Puma leaps out of South Africa amid rising market morality

Tarnished brand: South African football. Shine

German sportswear company Puma recently ended its contract with the South African Football Association (SAFA), after football’s world governing body, FIFA, found that there was “compelling evidence” that four of the South African national team’s games in 2010 were fixed.

Puma stated that it “abides by a code of ethics in all areas of its business operations and expects its partners to adhere to the same values”. Given the company has over the last decade made a significant strategic commitment to African football, this was a drastic move.

Yet Puma is not alone in taking such action; indeed, arguably the most (in)famous case in recent sporting history is that of Dutch bank ING terminating its sponsorship deal with the Renault F1 team after a proven case of race-fixing at the Singapore Grand Prix in 2008. Following an instruction from his team chief, driver Bruno Senna deliberately crashed his car thereby allowing his team mate to pass and win the race.

Minor blips

The edginess of sponsors is hardly limited to match or race-fixing though, as the cases of Lance Armstrong, Oscar Pistorius and Tiger Woods prove. The common denominator between the three is Nike; in Woods’ case, the golfer became embroiled in controversy in the light of his infidelities and subsequent separation from his wife. In this case, then Nike CEO Phil Knight described Woods’ behaviour as “a minor blip” and the company stayed loyal to the golfer, honouring its contract with him.

For many years, Nike remained totally steadfast in its support of Lance Armstrong. This was despite several high profile reports that Armstrong was involved in doping and had won many races and competitions by using drugs. Indeed, Nike strengthened its relationship with the cyclist by allying itself to his “Livestrong” cancer charity. Yet when the truth eventually emerged and Lance met Oprah, Nike withdrew from its contract with Armstrong.

Oscar Pistorius, in more market-friendly times. John Walton/PA

In Oscar Pistorius’ case, Nike’s response was immediate and stark. Taken into custody by the police following the death of his girlfriend, closely followed by charges being pressed on suspicion of murder, Nike almost instantaneously ended its deal with the South African paralympian. An interesting moral barometer: Nike finds allegations of murder and proven doping to be unacceptable, but unproven doping, infidelity and a sex addiction to be acceptable.

And it is not just athletes who have been exposed to action by sponsors. Skins, a manufacturer of cycling clothing, ended its sponsorship deal with the sport’s world governing body the Union Cycliste Internationale (UCI) after the UCI was accused of failing to deal with doping effectively. Skins even sued two UCI officials for $2m, claiming damage to its brand.

In football, several FIFA sponsors have sought to distance themselves from the sport’s governing body after a series of allegations of corruption (some now proven). For instance, Emirates Airlines announced their disappointment when two senior FIFA officials were handed lengthy bans for breaching the football governing body’s ethical code.

Taking the good with the bad

Sponsorship can ensure that people are readily able to associate brands with particular, desirable sporting properties. The psychology extends to a phenomenon often referred to as “image transfer”. This entails people processing the image of, say, an athlete or an event and then ascribing this image to the sponsors with which they are associated.

Unfortunately, this process also works the other way: a team’s poor image can project back onto the sponsor, casting them in the same light. For the likes of a bank, an institution historically viewed as being safe, trustworthy and (by some) honest, to be associated with a deviant activity such as race-fixing potentially does huge damage to image, reputation and business, hence ING’s withdrawal from Renault in 2008.

At the same time, such is the global prominence of sport in the 21st century that everyone knows Woods, Armstrong and Pistorius. These people have been icons, role models, sporting heroes – but when they fell, awareness and recall tended towards negative associations. In turn, this inevitably sets a path back to sponsors. Remember the murder charges or the transgression? Remember the brands they are connected to?

Morals of the market

So we are witnessing the emergence of a new kind of morality in sport. This is not a morality defined in absolute terms by religion or by society. Rather, it is a market-driven morality – a morality driven by the commercial concerns and bottom-lines of companies that have sought to associate themselves with sport through sponsorship.

In the case of Nike, its barometer of morality is very clear: where the company deems something is too deviant, too socially unacceptable, or simply just too bad, it withdraws from the sponsorship. Nike has done this because of its perceptions about what consumers in markets across the world might be thinking and feeling about them. If there is a chance that consumers will view Nike negatively and therefore stop buying its training shoes and football boots, then the moral decision is effectively made for the company by the market place.

But this is not just about Nike. It is also about ING, Skins, Puma, Emirates Airlines and the rest. This market-driven morality is likely to have a profound effect – and for some time to come. As social media gives individuals a greater platform than ever before, it won’t be managers making sponsorship termination decisions; it will be consumers on Twitter and Facebook.

Moreover, athletes, teams, competitions and governing bodies will not only be assessed by fans of sports for their successes, they will be judged by customers for their moral standards. The deviants, transgressors and scandalous of sport will therefore need to beware of the impact their dalliances, substance use or financial peccadillos could have.

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