Potential negative outcomes from sponsorship for a sport property
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Managing Leisure, 2014
http://dx.doi.org/10.1080/13606719.2014.912050
Potential negative outcomes from sponsorship for
a sport property
John L. Crompton
Department of Recreation, Park and Tourism Sciences, Texas A&M University,
College Station, TX, USA
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
Sponsorship funding has become a staple source of revenues for many sport events, but there are two
types of potentially negative outcomes for properties that may be associated with it: operational risk
and reputational risk. Operational risk occurs when sponsors insist on changing the rules or format
of the event, or when they exercise undue influence on its content, timing, location or participants.
The primary source of reputational risk is increased public sensitivity to the negative health impacts
of some product categories, most prominently those of tobacco, alcohol, gambling and products that
are high in fat, salt or sugar that may make it contentious for a sport property to partner with com-
panies in these product classes. Similar controversy from public sensitivity may emerge around
issues of corporate social responsibility, as expectations grow regarding the impact of a company’s
actions on society. Reputational risk also may emanate from over-commercialization of an event,
since this may erode “fan equity”, i.e. the passion of fans who traditionally have supported it.
Keywords: sponsorship, operational risk, reputational risk, tobacco, alcohol, gambling, junk food, cor-
porate social responsibility
INTRODUCTION property, or from erosion of “fan equity”
caused by over-commercialization. In these
When sport organizations accept sponsors’
cases the risk is that clienteles become disillu-
resources, they implicitly may be giving up
sioned with a property’s behavior so their
some control over their event. This may
support is gradually withdrawn.
result in negative outcomes to the property
that were not anticipated when the agree-
ment was signed. This paper reviews the OPERATIONAL RISKS
two types of potential negative outcomes
that may occur to a sport organization from Changes in a Sport’s Format or Rules
a sponsorship agreement: operational risk In return for their support, sponsors may
and reputational risk. Operational risk is insist on changing the sporting event so the
likely to be the primary focus in the short very nature of the sport is altered. There is a
term and result from either change in a well-known aphorism that says those who
sport’s format or rules, or undue influence pay the piper call the tune. Changes may be
by sponsors on organizations or events. implemented to make a sporting event more
Reputational risk is a longer-term concern exciting, entertaining and attractive, especially
emanating either from negative connotations to television audiences. Tennis is an example
or controversies associated with sponsors of this type of influence. The method of
that may impugn the reputation of the sport scoring was changed by the introduction of
# 2014 Taylor & Francis2 Crompton
sudden death tiebreakers to shorten matches embraced rule changes for similar reasons
and make them more interesting, while the tra- with the formation of the National Indoor
ditional white apparel was replaced by multi- Lacrosse League in North America. In order
colored outfits for the same reason. to increase goal-scoring opportunities, the
It may be argued that these changes are net was widened by six inches and the
media, rather than sponsor-driven. number of penalties reduced, as compared
However, the distinction really is arbitrary to traditional box-style lacrosse (Berrett,
and without meaning, because a central 1993).
issue in negotiations between a potential For the most part, these changes have been
sponsor and a sport property is likely to be successful in attracting new and wider audi-
the probable extent of the event’s media cov- ences for their sports. Ostensibly, this is a
erage, since this is a major component in the positive development for both the sport prop-
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
leverage of a sponsorship platform. If a erties and sponsors. However, radical
sponsor is seeking increased brand aware- changes to the rules and formats of sports
ness or image transfer benefits, then a key that have a hallowed heritage stretching
to receiving them is the extent, and the back for over a century, inevitably offends
quality, of visibility of the sponsor’s brand some traditionalists. They are often the
with the sport property. Thus, it is likely central core of a sport’s supporters whose
that a sponsor will seek to maximize media deep passion for it makes them prime candi-
coverage before committing an investment. dates for companies seeking enhanced
The growth of one-day (50-over) and half- brand equity by securing image transfer
day (20-over) cricket matches in national from a sport property. The more a target audi-
and international competitions was fostered ence feels a sense of gratitude to a company
by their ability to accommodate the believing that its support contributes to
demands of television audiences who their enjoyment, the greater the likelihood
wanted to see an immediate and definite sales increases will accrue to the sponsor. In
outcome, rather than waiting for up to five contrast, some proportion of the new audi-
days for a result which, even then, is not ence may merely be seeking entertainment
guaranteed to produce a winner. Thus, the and lack the emotional involvement of tradi-
majestic, traditional international format tionalists on which sponsors seek to “ride”
which consists of a series of five games in order to acquire some of supporters’ affec-
each lasting five days that is beloved by tion for the property for their brand.
hard-core cricket enthusiasts, “stands at a
precipice” according to the 149th annual Undue Influence by Sponsors
edition of Wisden – the “bible” of cricket
Consider the following examples of sponsor
(Wilson, 2012). There is a real possibility
influence:
the traditional format will become a histori-
cal relic, usurped by the “quickie” games . When Nike invested $160 million in a five-
and their adapted rules to meet the instant year sponsorship of the Brazil national
gratification needs of broadcast audiences football team, which many consider the
which far exceed the numbers who go to leading national soccer team in the world,
grounds to watch the games. the company was allowed to specify
In amateur sport, field hockey has experi- where, when and against whom the
enced a number of rule changes aimed at national team would play twice per year
making the game faster and therefore more (Berrett, 1993).
attractive to spectators, media and, hence, . Andretti Autosports’ car failed to qualify for
sponsors. The sport of lacrosse also the iconic Indianapolis 500 race so itNegative outcomes from sponsorship 3
negotiated with AJ Foyt Racing. It was interests. Consider the following examples
agreed that Andretti would pay Foyt of the influence of NBC television and their
$200,000 for its driver and sponsors to sponsor allies at the Sydney Olympics:
take over one of Foyt’s cars that did
qualify. This was legal under INDYCAR . NBC’s requirement that the overhead
rules which stated that the fastest 35 cars power lines and 48 electrical towers at
made the race, not the 35 fastest drivers. Homebush Bay be removed and the
The arrangement was forged because cables put underground in order to
Andretti’s sponsors paid much larger fees improve television images; the New South
than Foyt’s sponsors and, hence, had Wales government contributed $20 m
much more to lose by not appearing in the toward what state leaders called “a luxury
race. There was widespread condemnation we can’t afford”.
