Reputation in Sport
Reputation, Business and Sport: Of Volkswagen, Under Armour and the importance of reputation
Two events in as many weeks earlier this year have reminded us of the importance of reputation in the business of sport — but the two couldn’t be more different.
One involves how reputational damage to a brand can have potentially devastating effects on a sponsorship property. The other involves how reputational damage to a property can potentially diminish the brand.
First, the high profile case of Volkswagen cheating its emissions testing. The company is in line for a substantial fine, in excess of $10B, as well as billions of dollars more to ensure cars are compliant with pollution standards. The revelation is a massive blow to the company, whose brands squandered 55 years of great advertising.
This matters for sport for two reasons. First, the Volkswagen Group (which includes Audi and other brands) spends hundreds of millions of dollars each year on sports sponsorships and activations (the advertising that tells people of the sports associations). And secondly, it’s deeply integrated in German football, and in particular, Wolfsburg, making them especially vulnerable.
According to IEG, a sponsorship consultancy, Volkswagen spent roughly $220 million on sponsorship properties alone (not including activation). Taking such an enormous financial hit to pay for legal fees and compliance is bound to impact budgets elsewhere in the business. Marketing — and sponsorship specifically — are likely contenders to get the chop.
For global clubs like Real Madrid, Barcelona and Bayern Munich (all Audi partners), any sponsor cuts are likely to be quickly filled by whoever is next in line. But for smaller clubs, and particularly clubs with substantial relationships with their sponsors as a portion of the whole, the situation does not bode well.
This is precisely what faces Wolfsburg. IEG counts Volkswagen’s sponsorship of last year’s Bundesliga (German Football League) runners up one of its top investment properties. And a long history between the two exists: Wolfsburg was actually founded by VW Workers in 1945.
According to the BBC, Volkswagen’s “significant financial investment helped them win the Bundesliga title in 2009 and German Cup last season.”
And according to a former player, “Volkswagen is the backbone of Wolfsburg, it would be a disaster if they separated… without Volkswagen the team can’t survive, it would crumble.”
So, the impact of a crisis that has nothing to do with sports has grave potential consequences not just for the financial health of global sports properties, but for the very existence of individual clubs, too.
The second case involves the on-field behaviour of Washington Nationals player Bryce Harper, who’s a star Under Armour athlete and favourite for this year’s National League MVP.
Harper and teammate Jonathan Papelbon were involved in a dugout altercation following Harper’s lack of hustle around a routine pop up. Papelbon called out Harper for not running out the play, incensing the star outfielder, with the two exchanging words and shoves and Papelbon putting his hand around Harper’s neck. Papelbon was also apparently angry that Harper outed him in public for deliberately hitting Baltimore Orioles’s third baseman Manny Machado with a pitch earlier in the week.
Much of the response from the Washington Nationals and the press has been around Papelbon’s behaviour, with the pitcher handed a suspension by the club, which will keep him out of action for the remainder of the season.
But an alternative storyline is unfolding that reflects poorly on Harper.
According to the Washington Post, “as has become evident in the reaction to Sunday’s brawl, Harper still has a reputation for selfish narrow-mindedness, for self-serving me-first attitudes around the league”.
This presents a problem for the athlete when that attitude gets repeatedly reported, thus seeping into the public consciousness. That happened this week in Toronto with two sports commentators — Greg Zaun and Don Cherry — coming to Papelbon’s defense and criticizing Harper for his laziness. They agreed that Papelbon should have aired grievances behind closed doors, but then, so should have Harper.
Under normal conditions, this would be nothing more than a clubhouse scuffle between disappointed teammates. But these aren’t normal conditions.
To start, this scuffle is between one of the league’s best players and ‘face of baseball’ (Harper), and a 6-time All-Star, who’s 11th in MLB history in all time saves (Papelbon). Furthermore, coming into this season, the Nationals were one of the favourites to win the World Series. Their colossal capitulation is one of the more intriguing storylines of the season, and forms the backdrop to the dugout shoving match.
All of this can’t sit well with Under Armour. Their prized baseball property has earned the perception of self-centered laziness, which is at odds with the brand’s ethos of hard work and hustle.
Of Risks and Perceptions
The lessons of Volkswagen and Bryce Harper for sponsors and properties are twofold. First, risks exist on both sides — brand and property. High profile cases of sports sponsorships gone wrong in the past few years have often focused on the transgressions of the properties involved (Roger Goodell and the NFL, FIFA’s corruption scandal, etc), and the brands associated with them. But the case of Volkswagen shows the vulnerability of high profile sponsors to reputation damage, and the knock-on effects this can have on content properties and their value. Both brands and properties must be aware of these risk networks and devise appropriate hedge strategies.
Secondly, in today’s age of information anywhere, perceptions can change — and spread — quickly. Today’s darling can rapidly become tomorrow’s disaster (see Jian Ghomeshi). Rapid response mechanisms tend to be the favoured response, with social media monitoring the method most commonly used to inform these mechanisms. But these are incomplete for two reasons. First, attention spans are increasingly fleeting. What captures our focus today is gone in a few moments. As quickly as something takes hold, it can fade into a distant memory, replaced by a new headline. Secondly — and related — attention and emotional connection cannot be holistically evaluated just by what people say; we must also understand and measure how they actually feel. Perceptions get formed at our non-conscious level over time. It only makes sense that we measure and monitor that level over time to determine how meaningful the impact of crisis has been on a brand or property. In addition to tracking the speed and reach of a message, the depth of impact must also be evaluated.
To do so, brands and properties can make use of a growing field of measurement tools coming out of cognitive neuroscience, including Implicit Association (which evaluates the strength of associations — perceptions — between a property/brand (say, Harper or Under Armour) and characteristics (say, hard-working, lazy or innovative), and EEG, which measures the non-conscious attention, emotional connection and encoding to memory that one commits to a message. This would provide a more complete view on the seriousness of challenges to reputation, ensuring a Bryce Harper doesn’t turn into a Volkswagen.