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NFL Scandals Reveal The Power Of Corporate Sponsors

Bloomberg Business Week, September 18, 2014

By Ira Boudway

As the National Football League continues to deal with the fallout from abuse scandals surrounding Ray Rice and Adrian Peterson, sponsors are scrambling to stay on the right side of consumer sentiment. Their choice is whether their association with the league, team, or athlete does more damage than good. The depth of the moral outrage plays into the decision, but so does the size of the deal. The bigger the spend, the more loyal the brand. Sponsors, in other words, abandon players before teams, and teams before leagues.

So far, no nationwide NFL sponsor has dropped its deal with the league. Most, including Campbell Soup (CPB), PepsiCo (PEP), Verizon Communications (VZ), Marriott International (MAR), McDonald’s (MCD), and FedEx (FDX), have taken a wait-and-see stance. “We are watching developments closely and look forward to the findings of the independent investigation underway,” wrote Campbell Soup in a representative statement. The most strongly worded missive has come from Anheuser-Busch (BUD). “We are not yet satisfied with the league’s handling of behaviors that so clearly go against our own company culture and moral code,” said the company’s statement on Sept. 16.

On the team level, the Vikings, which employ accused child-abuser Adrian Peterson, have lost their deal with the Radisson hotel chain. It’s the only exit so far. Earlier this year, sponsors deserted the Los Angeles Clippers over racist comments by then-owner Donald Sterling, which proved that team deals are fragile. “There you are taking about a six-figure investment, or maybe low seven figures,” says Jim Andrews, senior vice president for content strategy at sponsorship consultant IEG, “It is a very, very different scenario.” Leaguewide NFL deals, he notes, can cost hundreds of millions per year. And that cost is directly related to the exposure that comes with them.

Because corporate relationships with players are comparatively smaller, such deals are the ones most likely to be dropped at the first whiff of scandal. Wheaties (GIS)has made Peterson disappear from its website. And Castrol (5015:JP) motor oil has terminated its deal with him. Nike (NKE), which stuck with him initially, today announced it has suspended his deal. The company, known for its loyalty to athletes in hot water, had already cut ties with Ray Rice. Both players are no longer on the field and face uncertain futures. Their employers are still around, still collecting sponsor checks.