Sorry!! The article you are trying to read is not available now.
Thank you very much;
you're only a step away from
downloading your reports.

Why Nike's Problem With Lance Armstrong Isn't Just About Money

By

Sometimes, even a massive corporation can get emotionally attached.

PrintPRINT
MINYANVILLE ORIGINAL The Wikipedia page entitled "List of Nike sponsorships" is impeccably constructed and maintained, just as you'd expect. After all, Nike (NYSE:NKE) is one of the world's biggest and most valuable brands, a name associated with grace, elegance, and excellence: The floppy-haired Steve Prefontaine, the imperious US women's national soccer team, the superhuman Michael Jordan.

Last week, however, one of Nike's longest-running sponsorships came to an abrupt and ugly end, and that Wikipedia page is one name shorter. The company announced that it would terminate its contract with Lance Armstrong, the phenomenally successful cyclist whose seven consecutive Tour de France victories and cancer-survivor success story made him one of the most high-profile athletes of the 21st century before widespread doping allegations led to Armstrong stepping down as chairman of cancer-research charity Livestrong.

Yesterday, he was finally stripped of all seven titles as well as countless other career wins by cycling's governing body. Nike's scrubbed-clean public image (scrubbed, for instance, of any evidence of its sweatshop labor controversies), visible in everything from its shoes to its ads to its Wikipedia page, has taken a bit of a hammering as a result of the Armstrong scandal.

For whatever reason, the company has decided to depart from its usual strategy of waiting out the sponsorship contract of a steroid-abusing athlete and instead dropped Armstrong like a hot potato. Even catastrophic image-collapse victims like Marion Jones and globally-depised hate-magnets like Alex Rodriguez (both prominent steroid users) got to finish out their contracts. So why the policy change?

Business Insider's Tony Manfred thinks it has something to do with the company's statement that Armstrong "misled Nike for more than a decade," but fails to take this to its logical conclusion. Any athlete who dopes, obviously, is misleading his sponsors, as well as his fans and his fellow athletes.

It wasn't the degree to which Nike bought Armstrong's story, though, that was the problem. The problem was the degree to which Nike sold it. The advertisements in which Lance Armstrong starred were soul-shakingly powerful, but they've almost instantly become jokes-and embarrassing ones at that. Check out this one, in which Armstrong calmly states, "This is my body, and I can do whatever I want to it."

It is precisely this whiplash-not just the lie, but the embarrassment of having believed and profited so massively from the lie-that is the reason that Nike has so publicly dumped one of its most prominent faces. When Alex Rodriguez and Marion Jones were caught doping, they really only injured themselves and their own reputations. Nike hadn't invested in them emotionally, only financially.

But Lance Armstrong has been so huge a part of Nike's public campaigns over the past decade-his pain, his courage, his supposed heroism-that his being unmasked as a fraud is having major repercussions for Nike's value as a brand. If Nike feels misled by Armstrong, consumers feel doubly misled by Nike. It remains to be seen how the company will behave in the coming weeks, but its reaction will have a big impact on whether the company recovers from having so spectacularly bet on the wrong horse.

Nike's stock took a 2.04% hit on Monday, falling especially steeply in early trading.
< Previous
  • 1
Next >
No positions in stocks mentioned.
PrintPRINT
 
Featured Videos

WHAT'S POPULAR IN THE VILLE