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
of the action with many claiming it impaired . The positioning of the running track at the
the race’s integrity (Andrew, 2011). Olympic stadium, resulting in winds that
. Air Canada, a longtime and heavy-spending seriously impeded athletes’ performances,
corporate partner of National Hockey to accommodate the desire for television
League (NHL) teams, threatened to with- cameras to have a shadow-free main area
draw its sponsorships if the NHL did not not facing the afternoon sun.
immediately address the frequency of . NBC’s decision to protect its $1.2 billion
headshots and resulting injuries (Beifer- purchase of television rights by delaying
held, 2011). all telecasts until evening prime time
(since most of the network’s viewing audi-
While sponsorship investments buy ence lived in a time zone 12 – 15 hours
brands the right to associate with a property, behind Sydney time) (Lenskyj, 2002).
do they also give them the right to influence
the property’s presentation of the event even Since the Sydney Olympics, the delay of
if, like the Air Canada vignette, they are telecasts issue has become moot by the per-
motivated by facilitating the “general good” vasive presence of social and digital media
rather than self-interest? which instantly inform those interested of
Another dimension of sponsor influence the results.
occurs when the needs of a sponsor It has been alleged that as commercial
become more important than the intrinsic forces have become more pervasive, the
merit of the sporting event itself. The pressure on athletes to perform more often
Olympic Games is perhaps the forum at and to participate even when they are hurt
which this issue reaches its apogee, but the has increased (Slack & Amis, 2004). For
issue is debated in other contexts at lower example, cricket used to be a seasonal
levels of sport. The central role of US televi- game. However, the large amount of sponsor-
sion companies and sponsors in financing ship and broadcast revenues that have
the Olympic Games has resulted in the sche- flowed into the sport have transformed it
dule of track and field events sometimes into a year-round global game with few
being arranged so they can be shown live breaks for international caliber players. Simi-
on prime-time television in the USA. Thus, larly, since Rugby Union became a pro-
on occasions, for example, marathoners fessional game in 1995, players have
have been required to race during the become bigger, stronger and faster, and
hottest part of the day. In such cases, the have been required to play many more
welfare of the athletes and the focus on the games. Predictably, the increased physical
event become subservient to commercial and mental stresses have led to players4 Crompton
participating when injured and have resulted game two or three times a year and watch
in shorter professional careers. many of their games on television.”
. “I was angry in 2012 when the club replaced
Britannia its longtime sponsor with Bet
REPUTATIONAL RISKS 365. Betting companies make vast profits
from exploiting gullible poor people,
There is an aphorism that says: People are
especially the young, with their persuasive
judged by the company they keep. Sport
‘get rich quick’ stories.”
organizations are increasingly expected to
be responsive to social concerns as well as
Balance can be restored either by rationa-
their own financial well-being. Thus, they
lizing perceptions of actions of betting com-
have to be concerned about partnering
panies so they become more positive and
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
with companies that could damage their
justifiable; or by adopting more negative per-
reputation. The extent to which the repu-
ceptions of Stoke City F.C. because of their
tation of a sport property might be
alliance with Bet 365. In this case, the rela-
damaged by associating with companies
tively tentative support for the football club
whose products are widely criticized will
and the strongly held views toward betting
range widely across the negative – indiffer-
suggest the likely outcome would be: “I am
ent – positive spectrum. An explanation of
disgusted that Stoke City F.C. have ‘sold
the process that determines where individ-
out’ to a betting company and will have
uals locate along that continuum is offered
nothing more to do with them.” However, if
by balance theory and attribution theory.
the individual was a “hard core” fan who
Balance theory’s principles were
had purchased season tickets for decades,
described by its originator: “By a balanced
then the rationalization may be reversed:
state is meant a situation in which the
“The fact that Bet 365 is putting £3 million a
relations among entities fit together harmo-
year into the club, won’t have any influence
niously . . . A basic assumption is that . . .
on whether or not people engage in betting,
relations tend toward a balanced state . . . if
and I think it’s great for the club.”
a balanced state does not exist, then
Attribution theory addresses how people
forces toward the state will arise” (Heider,
make causal interpretations. It posits that
1958, p. 201). The theory suggests that
members of a target market will cognitively
people react aversively to inconsistency
infer a motive for a sponsor’s investment in
and positively to harmony, consistency
an attempt to understand the rationale for
and the expected, so they act in ways that
it. It recognizes that people interpret behav-
further these latter outcomes rather than
ior in terms of its causes, and that these
their antitheses.
interpretations are important in determining
Thus, imbalanced relationships are under
how to react to the behavior. Thus, “Causal
pressure to change toward balance. The
attributions play an important role in provid-
direction in which balance will be restored
ing the impetus to actions and decisions
will be determined by the relative strength
among alternative courses of actions”
of the sources of incompatibility. The
(Kelly, 1973, p. 125). The general model of
theory is illustrated by the following
attribution theory states that antecedents
hypothetical internal conversation:
which comprise consumers’ beliefs toward
. “As a lifetime resident of Stoke-on-Trent, I a sponsor and their suppositions about the
am pleased when Stoke City F.C. do well. I company’s motives; lead to attributions as
follow the team’s news on the sports to whether the sponsor is a loyal, empa-
pages, take the grandchildren to see a thetic, supporter of the sport property, orNegative outcomes from sponsorship 5
is unreasonably exploiting it; which lead to additional revenues to prevail over the
consequences that result in where consumers values that sport is alleged to represent
locate it on the negative– indifferent – posi- and personal or community well-being, then
tive scale (Kelly & Michela, 1980). there is risk of reputational damage to a
A central precept of exchange theory property.
