Nike's Disassociation From Lance Armstrong Makes Nike A Stronger Brand

Nike, the most valuable brand in sports, has terminated its endorsement contract with 7-time Tour de France winner Lance Armstrong.  The brand, worth an estimated $15.9 billion, issued the following statement this morning:

"Due to the seemingly insurmountable evidence that Lance Armstrong participated in doping and misled Nike for more than a decade, it is with great sadness that we have terminated our contract with him," the company said, in a statement. "Nike does not condone the use of illegal performance enhancing drugs in any manner. Nike plans to continue support of the Livestrong initiatives created to unite, inspire and empower people affected by cancer."

"Nike got pushed into a corner and it didn't want to do this, but it makes the brand stronger," says Andre Mika, Executive Vice President of Creative for TBA Global, an engagement marketing company.  "Nike had no choice because the brand cannot support doping under any circumstance."

The termination of Armstrong as an endorser of the Nike brand was likely simplified by the inclusion of a broadly worded "morals clause" within the cyclist's endorsement contract with Nike.  Morals clauses are typically worded in such a way as to allow a brand to immediately terminate an endorsement contract, without any penalty, should the athlete endorser act in a certain manner that would tarnish the reputation of the brand.

Lance Armstrong’s recent forfeit to the U.S. Anti-Doping Agency cost him his seven Tour de France titles as well as his Olympic bronze medal.  Despite the USADA’s allegations that Armstrong used performance enhancing drugs, Nike had maintained its relationship with the cyclist.  However, the mounting allegations against Armstrong have continued to negatively affect his personal brand, as well as that of his foundation, Livestrong, and sponsors like Nike.

"Now that Nike has pulled out of the agreement with Armstrong, it is hard to believe he will have any money coming in from any endorsements for quite a while, and I cannot imagine any other sponsors will continue their relationship with him" explains Mika.  "Armstrong took a small hit when confronted with all the allegations, because he still had Nike behind him.  Today was the knock-out punch."

The timing of Nike's disassociation is not a coincidence.  It coincides with a continuing devaluation of the Lance Armstrong brand.  Additionally, Nike was recently accused of paying  a former International Cycling Union president to cover up a positive drug test, which the company has denied.  Further, the termination of Nike's endorsement contract immediately follows Armstrong relinquishing his position as chairman of the Livestrong.  Importantly, while Nike begins to distance itself from the athlete who often created a big gaps between himself and his competitors, it has stated that it will continue to support the organization, which has been instrumental in raising cancer awareness.

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Darren Heitner is an attorney at Wolfe Law Miami, P.A. in Miami, Florida, Founder of Sports Agent Blog, and Professor of Sport Agency Management at Indiana University.  Follow him at @DarrenHeitner and learn more about him at http://www.darrenheitner.com.