The world of celebrity endorsement is big business, with billions spent every year on sponsorship. When done properly, having a movie or sports star linked to a product can increase revenue, improve brand recall and generate interest in s certain product. But as recent events in the world of sports have proven, sponsorships can become problematic when the celebrity finds themselves in trouble. The recent situation with Maria Sharapova shows what happen when scandal rocks a celebrity and what it can mean for the sponsorships.
While this may come as a surprise to many, but the money sportstars make from endorsements and sponsorships is often greater than the amount they receive for playing their sport. That's why scandals can be so damaging for celebrities that depend on endorsements for their income. Most businesses don't want to be associated with the scandal and cut ties with stars who are garnering negative attention.
The situation with Maria Sharapova is interesting because we have a sportstar facing a doping scandal, but has managed to prevent the scandal from destroying some of her partnerships. This leaves many to wonder why Sharapova can keep her sponsorships while other scandalized stars have seen their endorsement deals killed for their bad behavior, such as Tiger Woods and Lance Armstrong. Looking at the situation closely can help business owners and marketers craft better plans for dealing with similar situations.
To start with a little background, Sharapova tested positive for a banned substance that could be used as a performance enhancing drug. What makes this doping scandal different from others, such as the problems facing the cycling world and Russian athletes, is that Sharapova's case seems to be unintentional. In contrast, other doping scandals have involved sophisticated systems to give players an unfair advantage.
According to the BBC, "an independent tribunal appointed by the International Tennis Federation (ITF) found the tennis star had not intentionally taken a banned drug but it said she bore a degree of fault and had been taking meldonium to enhance her performance."
The result was a two-year suspension from playing tennis, but Sharapova's openness with the investigation and the general belief that this wasn't intentional, has done much to save Sharapova's image, and vicariously, many of her sponsorships deals.
Not that there haven't been damage from the scandal. The cosmetic brand Avon cut ties with Sharapova, but said it didn't have to do with her ban. Tag Haur, a Swiss watch maker cut ties with Sharapova but didn't rule out working with her in the future. And the luxury automobile maker Porsche is on the bubble, waiting for the situation to be resolved before making a decision.
However, there are a lot of big names that have chosen to stand behind Sharapova during this situation. According to media reports and statements from the companies, The sports firm, Nike, the racket manufacturer, Head, and bottled water company, Evian have all said they will stand by Sharapova.
The mixed response is an indication of the intricacy surrounding Sharapova's situation. Melodonium, the substance Sharapova admitted to taking, is a medication that can be used for a variety of legitimate medical conditions. Furthermore, the substance only became banned in sports in January of this year, and Sharapova tested positive in March. This is why it's believed to be unintentional, with Sharapova unaware that the substance was no longer approved.
Whether it was truly intentional or not, the ambiguity gave sponsors a choice on whether or not to keep their sponsorship deals with Sharapova. Nike was able to successfully reverse its position (they immediately suspended ties when the news broke, but changed their position as more details were revealed). And Head, the racket manufacturer mentioned before, has strongly supported Sharapova through the situation, which will probably net them some good will with Sharapova fans.
The Sharapova situation shows that the way celebrities handle their scandals has a lot to do with how the public responds to allegations and how companies make decisions on which endorsements to keep and which are more trouble than they're worth.
For a further discussion about sponsorship, read this article on whether or not celebrity endorsements are still useful in modern marketing.