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Rio Incident Cuts Short Ryan Lochte's Commercial Victory Lap

Reuters, August 18, 2016

By Liana B. Baker and Scott Malone

The week after winning his sixth career Olympic gold in Rio, U.S. swimmer Ryan Lochte should have been doing a victory lap, cashing in on his performance with fresh sponsorship deals.

Instead, one of America's most decorated swimmers is accused by Brazilian police of inventing a story about an armed robbery to cover for some bad behavior at a gas station.

It could not come at a worse time for the 32-year-old.

One of his sponsors, swimwear company Speedo, said it was monitoring the situation. Another, mattress brand Airweave, was still trying to understand what had happened.

"I'm sorry about Ryan and I don't know about the situation and our position is not changing at this time," Airweave chief executive Motokuni Takaoka told Reuters.

After the Olympic cauldron is extinguished, a gold medalist only has a brief time to turn fame into commercial gain.

"That window of opportunity that you have to take advantage of your celebrity and your status is pretty small, realistically weeks," said Jim Andrews, senior vice president of sponsorship tracking firm IEG.

Lochte has said he and three team mates were robbed by gunmen early on Sunday, on their way back to the Athletes' Village from a party. Police denounced this version of events on Thursday, accusing Lochte and the others of lying.

Lochte returned to the United States on Monday, before authorities moved to prevent the four swimmers from leaving the country pending investigations into the incident – exactly the sort of high-profile scandal that the country hoped to avoid while hosting South America's first Olympic Games.

Lochte's sponsors include a small lineup of U.S. companies.

Apart from Speedo and Airweave, they include Marriott International, and Ralph Lauren Corp, according to his website.

Representatives for Marriott Rewards and Ralph Lauren could not be reached for comment on Thursday. Lochte's agent, CAA's Lowell Taub, could also not be reached for comment.

"His existing sponsors may not drop him, but they may determine that slow-playing the situation – reducing if not eliminating his presence – is the way to go," said David Carter, principal of the Sports Business Group consultancy.

Road To Redemption

Americans have forgiven Olympic swimmers for past indiscretions. Lochte's better-known teammate, Michael Phelps, was photographed smoking what appeared to be marijuana and arrested twice for drunk driving between Olympic appearances and he still kept a major deal with Under Armour.

But it can take time.

"He'll be toxic for a while," Gary Fechter, a lawyer with McCarter & English who has worked in corporate endorsements, said of Lochte. "Rightly or wrongly, until the full story comes out, he's tarnished."

Lochte's star peaked at the 2012 London Games where he had sponsorships with brands such as Nissan Motor Corp and AT&T that have since expired. His reality show on the E! network, "What Would Ryan Lochte Do?", was canceled in 2013.

Ahead of Rio, though, he was still one of the most recognizable faces on Team USA.

Sponsorship and endorsement deals typically include "morals clauses" that allow sponsors to terminate deals early if they feel the athlete has behaved poorly in public.

Doug Shabelman, president of Burns Entertainment, a firm that arranges endorsement deals, said that he would likely steer brands away from Lochte and toward other U.S. swimmers who did well in Rio such as Ryan Murphy, who has three gold medals.

But he said other athletes had bounced back from much worse situations and that Lochte could still repair his image.