which undergirds sponsorships is that the Some sport managers have chosen to dis-
relationship has to be fair to both sides. regard this risk because they believe their
There will be an understanding that in sports would not be financially viable
exchange for their investment, companies without sponsorship from companies in
need to secure a return on their investment. these sectors. They are concerned that loss
However, the company’s sponsorship will be of these revenues would mean either that
perceived to have both extrinsic motives events would be eliminated or that ticket
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
(commercial considerations) and intrinsic prices would be commensurately increased.
motives (loyalty, support, belief in the prop- The former outcome is likely to occur in
erty. If the company is explicitly mercenary some contexts, but an economist is likely to
and perceived to lack genuine, sincere argue that the latter outcome is improbable.
support for the property, then its investment Both of these outcomes assume that costs
will be discounted, imbalance will not be would remain fixed if sponsorship revenues
positively restored and the property may declined, but in many instances it is likely
suffer reputational damage from associating that efforts would be made to reduce costs.
with sponsors that are perceived to be cyni- It is naı̈ve to believe that ticket prices
cally exploitative. In contrast, if a sponsor- would be increased. Most sport managers
ship is packaged as an act of social are charged with setting ticket prices at a
responsibility, corporate altruism or benevo- level that will garner maximum revenues for
lence, then motive attribution would their organization, so the current price of
enhance sponsor credibility which would tickets is likely to be the highest price the
ameliorate the danger of compromising a market will bear. If patrons could pay more,
property’s reputation. then sport organizations would charge
more now. Thus, ticket prices could not be
increased if sponsorship was withdrawn.
The Sponsor Product Classes That Are The only way to retain viability or profit
Most Controversial margin would be to reduce costs which
Some people believe that by helping sponsor would involve reducing players’ salaries,
companies to market products which are prize money, administrative overhead, etc.
potentially harmful to public health, sport Most controversies focus on sponsors in
properties compromise their inherent the tobacco, alcohol, gambling and products
virtue for revenue (McDaniel, Mason, & high in fat, salt or sugar (HFSS) sectors. Tra-
Kinney, 2004). It is incongruous to them ditionally, companies in these industries
that sport which exemplifies a healthy fit life- have been major sponsors of sport events,
style should be used as a promotional but the debate over the appropriateness of
vehicle for products that appear to be the partnering with such businesses is becoming
antithesis of this. In short, these linkages increasingly prominent. In response to the
which are consummated for financial pur- public health concerns associated with
poses seem to defeat the broader raison these products, some professional sports
d’être for sport. When attribution theory leagues in the USA have inserted “morality”
leads to a conclusion that a property is clauses in collective bargaining agreements
“selling-out” by allowing the allure of with the players’ associations. These6 Crompton
clauses prohibit players from endorsing or Administration (FDA) the power to regulate
associating with tobacco, alcohol or gam- the tobacco industry. In June 2010, the FDA
bling companies (McDaniel et al., 2004). issued regulations closing the existing loop-
holes. They applied to all tobacco companies
Tobacco and all states, not only to those that signed
Tobacco companies had a long history of the earlier MSA, and banned all sponsorship.
sponsoring sport. Indeed, in the USA before The rules stated:
1998 they ranked second behind the auto-
Manufacturers, distributers, and retailers of
mobile sector as the primary investors in tobacco products MUST not sponsor any
sport. During the 1990s, opposition to their athletic, musical, artistic, or other social or
sponsorship reached a crescendo. It cultural event, or any entry or team in an
revolved around three issues. First, through event, in the brand, name, logo, symbol,
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
sport sponsorship the product could be motto, selling message, recognizable color
associated with the vibrant health of athletes or pattern of colors, or any other indicia of
instead of the horrors of emphysema, lung product identification, identical or similar
cancer and the host of other illnesses to, or identifiable with, those used for any
caused or exacerbated by tobacco products. brand of cigarettes or smokeless tobacco.
Second, was the belief that the sport linkage (21C.F.B. 1140.34c)
enabled tobacco companies to penetrate the The prohibition of tobacco company
youth market, and more than 90% of people sponsorship in the USA is consistent with
who will ever smoke on a regular basis do actions taken in many other countries
so prior to the age of 19 (Koop & Kessler, throughout the world. For example, a Euro-
1997). Third, was the contention that such pean Union Directive prohibited tobacco
sponsorship circumvented the ban of ciga- advertising and sponsorship in its 27
rette advertising and promotion in broadcast member countries in 2005. The demise of
media that was enacted in the USA in 1971. tobacco sponsorship in a short 15-year
In 1998, the angst with tobacco compa- period was remarkable (and perhaps a salu-
nies, and the extraordinary costs they tary exemplar for other potentially harmful
imposed on states’ health care systems products) given the industry’s aggressive
through people’s use of their products, opposition to such legislation and its formid-
resulted in the Master Settlement Agreement able expenditures on lobbying and influen-
(MSA). In this, 11 tobacco companies exe- cing political processes.
cuted a legal settlement with 46 states, the
District of Colombia, and five common-
wealths and territories, agreeing to pay Alcohol
these entities $246 billion over 25 years. In The nexus between alcohol, sport and males
addition, the settlement agreement con- has a long cultural history. By no later than
tained a number of important public health the sixteenth century in the UK.
provisions, including several resulting in
the severe curtailment of sponsorship the ale house was the main arena for staging
sports events . . . with fields, greens, courts,
investment by the companies.
