Ryan Lochte endorsement earnings under threat as tarnished sponsors could ask for millions back
American swimmer Ryan Lochte arrived in Rio de Janeiro with ambitions to return home with a fresh set of Olympic medals and a raised profile to help finalise a one final payday as his career enters its twilight.
In the end he got two out of three. Lochte has come back to the United States with a sixth gold medal, in the 4x200m freestyle relay, and a place on the front page of the USA’s newspapers.
But after relaying a dubious story about being held at gunpoint by Rio robbers — Lochte and teammates appear to have instead angered an armed gas station owner with late night drunken vandalism — the newspaper headlines haven’t read “hero”.
Instead the swimmer has been branded as a “liar”, “the ugly American” and “the Lochte mess monster”.
Lochte arrived at Rio as one of the most marketable athletes competing according to a survey of sport sponsorship experts consulted by City A.M., but will now miss out on the post-Olympic halo effect for endorsement deals.
“Ryan’s cut short the commercial opportunities he would have undoubtedly had otherwise,” Andy Sutherden, who has previously worked on a Lochte sponsorship package and is currently global head of sports and partnership marketing at Hill and Knowlton Strategies told City A.M..
“I’ve worked with him on Gillette who sponsored him at London 2012. He’s a good looking lad, he’s a man’s man and he was a great ambassador for Gillette at London 2012.
Read more: The 50 most marketable athletes in Rio
“So this will be a big disappointment for many companies who were earmarking Ryan for an endorsement deal beyond Rio, because he’s certainly one of the few swimmers on the planet that transcends the sport.
“His commercial opportunity might be sinking. When brands consider new athletes to sponsor for future events, it’s now highly unlikely that Ryan’s going to be considered.”
Speedo has said it is currently monitoring the situation surrounding Lochte (Source: Getty)
The 32-year-old has since issued a public apology to his teammates, fans, fellow competitors, Rio de Janeiro and his sponsors. But the latter group may not be placated.
A wave of negative coverage has surrounded Lochte. To quote one example, the swimmer was described as “the dumbest bell that ever rang” by the Washington Post.
It looks likely to damage future endorsement earnings, and existing sponsors could already be looking to get their money back already.
While Japanese mattress maker Airweave has said Lochte will remain their American ambassador as long as he is an elite athlete, both Speedo and Polo Ralph Lauren have both said they are reviewing the situation.
In total, the deals are reported to be worth $1m to Lochte in future earnings.
Ralph Lauren have already removed the swimmer from their “Meet Our Athletes” web page, a nod to the knowledge that association with him currently tarnishes their own brand.
And if they’d been wary of Lochte’s reputation as something of a party boy ahead of signing him up, they may have taken out “death and disgrace” insurance which could see them recoup the money they’ve invested in the athlete.
The number of companies buying the insurance on endorsement deals to protect themselves from the lost revenue association with a disgraced athlete could trigger has reportedly grown by 30 per cent in three years as sport stars and organisations come under more scrutiny than ever before.
“A wise sponsor would take out something like death and disgrace on all of their deals on the basis that it’s designed to protect their investment in the event of a circumstance just like this,” Edel Ryan, head of media and entertainment at JLT Specialty, told City AM.
So while Lochte’s misdemeanour may carry similar implications to Maria Sharapova’s doping ban – the Russian star lost sponsorship from Nike and Tag Heuer – or offend to the same extent as Manny Pacquaio’s homophobic comments that also lost him a Nike endorsement, Ryan believes the extent to which it has exploded into an international story could also give a company such as Ralph Lauren a valid insurance claim.
“I would certainly say that he’s done something stupid enough to bring the brand into disrepute,” she said. “And I wouldn’t be surprised if brands were considering their position around the individual.
“Brands can protect their entire deal with an athlete at a premium of about 0.5 to two per cent depending on the value of the contract, or it may be done on a pro rata basis whereby if they’ve had value to date [from the sponsorship] insurers may qualify that it should come off as a credit.”