After 15 years of fighting doping allegations, Lance Armstrong is seeing his major sponsors disappear along with the $75 million/yr of foregone endorsements in the next 5 years. Armstrong has not only been an inspirational athlete and cancer survivor, but a trailblazer in grassroots fundraising and corporate sponsorship. Naturally, news that Nike (NKE) and others are withdrawing support is like salt on an open wound.
It’s almost impossible to talk about a shamed athlete without talking about the sponsors involved. Corporations see sports as a major marketing opportunity. Think about the London Olympics this year. Who footed the bill? Over 40 companies contributed over $2 billion in sponsorship money. Peyton makes about $30 million each year from endorsements. When the Tiger Woods scandal broke out, the golfer lost deals with Gilette (PG) and Gatorade (PEP). Nike didn’t follow suit and continued supporting Tiger as it had with Kobe Bryant who had been accused of sexual assault.
Nike’s termination of its relationship with Armstrong is exceptional and is already having a domino effect. Anheuser-Busch (BUD) will be ending its contract by the end of the year. Oakley (LUX) follows suit. Livestrong, part of Armstrong’s foundations, will continue to be supported by Nike as well as Genentech (RHHBY), Radioshack (RSH), and Amgen (AMGN). These large donators shouldn’t be affected by the bad press although some have already made jabs at the fact that Livestrong isn’t cancer research, just awareness.
If anything, the USPS is going to hurt. As the namesake for the drug-enhanced cycling team, Armstrong helped pumped millions of dollars to their sponsor. Headlines such as “US Postal Doping” are of no help.
List of affiliated companies:
1. Nike Inc. (NKE, Earnings, Analysts, Financials): Designs, develops, and markets footwear, apparel, equipment, and accessory products for men, women, and children worldwide. Market cap at $43.96B, most recent closing price at $97.57.
2. Anheuser-Busch InBev (BUD, Earnings, Analysts, Financials): Engages in brewing and selling beer in North America, Latin America, Europe, and the Asia Pacific. Market cap at $142.26B, most recent closing price at $88.55.
4. RadioShack Corp. (RSH, Earnings, Analysts, Financials): Engages in the retail sale of consumer electronic goods and services through its RadioShack store chain and kiosk operations. Market cap at $242.63M, most recent closing price at $2.44.
5. Amgen Inc. (AMGN, Earnings, Analysts, Financials): Develops, manufactures, and markets human therapeutics based on advances in cellular and molecular biology for grievous illnesses primarily in the United States, Europe, and Canada. Market cap at $68.75B, most recent closing price at $89.20.
Written by Freda Ding
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