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The uneasy marriage between big business and professional sports is going through one of its rough patches again.
Australia’s richest person, mining billionaire Gina Rinehart, canceled a A$15 million ($9.6 million) sponsorship deal at the weekend that her iron ore miners Hancock Prospecting Pty. and Roy Hill Pty. was providing to Netball Australia, the sport’s peak body. The national team had sought to avoid wearing Hancock’s logo during some matches after an Indigenous player raised concerns about the deal, the player’s association told Australian Broadcasting Corp. radio this week. Rinehart’s mining magnate father notoriously called for the sterilization of Aboriginal people in a 1984 television interview.
Sport and politics have long been uneasy bedfellows, from the 1960s activism of Muhammad Ali and 1968 Olympics Black power salute to the knee-taking of American football and British soccer players over the past decade.
In Australia, the last few years alone have seen international rugby union player Israel Folau lose his contract after homophobic social media posts; longstanding Australian rules football and media executive Eddie McGuire step down following a damning report into racism in the club he led; members of another club refuse to play a match in which they were due to wear jerseys promoting LGBTQ pride; and former National Australia Bank Chief Executive Officer Andrew Thorburn resign within hours of his appointment to a football club over his links to a church that preached against homosexuality and abortion.
The dispute between Rinehart and Netball Australia has a more unusual twist, however, and one that should worry one of the biggest growth businesses in sports: It’s about the $54 billion market in sponsorship rights.
Sponsorship has always been a high-risk, high-return channel for media brands. Unlike straightforward advertising, where the brand has total control over the end product, a sponsorship deal sees them burnish their own reputation by association with a celebrity or sporting figure. In return for the relatively low cost of sponsorship and the high trust that it earns from consumers, brands take the risk that the person or team they’re sponsoring may have their own views about the world. That could ultimately send the whole agreement up in smoke if their public comments contradict those of the sponsor.
In the worst-case scenario, you end up like Adidas AG, which is now planning to end its association with Kanye West after anti-semitic comments from the rapper now known as Ye. Still, even smaller-scale deals such as Rinehart’s with Netball Australia risk blowing up. The rising value of sports sponsorship and marketing means players have their own images to protect. Adding fuel to the fire is the fact that elite athletes are normally younger than the sports managers who control marketing decisions, and often have different opinions about the world. Rinehart doesn’t want the team she sponsors speaking out about her father’s racist comments; players, for their part, don’t want to keep quiet about it for the sake of her money.
The volcano that the industry is sitting on is that sports sponsorship is riddled with sin stocks. Tobacco advertising is banned in most countries these days, though it played a crucial role in the development of women’s tennis when Altria Group Inc.’s Virginia Slims sponsored Billie Jean King and other players in establishing the event that would later become the WTA Tour.
Beer and spirits, however, make up the largest slice of sponsorship spending in Australia and elsewhere, with gambling not far behind. Fossil fuel companies — including oil and gas producer Woodside Energy Group Ltd. and coal-burning utility Alinta Energy Pty. — have also come into conflict with the teams they sponsor in recent weeks. Alongside Rinehart, Netball Australia’s other major sponsor is gas producer and utility Origin Energy Ltd.
Brands are free to kvetch about the teams they support speaking up in ways they don’t like. Rinehart, a testy culture warrior whose corporate website now hosts dozens of media clips about the netball controversy, seems to relish the fight far more than the cash-strapped players at the center of it.
Still, such disputes come with the territory in sports sponsorship — and brands tempted to get involved should get used to it. In 2017, Australian cricketers threatened to set up a player-owned marketing and image rights business during a dispute with the national body. That’s a sign that athletes are well aware of their rising profile and popularity, and how precious an asset it represents for external investors. They’re reluctant to sell that prize too cheaply. Sponsors who expect teams to sit down and keep quiet while they trade off players’ image may find they get more than they bargained for.
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This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
David Fickling is a Bloomberg Opinion columnist covering energy and commodities. Previously, he worked for Bloomberg News, the Wall Street Journal and the Financial Times.
More stories like this are available on bloomberg.com/opinion
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