We all know what happened a week and a half ago with Donald Sterling, so I won’t bore you with the racy details. However, how will their business be affected when it comes to corporate partnerships?
Within a mere 48 hours of the recorded conversation being released by TMZ, twelve of the Los Angeles Clippers’ sponsors either backed out of or stalled their deals. Why did they act so hastily? It is likely that those sponsors felt that if they stayed with the team, consumers might interpret that as their acceptance and maybe even approval of Sterling’s comments.
Distancing themselves from the team was an opportunity for those sponsors to take a stand against racist remarks. “When you have things like this taking places, somebody has to stand up,” said Steve Stoute, head of marketing at Transition (agency of record for State Farm). For some sponsors, this stand may have come at a hefty price: depending on their contractual provisions with the Clippers, some sponsors that did pull out may still be obligated to pay their sponsorship fees.
However, the tide began to change once NBA Commissioner Adam Silver announced Sterling’s ban from the NBA and $2.5 million fine. Silver also publicly pleaded to the other 29 NBA team owners to vote to force Sterling to sell the Clippers. Kia Motors had originally suspended its relationship with the Clippers on April 28th, but reversed its decision once Sterling’s ban was announced. Adidas also came back after the announcement.
Red Bull came back, but with new contractual terms. The energy drink company said it would rejoin the Clippers so long as 50% of its 2014 post-season sponsorship dollars would go to charity and the remainder go directly into basketball operations (e.g. not to Sterling). Yokohama said it would return if half of their sponsorship dollars went to charity as well.
Silver’s announcement also reassured league-wide sponsors about the direction of the league going forward. SB Kim, Kumho Tire marketing team leader, said, “Our confidence is even stronger going into a three-year sponsorship seeing how they handled such a serious and negative situation as racism.”
In the end and once a new owner purchases the team, could the Clippers actually be stronger than the organization was prior to the tape release? John Vrooman, professor of sports economics at Vanderbilt, thinks so. “I think that it’s inevitable that