Margareta Pagano: Does the brand maketh the sportsman?
Shareholders are starting to ask if the superstars they fund so lavishly are really good for business
Sunday 06 December 2009
The most shocking aspect of the Tiger Woods affair is how big brands are emerging as the arbiters of public morality. It's the world's big sports sponsors – brands such as Nike, Gillette and power drinks giant Gatorade – which are fast becoming the guardians of celebrity transgressions, not their families or even the press. Within hours of the Woods scandal breaking, the only statements that seemed to matter were those from the golfer's big-brand sponsors on whether they would still back him with the $100m or so a year they give in sponsorship.
It was only after Woods made his extraordinary apology, promising to be a better family man, that the companies involved came out with their full-hearted backing. Not so long ago it was the wronged wife or husband who would be forced to publicly announce support for an errant spouse. It doesn't take a rocket scientist to work out that the billionaire golfer was forced into his confession by the army of PR and sponsorship advisers, desperate for him to repair his squeaky-clean image as swiftly as possible.
But it's not surprising that power is switching to the big brands. As traditional forms of advertising decline, companies are under huge pressure to find new ways to sell their products. Top sporting stars such as Woods, who is both international and aspirational, have become one of the easiest ways to sell a message to the global audience. Between them, the world's biggest companies such as Adidas, Puma, Santander, Coca-Cola and even our own Royal Bank of Scotland, spent a staggering total of £15bn on sponsoring individuals and events this year. No wonder brand kings seem to care more about the image of their celebrities than whether their sportsmen are winners. That's why it's not enough for Nike to borrow Woods's body to display around the world: it's got to be seen to be clean as well. Gatorade can't be happy that its Tiger Focus is being marketed as a power drink to improve mental focus while he goes through daily counselling sessions. But for now, Woods seems to have given his sponsors what they wanted with his confession.
More pertinent, though, is whether we want big business to be these new guardians. I'm not sure we do, nor, I think, do their investors. I wouldn't be at all surprised to discover that Gillette shareholders are starting to question why the mens' grooming company is spending so much money on sportsmen who seem to have feet of clay rather than gold. What's being called the curse of Gillette started when it signed David Beckham to a sponsorship deal just days after stories emerged about his alleged affair with his personal assistant. Then, only a few weeks ago, Thierry Henry, another Gillette superstar, got in trouble for cheating in France's World Cup qualifier and was forced into a humbling mea culpa. And now Woods.
Yet good could still come from this humiliation. Big brands must think hard about throwing so much cash at spoilt sportsmen and other celebrities. Its not healthy for them. There are many more responsible ways for companies to advertise, and they should move quickly, before shareholders start swinging their golf clubs.
RBS SHOULD LOOK AT THE FUTURE OF ITS INVESTMENT BANKING, NOT ITS BONUSES
Forget the recent spat over bonuses at Royal Bank of Scotland. This prickly problem will be thrashed out between the Government and the RBS board over the next few weeks as RBS does not have to decide what to pay its top-earning staff until February.
Inevitably, there will be compromise as both the politicians and the investment bank need to defuse this issue.
A much bigger question faces Sir Philip Hampton, the chairman, and Stephen Hester, the chief executive. They need to decide what sort bank they are running – whether they should be building up the global banking and markets division, or running it down. For now, Hampton and Hester argue that they need to pay the bonuses to retain the staff. If they don't pay the market rate, they claim these brilliant assets with feet will jump ship to a competitor.
I'm not sure that I buy this talent argument. With no disrespect, RBS is not one of the top-draw, top-tier investment houses but a second-liner. Many of its bankers and traders are talented but if they are not paid the top street rate, I simply don't believe they will all be snapped up by a Goldman Sachs or a Morgan Stanley.
If RBS has to pay huge amounts to keep the bankers it fears will leave, the board must be brave enough to take a risk and let them walk. The priority of the board is still to fix the main part of the bank, but it looks increasingly as though the only way to do that is out of the private eye by nationalising the bank completely.
As this is political dynamite, the second-best option would be to clean out all the toxic assets from the global banking and markets division and either spin it off into a separate company or sell it to the private sector. That way, RBS can get on with its main job and avoid being caught in the crossfire between the politicians and the furious public.
Once the new bank has paid off its loans, then it can pay its bankers what it thinks they are worth.
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