rings, and the like arranged in close proxi-
There were loopholes in the MSA that mity to the grounds. Here came much cock-
enabled some limited tobacco sponsorship fighting, boxing, bowling, rugby, foot-races,
to continue. However, these were closed by and more. Riding on the tendency of retired
the Family Smoking Prevention and sport players to become pub owners, pro-
Tobacco Control Act passed by Congress in prietors became sports promoters and pro-
2009. This gave the Federal Drug grammed contests that would draw theNegative outcomes from sponsorship 7
largest crowds for the sale of brew. (Wenner accompanied by a commensurate increase
& Jackson, 2009, p. 6) in criticism from those concerned about
Alcohol companies are major sponsors of alcohol abuse. There has been heightened
sport. In the USA, Anheuser-Busch and Miller awareness in recent years that alcohol is a
Coors rank third and eighth, respectively, on drug with the potential to become addictive.
the list of companies most active in sport There are approximately 79,000 deaths
sponsorship (IEG, 2012), while Labatt and attributable to alcohol use each year in the
Molson are similarly active in Canada, and USA, making it the third leading lifestyle-
Guinness and Heineken in Europe. Several related cause of death for the nation. There
decades ago, the substantial investment by are more than 1.6 million hospitalizations;
beer companies in sport sponsorship was more than 4 million emergency hospital
visits for alcohol-related conditions
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
explained in these terms: “Beer drinkers
and sports fans are one and the same – indi- (Centers for Disease Control and Prevention,
visible, inseparable, identical! No one drinks 2011); and unmeasurable negative costs
more beer than a sports fan, and no one such as spouse and child abuse, desertion,
likes sports better than a beer drinker” emotional problems and fetal alcohol syn-
(Johnson, 1988, p. 74). The ages of drome. The concern is that beer companies’
maximum beer consumption and maximum promotions connote it is natural for this
sports involvement are the same, both for intoxicating drug to be consumed while
men and for women. The peak beer consum- watching, or after participating in, a sporting
ing years are from 18 to 29, which are the activity. The question is: Should sport be at
peak years for sports’ participants and spec- all connected with a drug that is responsible
tators. Males in the 18– 34 age group consti- for such problems? Sponsorship and adver-
tute only 20% of the beer drinking tising by beer companies promotes the
population, but they consume 70% of all image that beer is not very different from
beer. Breweries have sought tie-ins with soft drinks, and its negative consequences
sports because they provide a “macho” such as traffic deaths, domestic violence,
vehicle that appeals to their core young physical deterioration from cirrhosis, hyper-
adult male target audience. These heavy tension and stroke, and pregnancy risks are
users are the most critical market segment ignored.
for beer companies and it is easy to commu- Alcohol sponsorship aspires to create
nicate with them through sport associated positive brand image transfer associated
events. with sport teams and athletes: vitality,
The CEO of Anheuser-Busch identified fitness, fun, health, endurance, speed and
four priorities in the company’s quest to strength. It has been observed that “beer
enhance profits by increasing overall con- comes to share the luster of healthy athleti-
sumption and sales: (1) improve the image cism”, and that
and desirability of beer; (2) keep beer fun It’s really paradoxic that alcohol and all it
and social; (3) increase beer occasions; and stands for should be associated with excel-
(4) improve retail sales. Sponsorship of lent athletic performance. You cannot have
sports fits well with all four of these strat- one and the other at the same time. If
egies and so has become the company’s you’re going to perform as a top-grade
primary promotional tool in most of its athlete, you have to cut out alcohol.
markets (Wenner & Jackson, 2009). (Johnson, 1988, p. 78)
As the magnitude of sport sponsorship by The close relationship between beer and
breweries has increased, it has been sport has caused some “to wonder just8 Crompton
what kind of cultural hypocrisy is going on “moderate” as one drink a day for females
when Americans relentlessly insist on and two drinks a day for males.
immersing sport- our most wholesome, The debate over alcohol sponsorship is
most admired, even (sometimes) most especially potent in the context of college
heroic institution – in a sea of intoxicating sports, since they articulate a different
drink” (Johnson, 1988, p. 70). mission from the revenue and profit maximiz-
In response to their social critics, beer ing model that characterizes professional
companies point out that when used in mod- sports. In an open letter to Congress,
eration, beer has been shown to have posi- renowned US college coaches Dean Smith,
tive effects on health. A cardiologist who John Wooden, Joe Paterno and Jim Calhoun
undertook an exhaustive review of the stated, “Advertising alcoholic beverages
empirical literature concluded: “A vast litera- during college sports telecasts undermines
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
ture supports the notion of health benefits of the best interests of higher education and
moderate alcohol consumption.” However, compromises the efforts of colleges and
he issued a caution, “The recent research others to combat epidemic levels of alcohol
clearly shows that while moderate alcohol problems on many campuses today.” The
consumption is beneficial, the benefit is lost Center for Science in the Public Interest
at higher levels of consumption” (Kocheril, sought to convince colleges to sign the
2010, p. 420). The US Departments of Agricul- College Commitment, which features a prohi-
ture and Health and Human Services care- bition of alcohol advertisement during tele-
fully reviewed all the scientific literature vised collegiate sports events. The
related to alcohol consumption and health document was signed by officials at more
and concluded: than 250 colleges (Naughton, 1998). The evol-
ution of the thinking process among college
The consumption of alcohol can have ben- officials is captured by the following anecdote:
eficial or harmful effects, depending on the
amount consumed, age, and other character- The director of men’s athletics at the Uni-
istics of the person consuming alcohol. versity of Minnesota negotiated a contract
Alcohol consumption may have beneficial with Miller Brewing Company worth
effects when consumed in moderation. $150,000. Subsequently, he was promoted
Strong evidence from observational studies to vice-president for student development
has shown that moderate alcohol consump- and intercollegiate athletics of the univer-
tion is associated with a lower risk of cardio- sity system. When the contract expired, a
vascular disease. Moderate alcohol new contract for $225,000 was offered.
consumption is also associated with This time he declined explaining, “Being in
reduced risk of all-cause mortality among a new position, I was able to get a big-
middle-aged and older adults and may help picture view of what was happening . . . I
to keep cognitive function intact with age. felt like we were sending students a mixed
However, it is not recommended that message.” That big picture had included
anyone begin drinking or drink more fre- the need for 14 students from the university
quently on the basis of potential health to enter alcohol-rehabilitation programs
benefits because moderate alcohol intake is and an increase in alcohol-related assaults
also associated with increased risk of on that campus, which constituted part of
breast cancer, violence, drowning, and inju- his new responsibilities (Naughton, 1998,
ries from falls and motor vehicle crashes. p. A57).
