The Implosion of Lance Armstrong's Endorsement Empire: $30M and Counting
For a slew of brands, this week marked the final straw in years of allegations and doubts swirling around cyclist Lance Armstrong and performance-enhancing-drug use.
Within minutes of Mr. Amstrong yesterday announcing he would step down as chairman of Livestrong, the foundation he created to support people with cancer, his longtime endorser Nike issued a statement saying it was finally done. The company's decision to cut ties -- given not only the scale and awareness of the brand but also its reputation for sticking by athletes in the middle of scandals -- was what prompted more sponsors to follow suit. Over the past day, they've tumbled like dominoes, one after another.
Only one major sponsor is hanging on at this point, and that 's by a thread. Luxxotica's Oakley brand said "our policy with our athletes is to support them until proven guilty by the highest governing body of sport or court of law. We are reviewing the extensive report from the USADA, as well as our relationship with Lance, and will await final decision-making by the International Cycling Union."
As many have pointed out, it's a fall from grace. In a poll of Ad Age readers, 68% said the Lance Armstrong name is damaged beyond repair for brands.
Which means it's also a huge financial blow. Mr. Armstrong's loss of support from Nike and other sponsors will cost him about $30 million in earning potential, according to one sports-marketing agent. "That would include current endorsement deals, future endorsement deals and corporate speaking," said Steve Rosner of New Jersey-based 16W Marketing.
NikeOf all the marketers with which he partnered, Nike was the most important, pumping out tons of ads and products tied to the athlete. It issued the strongest words against Mr. Amstrong, too; that 's to be expected, considering that earlier this week the brand was alleged to have been part of a coverup of Mr. Armstrong's wrongdoing.
"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. Nike does not condone the use of illegal performance-enhancing drugs in any manner." It's also changing the name of the fitness center at its Beaverton, Ore., headquarters.
AB-InBevIn 2009, Mr. Armstrong signed a three-year contract with the brewer to a spokesman for Michelob Ultra. On the heels of Nike 's decision to end its relationship, AB-InBev said it would break up with him at the end of this year. "We have decided not to renew our relationship with Lance Armstrong when our current contract expires at the end of 2012," the company said.
TrekTrek, like Nike , expressed its dismay at having to make the call that it was done with the cyclist. "Trek is disappointed by the findings and conclusions in the USADA report regarding Lance Armstrong," a statement from the bike company said. "Given the determinations of the report, Trek today is terminating our long-term relationship with Lance Armstrong."
Honey StingerThe energy-food company in which Armstrong is a part owner, is "in the process of removing Lance Armstrong's image and endorsement from our product packaging," Len Zanni, marketing director of the Steamboat Springs, Colorado-based company, said. According to an Associated Press report, an image of Armstrong's signature that was on the site's front page earlier in the day appeared to be gone late Wednesday.
24 Hour FitnessMr. Armstrong was one of a group of athletes who struck a deal to open gyms that reflected his personality and workout style, but now those locations will be scrubbed of his name. "Given the evidence surrounding Lance Armstrong's alleged actions, we have determined that our business relationship with Armstrong no longer aligns with our company's mission and values. Over the coming weeks, we plan to remove the Lance Armstrong brand from our six co-branded fitness clubs and further improve these facilities to enable and inspire our members to achieve their fitness goals."
RadioshackThe retailer was a key sponsor for Mr. Armstrong's cycling team, but now the company has stressed it's got "no current obligations" to him from an endorsement deal it signed in July 2009. Radioshack said it will keep working with Livestrong though, and that it's proud of "generating more than $16 million to date in the fight against cancer."
GiroThe bike-helmet company that marketed a line of Lance helmets similarly said it is terminating its sponsorship of Mr. Armstrong but it will continue its association with Livestrong.
FRS CoMr. Armstrong was an investor and a board member in the energy-drink company, as well as an ambassador for the brand, but he resigned yesterday. According to BevNet, Mr. Armstrong will no longer be used to help market the products.
--with Bloomberg News contributing