Sports Stars Behaving Badly Draw Backlash as Sponsors Pull Rank
(Bloomberg) -- Australians are used to indiscretions by their sporting heroes. But corporate sponsors have had enough after a drunken rugby league player’s rampage in New York, orchestrated cheating at cricket and homophobic comments by a national superstar.
NRMA Insurance is pressuring the Brisbane Broncos to make forward Matthew Lodge compensate victims of a 2015 assault as part of his comeback. Qantas Airways Ltd. objected to a social media post by devout Christian and rugby union star Israel Folau saying gay people will go to Hell. And Magellan Financial Group Ltd. canceled its estimated A$20 million ($16 million) sponsorship of the Australian cricket team just months into a three-year deal after skipper Steve Smith confessed to a ball-tampering plan.
All three incidents provoked a storm on social media, and the intrusion by financial backers into the behavior of individual players reflects the double-edged power of platforms such as Facebook, Instagram and YouTube. While they offer huge exposure for a product, they can also sully a brand when a team or player errs.
“There’s increasing pressure being mounted on sponsors by the court of public opinion,” said Paul Nelson, founder and managing director of branding consultancy BrandMatters Pty. in Sydney. “The blowback is much more evident than it was before. It’s negativity by association.”
Sponsors have gained influence in Australia as more professional teams scramble for sponsorship. In the past decade, new soccer and cricket clubs have sprouted in Sydney and the Australian Rules Football League started a national women’s competition.
That’s made Australia one of the world’s most competitive sports-sponsorship markets, said Basil Scaffidi, managing director at SEL Ltd., a sports-rights and sponsorship company whose clients include cricketer Shane Warne and the National Rugby League.
The NRL is at the center of one storm. In the early hours of Oct. 16, 2015, Lodge followed two women into a New York apartment block and attacked a man in the foyer, according to court documents. Lodge, who’s 1.91 meters (6 feet, 3 inches) tall and weighs 121 kilograms (267 pounds), entered the man’s home and threw a wine bottle at police officers arriving at the scene. A U.S. judge in March 2017 ordered Lodge to pay $1.23 million to the victims.
The Broncos, part of Australia’s top rugby league competition, signed Lodge on a one-year deal in November. The 22-year-old “deserves a second chance,” Broncos Chief Executive Officer Paul White said at the time.
“We are disappointed that compensation is yet to be paid and we have told the club that our expectation is that they work with Lodge to ensure this happens,” NRMA Insurance said in a statement.
Australians are accustomed to sporting scandals. Warne was sent home from the 2003 cricket World Cup after failing a drugs test and subsequently banned for 12 months, while rugby-league players have variously been caught urinating on themselves or simulating lewd acts and punished by their clubs or governing bodies.
But NRMA Insurance’s intervention is unusual because it’s using its financial clout to exert pressure that could change a team’s playing roster. The company is at the center of the controversy: its logo is on Lodge’s jersey.
Social media, where sports clips are replayed endlessly, can generate more value for sponsors than television, according to GumGum Inc., which tracks logos to measure the value of sponsorship deals. That also raises the risk when a player misbehaves.
“If a team and its players are getting a lot of coverage, but for the wrong reasons, social media merely amplifies this bad press,” said Jon Stubley, GumGum’s managing director for Australia and New Zealand.
Qantas, the national rugby team’s naming sponsor and a supporter of equal rights, said the comments were “very disappointing.” CEO Alan Joyce is gay and last year personally gave A$1 million to a successful campaign to legalize same-sex marriage in Australia.
After Qantas’s objection, Rugby Australia CEO Raelene Castle met Folau on Tuesday and said they both wanted to use social media “in a respectful and positive way.”
Sydney-based fund manager Magellan took more forceful action last month, tearing up its sponsorship deal with Cricket Australia after Smith, David Warner and Cameron Bancroft admitted to ball-tampering in an attempt to gain an unfair advantage in a test against South Africa. Hamish Douglass, Magellan’s co-founder and CEO, described the episode as a “conspiracy” that was “inconsistent with our values.”
No sport can control its players, according to Scaffidi at SEL. And most sponsors will tolerate a one-off aberration, but not a persistent habit, he said.
“When you’re investing millions of dollars into a sport, you have every right to ask questions,” he said.
©2018 Bloomberg L.P.