foundation's 15-member board.” Brennan: “How can a man who now appears to be one of the most elaborate liars and cheaters of our time ever be associated again with a cause so noble as that of helping cancer survivors and victims and their families?” (USA TODAY, 10/18). In Austin, Cedric Golden writes Armstrong’s "well-intentioned foundation has taken a collateral hit, even as he attempts to shield it from guilt by association” (AUSTIN AMERICAN-STATESMAN, 10/18).

SEPARATING THE GOOD AND THE BAD: In London, Ashling O’Connor writes Nike “hopes to make a distinction between the doper and his good work” by distance itself from Armstrong but continuing to support Livestrong. The question is “whether they are just too entwined” (LONDON TIMES, 10/18). ESPN's Michael Smith said Nike's decision "speaks to the struggle that everybody has” trying to separate his “work for cancer research and his tainted legacy” ("Around The Horn," ESPN, 10/17). NBC's Anne Thompson said of Livestrong, “It changed the way we look at cancer, from a death sentence to a disease you can survive and then thrive. Tonight, that is the very challenge facing the Livestrong charity” (“Nightly News,” NBC, 10/17).

THE BIGGER ISSUE FOR CYCLING: The London TELEGRAPH reports Australia-based Skins CEO Jaimie Fuller, whose company is a sponsor of the Rabobank cycling team and Cycling Australia, has called on UCI President Pat McQuaid to "make clear" the organization's position on the doping allegations around Armstrong "or resign to prevent the collapse of world cycling.” Fuller has written an open letter to McQuiad "warning of catastrophic consequences to the body's 'inertia.'" He also “warned the commercial impact will go beyond the American and could dwarf the damage the sport suffered in the wake of the Festina team doping scandal of 1998." Fuller: “There's no question that there was a commercial hit that happened to the sport of cycling. I genuinely believe that what we're seeing now is way worse.” Fuller said that Skins, which produces “therapeutic compression clothing for athletes, would have to reconsider its association with cycling if the UCI failed to act” (TELEGRAPH.co.uk, 10/18). However, CBS' Armen Keteyian noted if the UCI does strip Armstrong of his Tour de France titles, it "will likely trigger an avalanche of lawsuits from sponsors and business partners” (“Evening News,” CBS, 10/17).

TV MONITOR: Last night’s editions of ABC’s “World News,” CBS’ “Evening News” and NBC’s “Nightly News” all aired reports on Armstrong losing Nike as a sponsor and him stepping down as Livestrong Chair. This morning’s editions of ABC’s “GMA,” CBS’ “CBS This Morning” and NBC’s “Today” all reported on Armstrong in the first 30 minutes of the broadcasts. ABC’s Neal Karlinsky, CBS’ Armen Keteyian and NBC’s Anne Thompson all appeared live in-studio before airing their taped reports on Armstrong (THE DAILY).
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