(USDA & USHHS, 2010, p. 31)
Nevertheless, football bowl games,
The USHHS (United States Department conferences and some individual colleges in
of Health and Human Services) define the USA still accept alcohol companyNegative outcomes from sponsorship 9
sponsorships. Some reject it and bar their France. Actions creating momentum likely
local media partners from airing alcohol to lead to more restrictions or bans on
advertisements in game broadcasts. Ohio alcohol sponsorship include:
State, a major athletic power, is illustrative
. A report commissioned by the European
of this group. Their athletic director
Union calling for an outright ban on
explained: “Colleges cannot work hard to
alcohol sponsorship throughout Europe
tone down the use of alcohol around
on health grounds.
games, while cashing checks from beer com- . An Irish government report, National Sub-
panies. There’s a terrible inconsistency
stance Abuse Mission Strategy 2009 – 2016,
there” (Fatsis, 2003, p. B12).
which recommended: “Ban alcohol spon-
The decision confronting sport managers
sorships of all sporting and large music,
as to whether or not they should solicit or
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
comedy and theatre events.” It states:
accept sponsorship from beer companies is
“The burden of health harms and the
more difficult than that associated with
social consequences of harmful use of
tobacco companies because, unlike
alcohol demand the implementation of
tobacco, the problem is not consumption of
further measures . . . to reduce the amount
beer, rather it is the abuse of beer. This
of alcohol we drink” (Holland, 2012).
makes it tempting for sport managers to . Australia, New Zealand, Welsh and South
rationalize that there does not appear to be
African governments have all indicated an
a strong enough case to ban beer companies
intent to ban alcohol sponsorship.
from sponsorship opportunities. Certainly, . The British Medical Association urged the
the case for a ban ostensibly is less compel-
UK government to pass a law that would
ling than the case that was made to ban spon-
include banning all sports and music spon-
sorship by tobacco companies.
sorships by alcohol companies. The gov-
Nevertheless, the alcohol industry is oper-
ernment acted on many facets of their
ating in an increasingly restrictive regulatory
recommendation with multifaceted restric-
environment worldwide that is reminiscent
tions on the alcohol industry, but to this
of the early ruminations which ultimately
point have excluded a sponsorship ban
led to the ban on tobacco products.
from their regulations.
Alcohol sponsorship of sport is vulnerable.
Every time bad behavior by athletes or fans
that is fueled by alcohol receives media visi- Gambling
bility, the negative linkage between sport Like tobacco and alcohol, gambling has had a
sponsorship and alcohol abuse is reinforced. long relationship with sport. A contempor-
Alcohol sponsorship has been banned in ary description of crowds en route to the
several countries, most notably France Circus Maximus in Ancient Rome observed
which prohibited it in 1991. Thus, the Heine- they are “already in a fury of anxiety about
ken Cup, which is the primary rugby club their bets” (Sauer, 1998), while a close
competition in Europe, has to be called the relationship has been documented between
H Cup in France; when the Scotland Rugby gambling and cricket and baseball in eight-
team play in France they have to cover eenth- and nineteenth-century Britain and
their sponsor’s name on their shirts since the USA, respectively (Munting, 1996). One
Famous Grouse is an alcoholic beverage historian, for example, contended that at
(Singer, 2008); and Anheuser-Busch replaces the onset of the twentieth century its popu-
beer/alcohol logos on cars it sponsors in larity with gamblers meant that, “baseball
Formula 1 racing with nonalcoholic brands was an important nexus between urban
it owns when the competition takes place in machine politics and organized crime,10 Crompton
albeit a lesser one than prize fighting or The emergence of “proposition bets” in
horse racing” (Riass, 1999, p. 87). There recent years has been especially trouble-
have been many cases of game fixing, includ- some. These relate not to the result of a
ing the notorious Chicago White Sox players game but to some aspect of it. For example,
alleged to have fixed the 1919 Baseball World a retired English Premier League (EPL)
Series for $100,000. All of the major US pro- player who made 400 appearances for his
fessional sports leagues over the years team said players would deliberately manip-
have had to address betting scandals (McDa- ulate set pieces such as corners and throw-
niel et al., 2004). ins:
Given this heritage, it might be expected
that sport leagues and properties would be For a while we did this almost every week.
