Sports sponsorships and partnerships: Are hidden ethical risks threatening your reputation?

We expect athletes and teams to operate fairly, with integrity, take responsibility and treat one another with respect.

The behaviour and actions of rights holders, governing bodies and sports organisations, indeed, any stakeholder operating within sport should mirror those ethics.

Just as an athlete facing accusations of doping risks tarnishing their reputation, sports organisations can suffer damage to their own reputations due to misconduct (suspected or otherwise) and associated unethical behaviour.

Exposing unethical behaviour in sport

In our comprehensive due diligence of sport partnerships, ethics represents just one facet of our reports; the following red flags are central elements of our investigations.

Unethical behaviour

Clear-cut unethical behaviour would be if the individual, organisation or entity has been involved in unethical practices such as doping or corruption.

An example of a doping scandal which significantly harmed Nike was its association with the Nike Oregon Project (NOP), a distance running training group based in Portland, Oregon.

The NOP led by coach Alberto Salazar included elite athletes such as Mo Farah, Galen Rupp and Mary Cain. In 2019, Salazar received a four-year ban from the sport for multiple anti-doping rule violations.

The revelations of Salazar’s doping violations and the subsequent disbanding of the Nike Oregon Project led to significant scrutiny and criticism of Nike’s involvement with it. While Nike has denied any wrongdoing, the scandal raised questions about the company’s commitment to fair play and athlete welfare. Nike faced a backlash from athletes, fans, and the broader sports community, with some calling for boycotts of the brand.

Misrepresentation or deception

Ethical risks can arise when partnerships misrepresent facts, exaggerate claims or engage in deceptive marketing practices. This was evident in the FIFA corruption scandal of the early 2010s.

Despite allegations of bribery and other corrupt activities implicating high-ranking officials, FIFA continued to form lucrative sponsorship and marketing agreements. These partnerships promoted FIFA events with claims of integrity and fairness, despite evidence suggesting otherwise. Such misrepresentation eroded trust among stakeholders including fans, sponsors and participating teams, damaging confidence in FIFA’s leadership and its partners.

Castrol, Continental Tyres and Johnson & Johnson, Sony and Emirates were some of the named sponsors which did not renew their deals following multiple scandals afflicting the governing body.

Exploitation

Partnerships which exploit vulnerable groups such as young athletes or communities for financial gain or promotional purposes can lead to ethical concerns regarding fairness, equity and social responsibility.

Adidas has faced criticism for exploiting vulnerable female workers in Myanmar. Reports revealed instances of low wages and poor working conditions in the supply chain. Despite these ethical concerns, adidas has continued to benefit financially from its partnerships with these factories. As a result, the company’s marketing campaigns have been called out for creating an illusion of support for women, despite the fact that 80% of garment workers worldwide are women.

Conflicts of interest

Partnerships which generate conflicts of interest, like sponsors wielding undue influence over sporting decisions or compromising competition integrity for commercial gain, can raise ethical concerns.

In 2019, an investigation by the BBC and The Sunday Times revealed that Nike received early access to confidential information from the International Association of Athletics Federations (IAAF). This arrangement sparked worries about conflicts of interest, given Nike’s role as an IAAF sponsor and its significant presence in athletics. The blurring of lines between commercial interests and sporting decisions ultimately undermined the integrity of athletic competitions.

Environmental Impact

Partnerships could be at reputational risk where there is environmental damage or when they are associated with excessive consumption, pollution or unsustainable resource use.

Motor racing, known for its significant carbon emissions, extensive travel and elaborate tracks exacerbate environmental impact. For instance, the construction of the Yas Marina Circuit in Abu Dhabi resulted in substantial destruction of mangroves and coastal habitats. This disregard for sustainability raises ethical concerns.

Social Responsibility

Neglecting social responsibilities, like promoting inclusivity and fair treatment regardless of race, gender or socioeconomic status, poses ethical risks in sports partnerships.

In 2016, NFL player Colin Kaepernick kneeled during the US national anthem to protest against racial injustice. The NFL’s response, including policies that stifled protests and discouraged player expression, was criticised for failing to support inclusivity and diversity within the league and disregarding players’ rights to peaceful protest. Sponsors such as pizza chain, Papa Johns, expressed disappointment with the NFL leadership’s response to player protests.

The consequences of risky partnerships

When unethical practices such as bribery, doping, or match-fixing come to light, they erode the credibility of the sport and those involved. This loss of trust can lead to decreased fan engagement, sponsorship withdrawals and damaged brand images.

Moreover, unethical behaviour tarnishes the reputation of individual athletes, teams and organisations, impacting their ability to attract sponsors, secure endorsements, and maintain public support.

Widespread unethical behaviour can result in legal consequences, fines, and bans, further damaging reputations and jeopardising future opportunities.

Mitigating ethical risk in sport

Mitigating ethical risks in sports partnerships requires rigorous due diligence. This involves conducting thorough background checks on potential partners to assess their ethical standards and how their principles align.

Reviewing past practices is essential to identify red flags. By understanding potential risks before deals are signed, organisations can safeguard against ethical irregularities. Regular audits will further ensure compliance and reveal areas for improvement.

Transparency through due diligence

In an age where public scrutiny is relentless, and where even a faint whiff of unethical behaviour can create a negative ripple effect, visibility of ethical risk is paramount.

Organisations must recognise the intrinsic link between trust and success, and not only apply it to their own actions, but also the partnerships and associations they forge in order to avoid bringing reputations into disrepute and staining legacies.

Since 2014 we have been identifying ethical risks in potential sport partnerships, working alongside leading brands, clubs, agencies, rights holders and institutions to help them make better decisions about who they choose to associate with. If you would like to see how InsightX’s approach can help, please get in touch.

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