Global Sustainable Sport – What are the reputational risks facing the industry?
In 2023, the world faces economic, geopolitical, social and environmental crises against the backdrop of ongoing physical and mental health challenges among the general population.
In the ultra-competitive sports industry, brand reputation is of critical importance.
However, as Native American comedian Will Rogers once said: “It takes a lifetime to build a good reputation, but you can lose it in a minute.”
Reputational damage can occur for a variety of reasons in sport – from an unintended data leak and shoddy fan experience to a sportsperson doing something inexplicable on or off the pitch. But it has the potential to be devastating for a sports organisation, league, club or athlete.
Indeed, in instances where there has been reputational damage, commercial partners are usually the first to go as they strive to avoid association with a tarnished brand. This often has real consequences on the financial bottom line.
For example, Hockey Canada revealed that it had lost C$23.5m in sponsorship income last year due to a sexual assault scandal.
A decade earlier, after finally admitting to doping after years of speculation, Lance Armstrong lost eight sponsors in a single day.
For the commercial partners, such swift action makes perfect sense. Research from the Rennes School of Business found that sponsors that act quickly in the wake of a doping scandal by severing ties with the guilty party can actually emerge from the episode with their overall reputations enhanced.
However, the response is crucial for all parties that are associated with a potentially damaging incident or event.
“There is a principle in PR crisis communications that it is never the crisis that kills you, it is your response to it,” David Alexander, Founder and Managing Director of Calacus, a sports PR agency that specialises in crisis communications, tells Global Sustainable Sport.
“There is a simple formula when facing a crisis. Acknowledge what has happened, express regret or sympathy for those affected, understand why they are aggrieved in the first place, and make a commitment to address your processes to ensure that it does not happen again in future.
“It is rarely the crisis that damages a reputation, but the way it is handled. Be strong, humble and determined to fix the problem and remain transparent, telling your stakeholders of your plans and progress along the way.”
From a good governance perspective, top officials and executives within any organisation should take a leading role in setting the right example to build and safeguard reputations. However, in organisations that have evolved through a changing world for generations, this may not come naturally.
“Sports organisations, by their very nature, can struggle with progress and often have established and conservative governance executives who cannot keep up with the pace of change,” Alexander says.
“We are in an era where consumers want their sports teams or associations to stand for something positive and do good in the world, and marrying that up with the challenges of attracting suitable sponsors who may not share precisely the same value set can be difficult.”
Some reputational headwinds are unexpected and inevitable in sport. However, sometimes sports organisations take proactive strategic decisions that have clear reputational risks from the outset.
“Money talks, as well, and the increasing influence and impact of wealth from the Middle East is also creating challenges,” Alexander adds.
“We have, for instance, rainbow armbands, laces and other symbols of support for the LGBTQ+ community in various sports, despite the fact that in many countries, particularly in the Middle East, homosexuality is illegal, as just one example.
“How sports can continue to engage and align with such a wide range of diverse communities when some cultures shut them down is a challenge that they have not yet solved.”
Alexander also makes the point that “some traditional sports are struggling to retain or attract younger audiences, for instance, and if they align themselves with repressive regimes, that may deter fans from engaging as they otherwise would.”
The broader challenge is that sport is an industry in which balancing risk versus potential reward is an everyday calculation that is factored into business models, from signing players to awarding hosting rights.
Alexander warns: “If you put profits over people, particularly when the risks of going down a certain route or aligning with specific sponsors, investors or hosts is concerned, it’s a long journey to win them back.”
With this in mind, a thorough risk assessment of any strategic choices is essential, he adds.
“Having core values and ensuring that every partner and stakeholder aligns to those values, ideally as engaging and supportive of every demographic as possible, is fundamental,” Alexander says.
“There have been incidences where football clubs, for instance, have signed players who have been accused of sexual misconduct, and whether they are guilty or not, their presence alienates huge swathes of their community, from female staff and teams to families who pay to watch them and sponsors who want to create positive vibes.”
A commitment to making a positive change in advance of a collaboration being struck is also important.
“This community activity should not be profit-making, nor should it be done with any thought for the bottom line,” Alexander explains.
“Supporting those most in need, using profits or expertise to empower those in disadvantaged communities or situations has a huge impact on loyalty but it should be a benefit, not a focus. You have to do the right thing because it is the right thing, not because it makes you look good, essentially.”
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