Sporting crises lay sponsors' most valuable assets, their brands, open to an associated fallout. How they can minimise its impact? Drew Barrand reports.
Sport is never far from controversy. Whether it be alcohol-fuelled misbehaviour, allegations of drug abuse or inappropriate public musings on a thorny political issue, the national press is filled to the brim with sports stars dragging the image of their employers - and the sports they represent - through the proverbial mud.
Such crises can have a major knock-on effect on existing sponsorship partners and the potential for attracting new income to the sport. The medium has only begun to prove its commercial viability in terms of return on investment over the past five years, and some believe that brands are being scared off by the inherent risks of sports sponsorship deals.
Football is the most obvious sport whose commercial value has been tainted by the actions of its players. While the game still attracts multimillion-pound investment from brands due to the massive media spotlight it enjoys, many are questioning the wisdom of their associations in light of a seemingly never-ending stream of negative headlines.
The guilt of the player involved in many of these cases can be irrelevant. As one sponsorship industry expert says: 'A sports star may be cleared of any wrongdoing following the emergence of a scandal, but would you put him back on the road for your brand? I know I wouldn't.'
The flip side of any sponsorship deal is the knowledge that the sponsoring organisation's most valuable marketing asset, its brand, is exposed to the risks that are inherent in professional sport. The key issue is the strength of the link between shocks, crises and general bad behaviour of top-profile sports people, and the image and brand equity of sponsors.
In short, when the mud flies, does it stick to the brands?
According to David Abrahams, senior vice-president of Marsh Risk Consulting Practice and an expert in brand risk, there is often a demonstrable link between the way in which a crisis is handled by a company and what happens to that business and its associated brand. 'The way in which any crisis is handled becomes a visible test of management capability,' he says.
'If that crisis arises from a fundamental breach of trust or performance, the compound effect of the bad handling can be devastating.'
The size of the problem faced by sponsors relates closely to an incident's shock value in media terms. For Alun James, formerly group managing director of Hill & Knowlton Sports Marketing, who recently left to set up FourGritti Sports and Sponsorship, there are two distinct types of crisis in sports sponsorship.
'The first can be reasonably anticipated while the second is totally out of the blue,' he says. 'If you are a sponsor of a sport, such as sailing or motor racing, where accidents regularly happen, then it is straightforward to undertake scenario planning and have a rigorous and robust response prepared.
'The unexpected crisis, such as Gary Neville's observations on the obtrusive nature of commercialism in charity football initiatives (see box, below left), is more difficult to deal with. The impact can be mitigated by clear processes and lines of responsibility, even if the specific nature of the crisis could not have been anticipated,' James adds.
In these instances of crises that cannot be anticipated, he believes that logic takes over to a certain degree. 'In many ways, the laws of physics apply when in a crisis: every action should have an equal and opposite reaction,' he argues. 'If the crisis is serious, then the reaction of the sponsors should demonstrate concern and action. An overreaction can create an issue when little exists, while an underreaction can make the sponsoring company look indifferent, disorganised and out of touch. …