Lance Armstrong – Doping Scandal AND Sponsorship

Arjun J Chaudhuri

Revelations of de-recognized seven times Tour De France winner, Lance Armstrong's aiding and abetting doping in the sport of bicycling is putting the advertising-based business model question for sponsors of sport. Sponsorship allows sponsors to reach mass audiences at a cost that is relatively low per unit as compared to personal selling in marketing goods or services. However, sponsorship also puts at risk the tainting of the sponsor’s Brand. The outcome of Lance Armstrong’s doping scandal has temporarily devalued the sport professional bicycling in Europe and United States of America, and there is no telling what the medium to long-term impact is. Paradoxically, bicycle sport became commercially popular after Lance Armstrong’s successful recovery from testicular cancer and comeback into sport. 

Tour De France bicycling team sponsor, Dutch company, Rabobank, has ended a sponsorship agreement worth 15 million Euros a year with concerns of what a doping scandal of this magnitude would do to their brand image of trust and confidence while looking to accept saving deposits from potential consumers for banking services or investing on their behalf in securities where product risk is great. Lance Armstrong’s sponsor, Nike, has also ended their agreement after the US Anti-Doping Agency [USADA] announced that his success had been fuelled by an elaborate and sophisticated doping scheme. 

Nike, an athletic shoe and apparel company that manufactures and markets its products globally has benefitted in real sales with brand associations with celebrities such as former NBA basketball player Michael Jordan. Equally, where the image of the associated athlete has fallen in the eyes of the public because of the extensive media coverage that their activities draw, the management at Nike has ended their association just as quickly, such as the case of Tiger Woods whose illicit love affairs ended his marriage and severely affected his sporting performance.

Sports Management Companies are very conscious of this and have been repeatedly advised by sponsors to stay focused on anti-doping procedures that professional athlete have to undergo randomly. Contract clauses are extremely strict on athlete conduct while endorsing branded product that any infringement such as dope test failure would simply result in termination of sponsorship contract. Reportedly, Jonathan Vaughters, manager for the Garmin-Sharp bicycling team, admitted to doping during his career as a professional bicyclist but launched his team five years ago with a public commitment to clean bicycling.

Japanese company Sharp Electronics signed up as a sponsor in June 2012, sharing naming rights with Garmin, the US maker of navigation devices, ignoring Jonathan Vaughters past.

Besides sponsorship agreements, bicycling teams can also earn prize money [450,000 Euros] in events like the Tour de France, which will stage its 100th racing edition in 2013.

The Tour De France is run by the family-owned French group Amaury Sport Organization [ASO], does not charge its spectators a viewership fee but generates its income through the sale of broadcasting [TV] rights to an estimated 190 countries and has its own sponsorship agreements in place that is independent of bicycling teams’ sponsorship deals.

However, in spite of the exit of renowned sports sponsors such as Rabobank and Nike from professional bicycling, there is growing optimism that their departure is unlikely to trigger a mass exit from a sport that delivers such exposure of brand awareness in Europe. 

The key to make the sport re-competitive and commercially re-valuable is to eradicate doping from sport by ensuring even more stringent measures to check consumption of performance enhancing substances and enforcing actual and punitive penalties on those who infract this basic requirement of sports persons and teams to be competitive, and thereby commercially entertaining.