German sportswear company Adidas AG is said to cut sponsorship ties with the International Association of Athletics Federations (IAAF) following the scandal currently plaguing the sport.
This means that the sporting giant will be ending its sponsorship deal nearly four years early, according to the BBC.
Adidas’ 11-year deal with the organisation made it the biggest sponsor of athletics’ governing body. The BBC reported that Adidas made the decision to end its contract due to the doping and corruption allegations that were unraveled in December.
When contacted by Marketing, an Adidas spokesperson confirmed the development and shared the following statement: “Adidas has a clear anti-doping policy and we are in close contact with the IAAF to learn more about its reform process.”
Adidas declined to comment when asked if an anti-corruption clause was included in the contract with the IAAF. In August 2015, the sportswear brand remained silent amid the corruption scandal that hit FIFA as fellow sponsors Coca-cola and McDonald’s demanded for reform.
Adidas’ sponsorship deal, signed in November 2008, is worth around US$8 million annually, BBC reported.
Impact on sponsorship deals?
Loren Mack, public relations manager at One Championship, doesn't see the bad publicity impacting rising sports like mixed martial arts where sponsorship is an all-time high. Even if scandals were to arise, organisations should learn how to deal with the matter "at lightning speed".
"It is ultimately about vetting your people and ensuring that you have the best talent on board who conduct themselves on the highest level. Martial arts at the end of the day is about respect; honour and performance - and that's what we ensure our talent promotes," said Mack.
Meanwhile, Ben Flint, CEO of Asia Sponsorship News (ASN), said that Adidas' latest move signals a shift in the balance of power between organisations and brands: "In this case, the power seems to reside more with the brands since they have the commercial rights. Still, a sponsorship is a partnership and there should ideally be concessions between buyers and sellers in a way that restores and maintains that balance."
For a true partnership to take place, Flint suggests a joint steering committee within these sport organisations where executives from partnered brands are included in the board.
In addition, Adidas' speculated exit may also act as a wake-up call for IAAF and other sport organisations. According to an ASN report, sport has already lost its dominance over "Non-sport" (led by general entertainment and non-sporting celebrity endorsement) in the Asian Sponsorship landscape. The share of all Sponsorship spend in Asia has shifted from 78:22% in favour of Sport in 2011 to 45:55% against it in 2015.