wary of entering into sponsoring agreements We made a fair bit of money. We could
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
with gambling companies. In the USA such make deals with the opposing captain, for
example, betting on the first throw, the first
links are generally prohibited by the sports
corner, who started with the ball, a yellow
leagues, although they do allow sponsor- card or penalty. Those were the sorts of
ships by state lotteries. Nevertheless, in things we had influence over. (Jackson, 2012)
recent years legal constraints on gambling
have been relaxed, so it has become more Soccer is the world’s most popular sport,
widespread and expanded the types of but it may also be the world’s most corrupt
gaming activities on offer. sport. European police investigations ident-
There are two dimensions to the issue of ified hundreds of matches, including some
sport sponsorship and gambling. The first involving the World Cup, the European
dimension is that the clubs are promoting a Championships and the Champions League,
potentially risky behavior of gambling pro- that had been fixed by corrupt global
blems that is increasingly recognized as a betting syndicates, many of which are
public health issue and that this abrogates based in Southeast Asia. The biggest
their responsibility to be socially respon- betting companies transact around $2
sible. The target groups known to be at billion a week, which makes soccer gambling
highest risk for gambling problems are an attractive target for criminals (Tatlow,
young males and adolescents who both 2013). The preferred method of fixing the
tend to relate to sports. outcome of games or “proposition” bets is
The second problematic dimension for by bribing referees, but there are also numer-
sport managers relates to gambling posing ous examples of players and coaches coop-
a threat by introducing incentives for corrup- erating with criminals to fix outcomes. For
tion. In recent years, it has been rampant. For example, in international soccer matches
example, in US college basketball most involving African teams and a South African
betting revolves around whether a team promoter, referees were bribed to award
will “beat the spread”, rather than win or multiple penalties to a specified team.
lose the game. This means athletes can be When the fix was arranged, organized gangs
on the winning team and at the same time across Southeast Asia employed hundreds
engage in corrupt actions that reduce the of people to place a series of bets up to
winning margin. This enables them to profit $3000 – the theory being that smaller bets
if they bet against their own team on the were less likely to draw suspicion
spread. Using a “forensics economics” (Chapman, 2012).
approach, it has been estimated that this Many of these betting companies are
“point shaving” occurs in as many as 1% of based in Asia and the worldwide reach of
college games (Wolfers, 2002). the EPL enables them to use theirNegative outcomes from sponsorship 11
sponsorship of EPL teams as a platform to Manchester United for the title of world’s
establish credibility in their home markets. best known soccer club (Chapman, 2012).
While these partnerships give respectability The gambling problem is not confined to
to the companies, there may be a risk that college basketball and professional soccer.
their pervasiveness and the unsavory conno- For example, a top player on the pro tennis
tations associated with gambling in sport circuit commented, “Everyone knows cheat-
may damage the perceived integrity of the ing goes on.” In tennis, a favored player can
teams and the league. Despite these linkages, retire from a match by feigning injury and
sponsorship by gambling companies in thus gift a win to the underdog (Doughty,
soccer is flourishing. For example, betting 2012).
companies have been the major shirt spon- In this environment, is it appropriate for
sors in the EPL with 7 of the 20 teams being sport properties to be partners with betting
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
sponsored by them either currently or in companies? The danger of the sport/gam-
recent years: bling companies relationship was identified
by the International Olympic Committee Pre-
Aston Villa-Genting Casinos
sident who said that betting-related corrup-
Stoke City – bet365
tion was as big a threat to the integrity of
Sunderland – Boylesports (terminated 2010),
Tombola (terminated 2012)
sport as doping:
Swansea City – 32 Red (who formerly spon- It is a world problem and it is a very perni-
sored Aston Villa) cious problem. With the introduction of
Tottenham Hotspur – Mansion Casino (ter- broadband, you can bet worldwide. The
minated 2010) danger is in match fixing and you see more
West Ham United- Sbobet and more attempts to manipulate matches.
Wigan Athletic – 12Bet (who replaced It is as dangerous as doping for the credi-
188Bet) bility of sport. (Goodley, 2012)
The EPL is an obvious vehicle for betting It has been suggested that, “The crux of
companies since the people most likely to the matter seems to be short term financial
bet on sports are sport fans. After Bwin gain versus the long-term outlook concern-
signed a three-year agreement with Manche- ing the integrity of contests as well as the
ster United to become the club’s “official image of sports organizations” (McDaniel
online gaming and betting partner” (one of et al., 2004, p. 302).
the club’s 32 different sponsors), the com- The dangers of sport associating with
pany’s CEO stated: gambling were recognized by the European
Court of Justice which stated in the Bwin vs
As Europe’s leading online sports betting Santa Casa case there was a possibility that
operator, football is fundamental to our
long-term success, making up approximately an operator which sponsors some of the
half of our total sports betting revenue of sporting competitions on which it accepts
261 m euros ($320 million). Manchester bets and some of the teams taking part in
United has 569 million followers outside of these competitions, may be in a position to
Europe, providing us with a great opportu- influence their outcome directly or
nity to offer jointly designed and innovative indirectly, and thus increase its profits.
products in countries that do not yet allow (Liga Portuguesa v. Departmento de Jogos,
real money online sports betting. 2009)
This partnership complemented Bwin’s The court’s concern was that commercial
existing sponsorship with the Spanish team gambling providers could use their sponsor-
Real Madrid, which competes with ship position to influence the results of12 Crompton
matches or to gain access to insider infor- of the Mayor of London and with a two-
mation. A similar view was taken by the thirds majority has the power to amend the
Council of Europe in an Adopted Resolution Mayor’s budget or overturn his strategies.
of 22 September 2010 which stated, “Betting In advance of the London Olympics the
operators should be banned from funding Assembly passed a motion
or sponsoring teams or individual competi-
to recommend that the IOC introduces cri-
tors if they manage bets placed on compe- teria for the selection of future Games that
titions in which they are participating.” exclude food and drink companies strongly
associated with high calorie brands and pro-
Products high in fat, salt or sugar ducts linked to childhood obesity and to
The targeting of youth by fast-food and sugar encourage national organizing committees
drinks companies has emerged as an ethical to adopt similar criteria.
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
concern. These HFSS products are being The chair of the Assembly who proposed
increasingly regulated, albeit at a relatively the motion said:
minor level at this point. For example, in
the UK, television advertisements for these London won the right to host the 2012 Games
products must not be shown on or around with the promise to deliver a legacy of more
programs that may appeal to children active, healthier children across the world.
under the age of 16. Given the growing con- Yet the same IOC that awarded the games
to London persists in maintaining sponsor-
cerns of societies about obesity, it seems
ship deals with the purveyors of high
more restrictive legislation is likely in the calorie junk that contributes to the threat
future. of an obesity epidemic.
