Tags: Nike | Anheuser-Busch | Armstrong | Sponsor

Nike, Anheuser-Busch Drop Armstrong Sponsorships

Wednesday, 17 October 2012 03:42 PM

Lance Armstrong was dropped by two sponsors and stepped down as chairman of the cancer foundation he founded one week after the U.S. Anti-Doping Agency detailed his alleged use of performance-enhancing substances.

Nike Inc., the world’s largest sporting-goods maker, said in a statement on its website that it was ending its contract with the seven-time Tour de France winner. Anheuser-Busch InBev NV said it wouldn’t renew the former cyclist’s deal when it expires at the end of this year.

Both companies they would continue to support the initiatives of the Livestrong foundation to help people affected by cancer. The charity, known for its yellow Livestrong bracelets, has raised more than $470 million since 1997, according to its website.

“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 Beaverton, Oregon-based company said. “Nike does not condone the use of illegal performance-enhancing drugs in any manner.”

Anheuser-Busch, in a statement from Vice President of U.S. Marketing Paul Chibe, gave no reason for its decision. Armstrong has been an endorser of the company’s Michelob Ultra beer brand.

“We have decided not to renew our relationship with Lance Armstrong when our current contract expires at the end of 2012,” Chibe said.

Prior Support

Nike said a week ago after the USADA report was released that it “plans to continue to support Lance.”

Mary Remuzzi, a Nike spokeswoman, declined to comment in a telephone interview on the financial details of the contract or why the company changed its stance in the last week on Armstrong, 41, whom it had sponsored since 1996.

Nike ended contracts with quarterback Michael Vick following his conviction for crimes related to dog fighting and with sprinter Marion Jones after a doping confession. It didn’t end contracts with basketball player Kobe Bryant or golfer Tiger Woods following acknowledgements of adultery.

The decision won’t have any financial ramifications for Nike, Chris Svezia, an analyst for Susquehanna Financial Group in New York, said in an interview.

Performance Counts

“I’m not overly surprised,” Svezia said. “The difference between this and Tiger Woods is that this was a drug that improved and altered his performance and they are all about performance.”

USADA’s report said Armstrong’s career was “fueled from start to finish by doping.” Armstrong, the record seven-time Tour de France winner who had his titles stripped by the Colorado Springs, Colorado-based agency in August, required teammates to use banned substances or face dismissal from his squad, according to a 202-page summary of its case against him.

“The evidence demonstrates that the ‘Code of Silence’ of performance-enhancing drug use in the sport of cycling has been shattered, but there is more to do,” Travis Tygart, chief executive officer of USADA, said in a statement that preceded the report. “From Day 1, we always hoped this investigation would bring to a close this troubling chapter in cycling’s history and we hope the sport will use this tragedy to prevent it from ever happening again.”

Armstrong has repeatedly denied doping, saying he has never failed a drug test. He said today he was stepping down as chairman of Livestrong, which he started in 1996, to “spare the foundation any negative effects as a result of controversy surrounding my cycling career.”

New Chairman

Livestrong Vice Chairman Jeff Garvey will take over as head of the foundation. “This is a great development,” Doug White, an adviser to charities who teaches in Columbia University’s School of Continuing Education, said in a telephone interview. “You have a charity that’s positioning itself for a very important cause and you have the leader of that cause that’s very much under the gun for breaking what’s considered to be pretty important rules. The question is how can that happen with a charity? It can’t.”

Livestrong wasn’t among the top 400 charities in the Chronicle of Philanthropy’s annual survey released this week, with no figures given. It ranked 343rd a year ago, when it had $50.8 million in private support for the fiscal year ending Dec. 31, 2010 and remains the largest athlete-founded charity, according to the Chronicle of Philanthropy.

Further Step

     The charity should move a step further and remove Armstrong from the board entirely, White said. Armstrong’s personality might be too strong to be ignored by other board members when decisions are made, he said.

“I would rather him be a person that’s not connected at all with the organization,” said White, the former academic director of New York University’s Heyman Center for Philanthropy and Fundraising. “His being on the board does keep that connection and that’s not good.”

Armstrong’s resignation is likely to have a small effect on the charity, which has diversified its sources of income, partnerships and programs, said Leslie Lenkowsky, a clinical professor of public affairs and philanthropic studies at Indiana University.

Foundation Protected

“Livestrong has institutionalized itself so that it will be protected from Mr. Armstrong’s problems,” Lenkowsky said in a telephone interview. “The fact that he resigned -- or perhaps he was allowed to resign -- reflects the confidence the organization has in its ability to continue on without him.”

Nike is scheduled to co-sponsor events celebrating the 15th anniversary of Livestrong in the coming weeks, according to a report in Outside Magazine cited today by cyclingnews.com. It said the company signed a five-year contract in 2010 to pay the Lance Armstrong Foundation at least $7.5 million annually from profits generated by Livestrong merchandise.

Armstrong made $21 million in 2010, making him the 50th highest-paid athlete in the world and the wealthiest cyclist, according to an annual list released by Forbes magazine.

He also has endorsement deals with Trek Bicycle Corp. and Luxottica Group SpA’s Oakley unit, as well as smaller companies such FRS Co. and Honey Stinger, which make energy and nutrition products.

Oakley said in an e-mail that it would await a final decision on Armstrong’s sanctions from the International Cycling Union. E-mails seeking comment from Honey Stinger marketing director Len Zanni and Eric Bjorling, a spokesman for Trek, weren’t immediately returned. While RadioShack Corp. is listed as a sponsor on Armstrong’s website, it “has no current obligations” with him, Eric Bruner, a spokesman for the company, said in an e-mail.

Major Blow

Nike’s decision is a major blow to Armstrong’s brand, according to Scott Becher, managing director of Z Sports & Entertainment, a division of Fort Lauderdale, Florida-based Zimmerman Advertising.

“He’ll be labeled a cheater unless he can prove it otherwise, and that’s not a very marketing-friendly label,” Becher said in a telephone interview. “Those that were fans of Lance can easily overlook the cheating and still find him to be inspirational, but there is a difference between someone inspiring you and someone being a role model.”

Armstrong was banned for life from competitive cycling and all other Olympic-related sports and stripped of his Tour de France titles on Aug. 23 after opting not to fight USADA’s allegations.

The USADA decision is “a taxpayer-funded tabloid piece rehashing old, disproved, unreliable allegations based largely on axe-grinders, serial perjurers, coerced testimony, sweetheart deals and threat-induced stories,” Armstrong’s lawyer Timothy Herman said last week.

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Lance Armstrong was dropped by two sponsors and stepped down as chairman of the cancer foundation he founded one week after the U.S. Anti-Doping Agency detailed his alleged use of performance-enhancing substances.
Wednesday, 17 October 2012 03:42 PM
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