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News - Armstrong Sees the Fallout of Allegations

Oct/2012

24

Armstrong Sees the Fallout of Allegations

The commercial fallout from allegations against Lance Armstrong finally hit last week, as Nike, RadioShack, Anheuser-Busch, and others distanced themselves from the former cycling champ.

The U.S. Anti-Doping Agency issued a report accusing seven-time Tour de France champion Lance Armstrong of being at the center of “a massive team doping scheme, more extensive than any previously revealed in professional sports history.”

This was enough to tarnish the former champ’s reputation with major endorsers. 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, has had a partnership with Nike for years, 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. That will no longer be the case.

Armstrong said Wednesday he resigned as chairman of his foundation. 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.

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.

“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 . “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.

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. 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.

Sports marketing experts were shocked about the dismantling of a profitable endorsement career. Burns Entertainment & Sports Marketing, a company that helps match athletes with advertisers, estimates that Mr. Armstrong earned between $15 million and $18 million from his long list of sponsors this year.

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