Sport is acknowledged by HFSS
businesses as being an effective vehicle for The Assembly believed that allowing com-
reaching the critical youth market. Asked panies like McDonald’s and Coca-Cola to be
why McDonald’s invest so much in sport, featured as The Olympic Partner (TOP) spon-
the company’s director of worldwide market- sors contradicted the goal of leaving behind
ing said, “It is important that we build brand a healthy legacy for children (“London 2012
loyalty with kids . . . sponsorships are a great Olympics”, 2012)
way to accomplish this” (Kelso, 2004). One The conundrum of selecting between
expert on food policy commented: revenue enhancement and health concerns
over fast food is particularly prominent in
It is very convenient for fast food and soft the high-school context. It is common for
drink people to sponsor sport, because by
soft drinks companies to provide sponsor-
doing so they place all the emphasis on
activity as the means of avoiding obesity
ship money to fund high-school sports in
rather than both activity and diet. There is the USA, which provokes the questions:
a similarity between the strategy of the does pairing sport and HFSS foods and
food industry today and the tobacco indus- drinks implicitly communicate that one can
try. Both have used sport as a means of eat them and still look and feel like an
reaching young people and both began by athlete? Should high-school sport events be
denying evidence that their products are used to promote consumption of a product
harmful to health. There is a horrible famili- that the US Department of Agriculture and
arity in the way the food companies have all reputable health nutrition texts urge stu-
behaved; they are trying to buy influence dents to avoid? Does it make sense for the
and present a kindly face. (Kelso, 2004)
school to be teaching avoidance in the class-
The London Assembly is a 25-member room and to encourage use on the sports
elected body that scrutinizes the activities field? There appears to be an ethical issueNegative outcomes from sponsorship 13
with schools embracing a set of values they trustees. GEO have been the target of numer-
probably should be against. ous lawsuits and allegations claiming pris-
The fast-food industry is under attack oner abuse, which has resulted in them
from a growing army of lawyers, doctors paying out millions of dollars in fines and
and ordinary citizens. Elected officials are penalties. A US judge described one GEO
coming under pressure to pass laws limiting facility for teenaged prisoners as “a cesspool
the junk food sold in schools and to regulate of unconstitutional and inhuman acts and
the marketing of products high in fats, sugar conditions” and “a picture of such horror
or salt. “Big Food” is becoming a target of as should be unrealized anywhere in the civi-
protest just as “Big Tobacco” was in the lized world” (Hyde, 2013). Outrage from
1990s. Protestors are campaigning for fast- South Florida communities, which are
food companies to put cigarette-style highly sensitive to immigration and human
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
warning labels on their food. Junk-food rights violations; campus protests; and cam-
makers have to appeal to children to sell paigns by civil rights groups caused the
their products. They need to create custo- agreement to be mutually terminated
mers, but is this something that sport man- (Muret, 2013). Presumably, both the negative
agers should support through accepting reputational outcome for FAU from associat-
sponsorship from such companies? Every- ing with a company perceived by some to be
one can get excited at the revenues these a pariah and the widespread negative publi-
sponsors bring to the organization, school city drawing attention to GEO’s transgres-
or association, but don’t sport managers sions persuaded both parties to withdraw
have an obligation to ask whether these pro- from the agreement.
ducts are good for the people being targeted Wonga is the UK’s highest profile payday
before accepting them as sponsors (Tyre, lender. When Newcastle United signed a £6
2002)? million a year shirt sponsorship with the
company, there was a loud outcry. The
Other concerns relating to corporate city’s leaders were unanimous and outspo-
responsibility ken in their condemnation of the sponsor-
In most of the cases described to this point, ship. The president of the city council
the nexus between products and their alleg- called it “disgraceful” saying it “undermines
edly detrimental health impacts is highly all the work we are doing to crack down on
visible. Many other corporate social respon- legal loan sharking”. The head of the team’s
sibility issues are less obvious. For example, fan club described the deal as “shameful”
McDonald’s has been accused of accelerat- and said “it tarnishes the club’s name,
ing the destruction of rainforests to make image and reputation.” A local MP accused
way for cattle ranches; wasteful production Wonga of “legal loan sharking” and said, “It
and disposal of its packaging; and cruelty is only through preying on families struggling
to animals (Slack & Amis, 2004). to make ends meet that Wonga has made
Florida Atlantic University (FAU) agreed a enough money to be able to sign this deal
$6 million naming rights deal to be paid over with Newcastle” (Conn, 2012).
12 years for its new 30,000-seat football The partnership was consummated,
stadium with GEO Group. The $3 billion which suggests the Newcastle club owner
company is one of the largest operators of believed the fans’ outrage would be ephem-
for-profit prisons in the USA (it also operates eral and would not inflict damage on his
in the UK). Its headquarters are in Florida, property. However, Bolton Wanderers F.C.’s
and its chairman was a FAU alumnus and owners reached a different conclusion
former member of the school’s board of (Kent, 2013). Their fans protested so14 Crompton
vigorously against the club’s shirt sponsor- An ongoing challenge for sport apparel
ship agreement with QuickQuid, another companies is to address allegations that
payday lender, that eight days after signing their products are produced in “sweatshops”
the agreement the club nullified it. In the in underdeveloped countries where workers
Newcastle context, fans’ strong emotional (predominately women and children) are
attachment to the success of their club led paid low wages; have minimal safety and
to balance being restored by retaining the environmental standards exposing them to
sponsorship; whereas in the Bolton case, dangerous machines and harmful chemicals;
fans’ negative attributions of the motives of and are required to work long hours at unrea-
QuickQuid resulted in balance being listic speeds with no access to unions. Nike,
restored by terminating the sponsorship. adidas, Reebok and others face continual cri-
Clearly, partnering with such socially contro- ticism. Nike, for example, owns 11 factories
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
versial partners carries a reputational risk in Indonesia that produce 5.5 million shoes,
.The consequences of that risk are likely to mostly for the US market. The company’s
be weighted differently by different owners typical response to these allegations is:
and are only likely to be revealed over a “Nike believes wages are best set by the
longer time period. local marketplace in which a contract
In the USA, sport properties that have factory competes for its workforce” (Bloom-
associated with ExxonMobil have been sub- berg Businessweek, 2006).
