Why Nike couldn't forgive Lance Armstrong

Nike's decision to dump one-time Tour de France champion Lance Armstrong underscores what companies are — and aren't — willing to forgive these days when it comes to the behaviour of its spokespeople.

The athletic-wear manufacturer stood by disgraced golfer Tiger Woods in 2010

Experts say Nike's decision to terminate its marketing relationship with Lance Armstrong could cost the disgraced cyclist millions in future earnings. (Jamie Squire/Getty Images)

Nike’s decision to dump one-time Tour de France champion Lance Armstrong underscores what companies are — and aren’t — willing to forgive these days when it comes to the behaviour of spokespeople.

"When companies look for celebrities or athletes, they look for someone who has role-model capabilities," says Bruno Delorme, who teaches sports marketing at McGill and Concordia universities in Montreal.

Armstrong seemed to fit that description back in 1996, when Nike first signed him as an endorser. He was a cancer survivor who was clearly on the rise as a world-class cyclist. His seven consecutive Tour de France wins between 1999 and 2005 appeared to prove Nike’s prescience.

But accusations of blood doping have dogged Armstrong for many years, and reached a climax last week when the U.S. Anti-Doping Agency issued a report that contained detailed allegations of pervasive doping by Armstrong and his teams during his incredible Tour de France streak. The report included sworn statements from 11 former teammates.

On Oct. 17, Nike terminated its marketing partnership with Armstrong.

In a statement, the athletic-wear manufacturer said, "Due to the seemingly insurmountable evidence that Lance Armstrong participated in doping and misled Nike for more than a decade, it is with great sadness that we have terminated our contract with him."

The company added that "Nike does not condone the use of illegal performance enhancing drugs in any manner."

Several hours later, beer producer Anheuser-Busch announced that it, too, had abandoned Armstrong.

In a column for Forbes magazine, U.S. sports marketing expert Patrick Rishe wrote that Nike’s decision will lead to a "mass exodus of corporate support" that he estimates will lead Armstrong to lose up to $150 million in future earnings.

What companies look for

Delorme says companies have a number of criteria for an endorser. He says they look for the individual to be a high achiever, to possess credibility, to be well known and admired and to be easily recognizable.

"And it doesn’t hurt that the endorser be physically attractive," says Delorme.

Adidas recently signed Justin Bieber as its new 'style icon.' (Matt Sayles/Invision/AP)

This would certainly be the criteria that prompted Nike competitor Adidas to announce this week that it had signed Canadian pop superstar Justin Bieber as its "style icon," as well as ambassador for its new NEO line of shoes.

Another thing companies look for in a spokesperson are what Delorme calls "continuity prospects" — in other words, the likelihood of having a long-term relationship with that athlete.

"The best endorsers of all time have been people like [former basketball star] Michael Jordan, who has had a long relationship with Nike," says Delorme. "They try to get them when they’re young."

That seemed to be the thinking when Nike signed Tiger Woods for a reported $40-million US endorsement deal in 1996. He was only 21 at the time.

The difference between Tiger and Lance

The Nike relationship was put in jeopardy in 2010 after a violent domestic spat between Woods and his wife, Elin Nordegren, revealed that the champion golfer had had a number of extramarital affairs. Nike ended up sticking with Woods.

Experts say there are crucial distinctions for Nike between the Woods scandal and Armstrong’s predicament.

"One’s not an athletic issue — no one’s ever insisted Tiger Woods cheated in golf," says Cary Kaplan, president of Cosmos Sports, a sports marketing firm based in Markham, Ont.

The second difference, Kaplan says, is that Woods made a public act of contrition.

Long-time sponsor Nike decided to stick with golfer Tiger Woods after his admission of marital infidelity in 2010. ((Ryan Pierse/Getty Images))

"I want to say to each of you, simply and directly, I am deeply sorry for my irresponsible and selfish behaviour I engaged in," Woods said at a press conference on Feb. 19, 2010.

Kaplan says it’s difficult to determine the sincerity of Woods’ apology, "but he admitted wrong right away."

While the allegations against Armstrong haven’t been proven in court, they are damning, and "there doesn’t seem to be any admission [of guilt] on the horizon," says Kaplan.

The ‘morals clause’

Richard Powers, a senior lecturer at the Rotman School of Management with an expertise in corporate law and sports marketing, says contracts between companies and their spokespeople typically contain a "morals clause."

This allows the organization to break the relationship with the individual if the person has engaged in actions that are illegal, offensive or could bring the company into disrepute.

"These morals clauses became much more popular after Ben Johnson," says Powers, referring to the disgraced Canadian sprinter who was found guilty of steroid use after setting a record for the 100-metre dash at the 1988 Olympics in Seoul, South Korea.

"Some of [Johnson’s] sponsorship contracts, I was led to believe, did not have [a morals clause], and they just paid him out to be done with it," says Powers.

Although Tiger Woods’ transgression tainted him personally, Powers says Nike clearly didn’t think it damaged his association with the Nike brand.

Extreme personas

Felix Baumgartner's recent plunge from the edge of space was partly sponsored by energy drink maker Red Bull. (Jay Nemeth/Red Bull/AP)

Many sports-related companies prefer clean-cut, wholesome spokespeople, but some, especially energy-drink manufacturers such as Red Bull and Monster Energy, actually seek out edgier envoys.

Monster Energy’s roster of spokespeople includes supermotocross rider Matt Goerke, while one of Red Bull’s highest-profile endorsers is Austrian skydiver Felix Baumgartner, who made headlines last week for his death-defying plunge from the edge of outer space.

Kaplan says the integrity principle still applies, even with extreme sports.

"There’s a difference between edgy and unethical," says Kaplan.

"You can be edgy and cool and that bad guy, but when you start getting into things like drugs and cheating in your sport, it’s hard to think of too many brands that would say, ‘Hey, that’s cool, let’s affiliate with somebody who may have talent, but lacks integrity.’"