Ryan Lochte’s sponsors have dumped him like a rotten tuna. Is this the end of his endorsement career?
Maybe not. Americans are a very forgiving bunch. Celebrities have overcome much worse scandals, maintaining or regaining endorsement deals.
In 2009, Tiger Woods was caught cheating on his wife with a party girl. The news resulted in Accenture dropping him as a spokesperson. But Nike stood by him, telling Reuters that scandal is "part of the game."
When Kobe Bryant was accused of sexual assault in 2003, he was the third most sought-after sports product spokesperson, according to ABC News, raking in an estimated $10 million a year in endorsement deals. He’d just signed a multi-year agreement with Nike. Although Nutella and McDonald’s didn’t renew their sponsorships, he maintained relationships with Nike, Spalding and others. In 2014, Nike re-signed him for $75 million – one of the biggest endorsement deals in sports history.
Even current Olympic darling Michael Phelps suffered disgrace. In 2009, he was suspended from the USA Olympic swimming team after photos surfaced of him enjoying a bong hit. In that case, Kellogg’s dropped him, but Subway kept him as a spokesperson.
Good to be bad
Sometimes, being bad only helps your fame. Few had heard of endorsement queen Kim Kardashian before her sex-tape scandal. Reporting on it, People described her only as "a pal of Paris Hilton and daughter of O.J. Simpson attorney Robert Kardashian."
And cross-dressing, North Korea-visiting, party-animal Dennis Rodman may now be reduced to shilling for Wonderful Pistachios, but in his prime, brands like Carl’s Junior and Eastman Kodak were proud to contribute to the $6 million a year he reportedly took in, despite or because of his antics.
Mike Valdes-Fauli, president and CEO of cross-cultural marketing agency Pinta USA, points to the more recent example of LeBron James. In 2010, he announced he was leaving the Cleveland Cavaliers for the Miami Heat in a 90-minute-long TV special in which he came across as arrogant – and he hadn’t notified his current team or manager in advance. His former fans hated him for what they saw as a betrayal. There’s even a haters’ website.
The hate didn’t hurt his off-court income much. That year, he was the fourth highest sports earner, with an estimated $30 million coming from sponsors including McDonalds, Coca Cola and State Farm.
Valdes-Fauli says, "There’s room in sports for the dark villain."
After admitting he lied about being robbed at gunpoint at a gas station in Rio, Lochte was quickly ditched by all four of his sponsors, including Speedo, which had sponsored him for 10 years. The speed of the news cycle and the relentlessness of social media have changed the game for celebrity reputation management, according to Darcy Bouzeos, CEO of DLB, an agency that matches celebrities and athletes with brands.
"In prior years, you often saw brands wait a while in such a situation. And it often worked well," she says. "There used to be a formula: Step off the stage and let things die down. In this new world of social media, the information feedback is so fast and furious that we’re seeing brands moving very quickly to terminate a relationship with a celebrity spokesperson. There’s pressure on brands to act quickly."
Can Ryan be a Tiger?
But, why not a reputation rehab for Lochte? After all, his exaggeration was more akin to Phelps’ bong hit than to Bryant’s or Woods’ transgressions.
Unfortunately, Lochte screwed up on the biggest stage possible, according to Courtney Nally, vice president of Ketchum Sports Network, and the kerfuffle hit too many trending memes.
"All eyes globally were on the Olympics," Nally says. "And, there was so much talk about whether Rio was safe."
Nally would advise clients contemplating the malfeasance of spokespeople to evaluate the risks to the brand on a scale of one to ten. It makes a difference, for example, if the celebrity is booked to do public appearances or act as a spokesperson, situations where the questioners could rehash the whole thing once again, as opposed to appearing in an ad or scripted commercial.
"It’s important to look at the severity of the indiscretion and the media coverage. Monitoring social media is equally important," Nally says. "That chatter is the voice of the consumers you’re trying to reach.
The hype cycle
Post-Olympics, Nally notes, the marketing window and time to leverage spokespeople is short. "He’s eliminated the opportunity to use him post-games," she says.
Plus, he no longer has a global platform to rehabilitate himself, Bouzeos adds. "The Olympics aren’t for another four years, and that’s their main stage."
Another problem specific to Lochte’s situation is that, now that the Olympics are over, the media is doing its wrap-up and human interest stories – and the fake robbery incident and its fallout are still leading.
If Lochte had beaten Phelps out of his final gold medal, it would have made the story more complex and perhaps let him become one of those dark villains. Instead, Valdes-Fauli says, even his crime was "more silly than serious. Plus, he underwhelmed in his performance and then fled the country. He might get a couple of endorsements from brands leveraging the humor."
And don’t forget the green hair. Maybe Lochte’s people should call Wonderful Pistachios.