jected to criticism. When Washington, DC, Organizations such as United Students
built a new stadium for the Washington Against Sweatshops urge these companies’
Nationals to welcome baseball back to the products be boycotted. To this point, the
nation’s capital, it was the country’s first protests appear to have gained little traction
LEED (Leadership in Energy and Environ- among the general population, but this may
mental Design) certified green major pro- change as corporate social responsibility
fessional sports stadium. One of the team’s emerges as an expectation rather than a dis-
sponsors was ExxonMobil whose signage cretionary philanthropic behavior. Adidas, a
appeared prominently in the stadium. The TOP sponsor of the London Olympic Games
sponsorship was activated by the distri- and the maker of Team GB kit, was the
bution of tip cards and by displaying focus of sweatshop protests around the
energy-saving ideas on the stadium score- Games. For example, campaigners from War
board. Environmentalists were outraged. on Want released a 90-second video on
The Strike Out Exxon group protested that YouTube alleging exploitation of workers.
the company’s involvement in the park Their spokesman stated:
“burnishes the image of the worst environ-
mental company on the planet . . . The more adidas has 775,000 workers making products
environmental the Nationals make that park in 1,200 factories in 65 countries. What’s
seem, the stronger the payday for Exxon”. shocking is at a time they are spending
$100 million alone on the sponsorship deal
Pointing out that the company had spent
with the Olympics, and the additional deals
$20 million to finance groups that questioned with the athletes, similar amounts of money
links between human activity and climate are not being spent on real improvements
change, and that members of Congress and in workers’ rights. (Bowater, 2012)
other policy-makers frequented the new
stadium, Strike Out Exon suggested, “It’s Mega events provide a platform which
perfect politics. They get to associate their activists and protest groups increasingly
name with the goodness of baseball and use to further their own agendas. The plat-
environmental generosity” (Becker, 2008). form has been created at great expense byNegative outcomes from sponsorship 15
others and is paid for, at least in part, by divested by Union Carbide to a third
sponsors. Activists have become skilled in company McLeod Russel India Ltd. Dow’s
using it to garner the attention of global spokesperson said, “We didn’t buy the
media, some of which are likely to be respon- Indian assets or liabilities because Union
sive to controversial-event-related stories. Carbide had sold them to McLeod Russel.
Sporting goods are a high-profile part of the Are we responsible? Legally? No. Morally,
garment industry and activists sometimes ethically? No.”
are able to suggest the sport companies’ Despite Dow’s claims of severance from
practices are contrary to the event’s pro- the disaster and the Indian government
fessed ethos of “fair play”. For example, the accepting a $470 million payment in final
Olympic Charter states, “Olympism seeks to settlement of any obligations, a petition
create a way of life based on . . . respect for was organized to protest Dow’s sponsorship
Downloaded by [Texas A&M University Libraries] at 15:08 17 June 2014
universal fundamental ethical principles.” of the wrap, and to try and galvanize public
In some instances, the negative connota- support to persuade Dow that it should
tions associated with a company may be regard Bhopal as its obligation. It had some
public perceptions based on a distorted success, since in the British Parliament, the
view of the actual facts. Nevertheless, the Shadow Olympics Minister who played a
risks of damage to the sport property’s key role in securing the London Olympics
image remain. Dow Chemical’s involvement when her party was in power and she was a
with the London Olympics illustrates how cabinet minister, and who was still on the
this might occur. Dow was a TOP sponsor board of the London Organizing Committee
of the London Olympics. They committed said: “It’s better that we have an unwrapped
$100 million to the IOC over a 10-year stadium, rather than a stadium wrapped in
period. As part of their sponsorship, the the continuing controversy over Dow Chemi-
company agreed to pay £7 million for a cal’s sponsorship.” Another elected official
“wrap” of polyester and polyethylene fabric said, “This is damaging the credibility of
panels which would encirculate the main London and the Games.” Dow was defiant,
Olympic stadium. In return, it secured the with their vice president for Olympic oper-
right to brand the surfaces with its name ations stating: “This issue is not our issue.
until the eve of the Games. We’re not going to be bullied by activists or
In 1999 Dow had bought Union Carbide, politicians” (Gibson, 2012). The relationship
another chemical giant, which had come to of these issues to sport properties may
public attention 15 years earlier when a seem tenuous, but the Dow Chemical case
dilapidated plant belonging to its Indian sub- illustrates their potential for impugning a
sidiary in Bhopal, a city of 1.7 million people property’s reputation. Enhanced telecommu-
in the central Indian state of Madhya nications and globalization suggest ethical
Pradesh, exploded and filled the air with conundrums for sport properties of this
gases, principally methyl isocyanate, an type will occur with increasing frequency.
ingredient in pesticides. Some 3000 people Perhaps the worst scenario for a sport
were killed in the first few weeks, many property is when the disreputable behavior
more have died in the years since then, and of a prominent sponsor partner rises to the
the death total directly attributable to the level of high-profile criminality. The exem-
world’s worst industrial disaster now plar of this situation was Enron’s 30-year,
stands at around 11,000 in the most conser- $100 million agreement with the Houston
vative estimate (the true total may be over Astros Major League Baseball franchise
20,000). Dow bought Union Carbide seven for the naming rights to its new stadium.
years after the Indian subsidiary had been When the agreement was signed, EnronYou can also read
