Lance Armstrong Gets Dumped

Nike, RadioShack, Others Distance Themselves From Cyclist Amid Drug Scandal


October 18, 2012

Nike terminated its contract with Lance Armstrong, citing "seemingly insurmountable evidence" that he doped. Vanessa O'Connell and Reed Albergotti join Markets Hub with details and to discuss whether brands get dented when an iconic spokesperson takes a fall.

Commercial fallout from doping allegations against Lance Armstrong hit Wednesday, as Nike Inc., RadioShack Corp., RSH -1.23% Anheuser-Busch InBev NV, the makers of Trek bikes and Giro helmets, and others distanced themselves from the former cycling champ.

Nike was particularly harsh, citing what it described as insurmountable evidence that he participated in doping and misled Nike for more than a decade.

The clothing and footwear company said it would continue to support Mr. Armstrong's cancer charity and carry Livestrong- branded products. The Lance Armstrong Foundation, known as Livestrong, for years has had a partnership with Nike, allowing it to license the Livestrong brand for a collection of clothing, shoes and other merchandise. Mr. Armstrong in the past made appearances at retailers and trade shows on Nike's behalf, to promote the Livestrong line.

Analysts say Livestrong branded products—profits from which go to the charity—represent a tiny portion of Nike's $25 billion in revenue.

Lucrative Deals Lost

Athletes are celebrated for their prowess in their respective sports and looked up to as role models by younger fans, helping them to land endorsement deals. But when those athletes face troubles, the lucrative deals often dry up.

Mr. Armstrong said Wednesday he resigned as chairman of his foundation. The charity said the decision was made by Mr. Armstrong after consultation with his family. A spokeswoman for the foundation said the former professional cyclist continues to deny the allegations that he used performance-enhancing drugs, adding that he will remain on the foundation's board.

A Nike spokeswoman said she wouldn't comment on whether Nike had asked Mr. Armstrong to step aside from his chairmanship after the U.S. Anti-Doping Agency last week detailed the allegations against him.

Nike's relationship with Mr. Armstrong began in 1996, and when previous allegations that Mr. Armstrong doped surfaced, Nike had consistently backed Mr. Armstrong following his denials. Even last week, after the report, Nike issued a statement that it was standing by the athlete.

In 2000, Nike portrayed Mr. Armstrong to the public as a clean athlete, when it began airing commercials in which Armstrong is shown taking a blood test in front of reporters and then addressing allegations that he doped. "What am I on? I'm on my bike, six hours a day, busting my ass," he said, in the spot.

"We used to joke that they were the untouchables—[Michael] Jordan, Tiger [Woods] and Lance—the upper echelon of Nike," said Slate Olsen, the general manager of cycling club Rapha North America and a former Nike employee who worked on the Livestrong brand in the 2000s. "After the bracelets launched around 2004 there was even talk about trying to move the corporate color from Nike orange to Livestrong Yellow."

The stampede of marketers away from Mr. Armstrong on Wednesday included Trek BicycleCorp., energy drink maker FRS Co., energy foods maker Honey Stinger and Easton-Bell Sports Inc., which manufactures the Giro helmets Mr. Armstrong often wore.

FRS said Mr. Armstrong also resigned from its board.

The cyclist continues to deny the doping allegations.

Trek, which made every bicycle Mr. Armstrong rode during his seven Tour de France wins, said Wednesday it was ending its relationship with him and that it was "disappointed" by the findings in the USADA report. Mr. Armstrong was given a small stake in the company as a gesture of goodwill during his career, and will get to keep that stake, a spokesman said. Trek, like most of the others, said it will continue to support Livestrong.

RadioShack—closely aligned with Mr. Armstrong since it signed a sponsorship agreement with the cyclist in July 2009—said Wednesday it has ended its relationship with Mr. Armstrong.

Mr. Armstrong's former team director, Johan Bruyneel, last week resigned from a cycling team sponsored by RadioShack. RadioShack had said last week it was monitoring the situation. A lawyer for Mr. Bruyneel didn't respond to a request seeking comment.

Anheuser-Busch had signed a three-year agreement with Mr. Armstrong at the end of 2009 and he has appeared in several commercials for the Michelob Ultra brand; that is now over. The brewer said it wouldn't renew Armstrong's contract, which expires at the end of the year.

Once an endorsement darling on Madison Avenue, Mr. Armstrong has seen his appeal in the eyes of consumers begin to wane as the scandal intensified, according to consumer research. Consumers trust in Mr. Armstrong and his worthiness to be a pitchman has fallen significantly, according to Davie-Brown Entertainment, an Omnicom Group Inc. unit that tracks celebrities' appeal via its Celebrity DBI index.

The firm said that in June 2008, Mr. Armstrong was ranked as the 60th most effective product spokesperson, on par with folks such as swimmer Michael Phelps and actor Brad Pitt. As of September, Mr. Armstrong ranked 1,410th, putting him alongside rapper Nicki Minaj and actor Jeff Goldblum.

Sports marketing experts were shocked about the dismantling of a profitable endorsement career. Oakley Inc., which has sponsored Mr. Armstrong for more than two decades, said Wednesday that it is "reviewing the extensive report from the USADA, as well as our relationship with Lance." The sunglasses maker said it will await final decision-making by international cycling's governing body, the International Cycling Union, with a response to USADA's file.