Nike and Oakley stuck with Lance Armstrong through his battle with cancer in 1996, when much of the sporting world considered him damaged goods. But for companies like Nike and Trek Bicycles, the mountain of evidence the U.S. Anti-Doping Agency amassed against the former world champion was too much, and according to one sports marketing expert, Armstrong’s fall from grace will be the sharpest decline in modern sports history.
On Wednesday, Nike terminated its contract and its 16-year relationship with Armstrong. The move comes as an abrupt about-face from Nike’s stance just six days prior, when the athletic apparel manufacturer issued a statement saying that, “Nike plans to support Lance and the Lance Armstrong Foundation.” In dropping the former world champion, Nike led RadioShack, Giro, Trek, Honey Stinger and Anheuser-Busch in what is already a growing exodus of corporate partners away from the Armstrong name.
And a name, according to Evan Morgenstein, president and CEO of PMG Sports, is “the only thing [an athlete] can market in this world.”
Now, Morgenstein said, Nike “absolutely didn’t believe the story that they had heard previously. Then again, it could have been business factors also.”
Morgenstein, whose sports management group focuses on the brand management of Olympic athletes, told VeloNews on Wednesday that, “What you’re going to see is the greatest collapse by an American icon, sports or otherwise, in history.”
Brand managers at Nike, who produced the Livestrong apparel and whose logo had adorned Armstrong’s one-off cycling shoes, would have had “an absolute nightmare” dealing with the collapse of the Armstrong brand, Morgenstein said: “Just take it from a business perspective first, how much inventory are they going to have to liquidate now, or how much of it’s coming back to their warehouses from their retailers?”
These retailers, Morgenstein said, “with tens if not hundreds of millions of dollars of merchandise, saying ‘we’re sending it back,’ because [the merchandise is] not moving,” must, like Nike, face the business consequences of the fact that “the public doesn’t believe [Armstrong] anymore.”
In addition to the business concerns, Morgenstein said, Nike — like Armstrong throughout his Tour-winning years, when he assured the sporting public that his victories were achieved drug-free — “probably had, at some level, reassured over and over again their retail partners that there’s smoke but no fire. And so now, these retailers… they have to deal with the public rebuke of someone, for all intents and purposes, that’s no different than (Olympic medalist and drug cheat) Marion Jones.”
Armstrong, however, “is so much bigger of a global icon, with so much more to risk,” he added. “All these companies (that) have spent money associated with him, probably add up to be about a billion dollars.”
Companies like Nike and Trek Bicycles continued to back Armstrong, despite serious personal red flags, according to Morgenstein, pointing to “the fact that [Armstrong] had multiple wives, they’ve overlooked a lot of things that maybe some other people would have been held to… This is a company that stuck with Kobe Bryant after what happened in Colorado (Bryant was accused of rape in 2003), Michael Vick going to jail (for illegally organizing and gambling on dog fighting), Tiger Woods in a global scandal (Woods admitted to being a serial cheater on his wife), and they stuck with those three. Lance Armstrong, they dumped.”
David Carter, a sports business professor at the University of Southern California and executive director of USC’s Sports Business Institute said Nike could no longer afford to stand by Armstrong as it had other disgraced icons.
“I think because his indiscretion cut to the very heart of competition in sport, if he lacks that kind of integrity there’s no way a company like Nike can tolerate that,” Carter said. “The other guys’ problems were off the field of play.”
As both an athlete and as a marketable brand, Morgenstein said, “How you remember Lance Armstrong was like Paul Bunyan. And now, how you think of Lance Armstrong, is like Al Capone.”
Carter noted that a surprising number of disgraced athletes manage to rehabilitate themselves in the eyes of fans and sponsors. Armstrong might be different, not only because he was already retired from top-flight cycling when he was banned, but also because he has never admitted any wrongdoing.
“The only way they come back is when they take personal responsibility and accountability for what they’ve done,” Carter said. “He has not taken responsibility.”
With the fallout from USADA’s case against Armstrong mounting day-by-day, the extent of the business and marketing consequences is sure to grow.
Rebecca Bryan and Agence France Presse contributed to this report.