Major Companies That Have Had to Drop High-Profile Spokespeople

Jacob Harper |

On Aug. 5, MLB announced that 14 major and minor league players would be suspended for 211 games, making it the longest suspension that wasn’t a lifetime ban in the history of baseball. By far the most famous suspended player is New York Yankee Alex Rodriguez. While Rodriguez will be allowed to play while he appeals his suspension, the Yankee could end up losing up to $31 million in money he was guaranteed in his contract with New York.

What isn’t as publicized as people like Rodriguez’s loss of income from work is their loss of income from sponsorships. Endorsement deals are often a huge chunk of a celebrity's income, and unlike their playing careers, sponsorships deals aren’t made on stats. They’re built on reputation and perception, and companies are reticent to keep a player with a tarnished image on the payroll.

Here’s a recap of some of the higher profile “drops” companies have made over the last few years:

NIKE

On Aug 1, Nike (NKE) dropped Milwaukee Brewers star Ryan Braun after he was implicated in a second performance enhancing drugs scandal. His first “conviction” got thrown out on a technicality.

Nike has a long, storied history of dumping players whose public reputations have become tarnished. In 2003, the athletic apparel manufacturer dropped Kobe Bryant following a rape accusation, though they took him back in 2005. In 2007, they dropped Michael Vick after he was found to be running a dog fighting ring. Nike likewise took Vick back in 2011.

In May 2013, Nike dropped American cycling champ Lance Armstrong’s Livestrong brand from its roster after Armstrong tested positive for doping. The brand had raised over $100 million for cancer research. They had previously dropped the disgraced cycling star as a spokesman in October 2012.

ANHEUSER BUSCH

Nike wasn’t the only major sponsor to drop Lance Armstrong. In total, seven major sponsors kicked Armstrong off their roster following his doping scandal. Perhaps the highest profile of the lost sponsorships was beer maker Anheuser Busch Inbev SA (BUD) who followed Nike in deciding to drop Armstrong. The company elected to keep supporting Livestrong.

Armstrong promoted Michelob ULTRA, a super-low calorie light beer. All in all, it has been estimated that Armstrong lost as much as $30 million from lost sponsorship deals.



AT&T

Telecom giant AT&T Inc. (T) dropped one of its biggest spokespeople in 2010, but it wasn’t because of doping. Golfing superstar Tiger Woods had been found to be carrying on multiple affairs and when his multiple dalliances became public knowledge AT&T dropped him. Woods had been the host of the AT&T National PGA Tour event since it began in 2007, and while the company continued sponsoring the tour, they kept Tiger out.

PEPSICO

In May 2013, PepsiCo Inc. (PEP) decided to cut ties with rapper Lil' Wayne, after he released a song with a controversial lyric about civil rights icon Emmett Till. In the lyric, Wayne compares sex to the beating death of Till, who was murdered in 1955 and became a martyr of the civil rights movement. Wayne later apologized to Till’s family, though the company still decided to quit having Wayne shill for their Mountain Dew brand.

It’s also worth noting that Pepsi dropped Magic Johnson as a spokesman after he disclosed he had contracted HIV in 1991. The company did not do so publicly, but did quit retaining his services. They brought him back on the following year when he briefly rejoined the Lakers.  

MCDONALDS

McDonalds Corporation (MCD) has had plenty of scandal of their own lately, with franchisees threatening to go rogue and the launch of a personal fiscal responsibility campaign laughably backfiring. But back in 2004, Mickey D’s took the moral high ground when they dropped Kobe Bryant after he was accused of rape. An AP report alleges that Bryant lost between $4 and $6 million because of the charge, which was eventually dismissed. A later civil suit brought by the accuser was settled out of court.

MASTERCARD

MasterCard Incorporated (MA) dropped a star who never even got convicted of anything, save in the court of public opinion. Barry Bonds did a series of high profile ads for the company in 2002. But by the time the steroid scandal sweeping baseball had reached its apex, pressure mounted to drop Bonds, who had long been suspected of using performing-enhancing drugs.

The slugger has never been proven to have used them, but the massive late-career uptick in power – coupled with his reportedly surly off-field demeanor – convinced the public he was doping, no matter if the proof was there or not. MasterCard dropped him in 2004.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
PEP Pepsico Inc. 115.08 -0.97 -0.84 3,598,467 Trade
MA Mastercard Incorporated 151.25 -1.26 -0.83 2,658,577 Trade
NKE Nike Inc. 59.07 -0.32 -0.54 8,501,289 Trade
MCD McDonald\'s Corporation 169.05 0.75 0.45 2,719,456 Trade
BUD Anheuser-Busch Inbev SA Sponsored ADR (Belgium) 115.75 0.13 0.11 727,462 Trade
T AT&T Inc. 34.87 0.54 1.57 26,453,909 Trade
HESG Health Sciences Group Inc 0.00 0.00 0.00 0

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