AS COMPANIES become more competitive, they become more deliberative about fulfilling their promise. A brand, after all, does not only state why companies exist but also states how this purpose differentiates them from other companies.
Putting a face to these companies has, thus, led them to use celebrities who either mouth the companies’ brand promise verbally or in silence. The bigger the company, the bigger is the celebrity chosen.
Presumably, there’s a catch. No company is content to just latch on to a celebrity’s name and image. Similarly, the celebrity agrees to remain a fitting representative of the sponsor. This means compliance with guidelines, which prohibit certain behavior in an endorser’s private life, and thus, encourage the endorser to live its brand promise.
According to Marc Edelman, who teaches contract and sports law at Barry University in Florida, such contract provisions known as “morality clauses” are usually general sounding. But they clearly expect the endorser to “refrain from conduct, which would bring him or her into public hatred, contempt, scorn or ridicule, or shock, insult or offend the community, or offend public morals or decency.”
Any violation by the celebrity allows the company to switch off the contract without obligation of paying a break-up fee.
No, celebrity golfer Tiger Woods’ sex scandals did not trigger these kinds of contract provisions.
These date as far back as 1921 when Universal Film Company initiated the move. That’s because actor Fatty Arbuckle was accused of manslaughter for the death of a starlet.
While Arbuckle was eventually acquitted, the provisions became standard in contracts. And at the height of accusations in the 1950s that some actors were Communists, the film studios used these to fire the suspects. Twenty years after, these clauses were adopted for sports figures, particularly because of the growth of big-dollar marketing deals.
The clauses have been slapped against NFL quarterback Michael Vick for running a dog fighting ring. NBA player Chris Webber lost his sponsor Fila USA in 1998 after being charged with assaulting a police officer, resisting arrest, and possession of marijuana.
Then there was Floyd Landis who lost the sponsorship of Phonak, maker of the Swiss hearing aid, after testing positive for illegally high testosterone use.
And more recently, there was American actor Charlie Sheen, dropped by underwear maker Hanes, for allegedly putting a knife to his wife’s throat.
Given the history of morality clau-ses, their origin and applications, it shouldn’t surprise anyone that Tiger Woods, the first athlete to become a billionaire, has been dropped by Accenture, Gillette and AT&T. Their spokesmen stress about $12 billion in losses because of his scandal. Marketing analysts, however, state that the “losses” are really paper losses, not actual cash, because “so little of their overall value is tied to Woods.”
Nike has remained loyal to Woods. But surely, as Woods does his hindsight, he’ll ponder more solemnly Nike’s “Think twice before you just do it.”