Hearts & Minds: When sponsorships turn toxic

FOR rugby fans tomorrow is a big day, the holding of the first internationals of the season. For the game’s sponsors, it kicks-off a period of added brand awareness but also nervousness. Rugby, which normally plays second fiddle to football, will once again find itself under the media’s gaze. It’s probable at some point the thorny subject of concussion will be raised. One bad tackle and the discussion will turn to the sport’s handling of a growing crisis and the accusation its governing bodies do not take the issue seriously enough.

For rugby’s backers, the question increasingly is to stick or go. How bad must things develop before the association becomes toxic and begins damaging their brand reputation?

They would not be the first to find themselves in such peril. Corporate history is littered with examples of tie-ups that have backfired. Two recent ones were the businesses that supported Tiger Woods when the golfer confessed to his numerous affairs and those who sponsored Lance Armstrong after the cyclist was shown to have taken performance-enhancing drugs.

The difference is that they did not see the storm coming. In rugby, it’s been brewing for a while, and given the lawsuits brought by affected former players, it is only likely to worsen. One solution is to withdraw now. This is the safest option: to pull out or at least quietly wind down the relationship.

It’s also the most extreme. Rugby is not in the hole just yet. Indeed, anyone witnessing the coming fixtures would think all is well: the grounds will be packed, the atmosphere will be infectiously celebratory, the ties will enjoy blanket prime-time coverage. It will be impossible to miss the company names on shirts, billboards and in advertising slots.

That is the case at the international level. Below, however, the impact of the controversy is being felt, with clubs struggling financially and some parents unwilling to allow their children to take part.

Another route is to turn the issue to advantage. There is a precedent. In 2015, Coca-Cola, McDonald’s and Visa endorsed football’s World Cup.  The FIFA organizers were struck by corruption claims. The firms demanded FIFA mend its ways. For some, it was an ultimatum: reform or else they would exit.

It put them on the side of right and showed they cared more deeply about the game’s future than their own prominence. For those in the plum seats tomorrow, it could be food for thought.

Chris Blackhurst is one of the UK’s foremost business journalists. He was previously Editor of The Independent and City Editor of the Evening Standard.