Take Note Michael Phelps
February 3, 2009
Take note Michael Phelps. A few years ago another good guy athlete, Kobe Bryant, got caught being not so nice, and it cost him millions of dollars in endorsement contracts.
I did several press interviews during that scandal. During the interviews, I pointed out that virtually all endorsement contracts contain a “morals” provision, stating that scandalous behavior on the part of the celebrity could result in immediate termination of his/her contract. I also noted that “Bad boy/girl” celebrities can act badly and hardly impact their endorsement contracts at all, but if you present yourself as one the “good guys/girls” you have to live up to your good reputation, or else.
From a business succession perspective – understanding the importance of who/what comes next – anyone seeking or holding endorsement or sponsorship contracts should think long and hard about behaving badly. It’s not just a matter of doing what’s right, we’d all argue in favor of that. It is also a matter of protecting the “goose” that lays golden eggs. Kobe Bryant was on the way to becoming a superstar in the endorsement arena. Michael Phelps has been on a similar track. Both derailed. How badly is still unfolding.
In Phelps defense, smoking marijuana is far less troubling than committing adultery. Furthermore, his 2004 underage drinking incident has not been repeated. Still, I believe he is literally on the brink. Some sponsors have not renewed (according to the Associated Press, Rosetta Stone, AT&T and PowerBar have ended their relationship with Phelps). Some are supportive (notably Hilton Hotels, Speedo and Pure Sport). Others (VISA, Kellogg, Subway and 505 Games), have yet to speak out (some sponsors choose to let contracts expire quietly rather than take a public stand).
To an advertiser, particularly a consumer products company, even the hint of scandal can tilt sales downward, particularly when parents as well as their children are controlling the spending. In a recessionary period it
might not take much to say, “Goodbye, Michael.” If Michael Phelps gets back on track, he’ll still make millions, but one night’s high has certainly lowered his prospects. Another incident and it could be even more costly.
There is always a “next.” Understanding the importance of, and knowing how to prosper from the transition is what succession planning is all about.
John Reddish speaks to and works with entrepreneurs and leaders who want to master growth, transition and succession to get results faster, less painfully and in ways that work for them. Contact John at: 610.506.6311 or e-mail to: Johnr [at] getresults [dot] com.
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