BETA
This is a BETA experience. You may opt-out by clicking here

More From Forbes

Edit Story

Lance Armstrong And Why Sponsors Need To Rethink Athlete Endorsements

This article is more than 10 years old.

(Photo credit: Wikipedia)

Lance Armstrong: champion to many, cheater to others. Tireless hero who battled cancer and won; soulless jerk who used drugs to make millions. People have long been, and will continue to be, divisively split on Armstrong, arguably the best (or worst) cyclist of all time. Yesterday many of Armstrong's sponsors stepped across that line, dropping him on the same day he stepped down as chairman of Livestrong, the cancer charity he founded in 1997.

The most surprising among those former sponsors is Nike, the sports apparel brand that is known for sticking by its maligned athletes. Sure, some low-exposure ones can be tossed aside when necessary (see: Katrin Krabbe, Justin Gatlin, Joey Barton), but the big names never go. The Swoosh has weathered massive scandals standing behind figures like Kobe Bryant, Ben Roethlisberger, Joe Paterno and Tiger Woods.

But what is often mistaken for loyalty is really just a business-first approach. Just look at Nike's handling of Michael Vick, the only major athlete it had ever dumped prior to Armstrong. Vick was dismissed from the brand following his 2007 conviction because, in simple terms, his two years behind bars offered no sponsorship value to Nike. And sure enough, once Vick returned to the gridiron he was re-signed as a Nike athlete.

Similar to how Vick was a poor investment while he languished in prison, Armstrong would also be a waste of Nike's sponsorship money because a lifelong ban from cycling has erased all possible exposure. Some may argue that Nike only dropped him now because of rather convincing evidence of doping, but those supporters will have trouble explaining away reports that Nike paid $500,000 to cover up a doping scandal in 2006.

That exposure-focused, return-on-investment model of athlete endorsements has worked very well for Nike in the past, and just yesterday we ranked the company the most valuable sports brand in the world, worth $15.9 billion. But considering the way that today's world of cell phone pictures and social media has begun to peel back the secrecy of athletes' private lives, Nike and other brands may need to reconsider their approach toward athlete endorsements.

Simply put, athlete sponsorships have become riskier than ever before because they now carry an unprecedented chance of embarrassment for the companies involved. It almost seems like every athlete, from local hero to international superstar, will one day be caught acting inappropriately. Olympic hero Michael Phelps was endorsement gold until he ended up on the wrong end of a camera hitting a bong. Patrick Kane is one of the best young forwards in hockey, but overnight he went from being a great role model to an allegedly violent drunk. Tiger Woods was possibly America's favorite athlete but, in a moment, became a pariah in houses across the nation.

And that propensity for scandal doesn't even touch on the fact that social media has turned polarizing athletes like LeBron James, Alex Rodriguez and Tom Brady into instant punchlines for crowds of haters across the country rooting for them to fail. Those strongly negative reactions are exactly what companies want to avoid with endorsements, and social media only continues to magnify the vitriol of fans.

If what we know about Michael Jordan today was known in his prime, he would have had a fraction of the endorsement potential for brands like Nike and Gatorade. Jordan profited greatly off an age of marketable images and little public insight. That age, for better or worse, is quickly coming to a close. There are but a few "clean" athletes left, survivors of an endangered species - Derek Jeter, Lionel Messi, Kevin Durant, Drew Brees, the Manning brothers - and even they offer few guarantees to future sponsors. So while Nike may have profited off pure exposure in the past, its future may rely on a much more careful approach to athlete endorsements.

Follow me on Twitter