The racist comments attributed to longtime Clippers owner Donald Sterling appear to be hitting the team’s bottom line as 13 sponsors announced Monday they were ending partnerships or suspending work with the franchise.
The two biggest names in terms of sponsorship connection were State Farm and the car company Kia. State Farm is known for its “Born to Assist” campaign with Clippers All-Star point guard Chris Paul (and his “twin” Cliff Paul) and Kia features ads centered around All-Star forward Blake Griffin.
“The remarks attributed to the Clippers’ owner are offensive,” State Farm said in a statement. “While those involved sort out the facts, we will be taking a pause in our relationship with the organization. We are monitoring the situation and we’ll continually assess our options. We have a great relationship with Chris Paul and will continue supporting the ‘Born to Assist’ advertising campaign involving Chris and now other NBA players.”
Others companies that ceased or suspended ties with the team Monday include CarMax, Red Bull, Virgin America, Sprint, Mercedes-Benz, Corona, Yokohama Tire Corporation, LoanMart, Lumber Liquidators, AQUAhydrate and the tribal-owned Chumash Casino, one of the team’s biggest partners. Exact figures for the value of those contracts were not immediately available, but they are believed to be in the many millions of dollars.
“This is an example of the market punishing the conduct,” said Michael Chasalow, a law professor at the University of Southern California. “And that of course can cost money to a team.”
The comments allegedly made by Sterling were to his apparent girlfriend, V. Stiviano, on a recording released by TMZ. The man making the comments urged Stiviano to stop bringing black friends to Clippers games and appearing with them in photos.
The team may not face an immediate economic impact, as most sponsorship deals have already been paid for the current season. But the longer the scandal hangs around, the more the team will feel the economic blow.
“If this festers and spills into next season, it could cost them a lot of money,” said Stephen A. Greyser, a Harvard Business School professor who specializes in marketing and sports management.
While the legal issues remain over determining the authenticity of the recording and whether there was an element of consent in taping the conversation, sponsors are not concerned with those issues.
“They are not worried about the legal formalities or niceties,” said Jody Armour, a law professor at USC. “They’re worried about the court of public opinion and the brand.”
The sheer number of sponsors suspending and ending partnerships with the Clippers also puts pressure on other companies to follow suit or to even state why they are continuing their partnerships.
In a business sense, as Greyser put it, Sterling is seen as equal to the Clippers franchise, indicated by the loss of team sponsors triggered by the owner’s alleged remarks. But further economic impact will be determined by the fans’ view of the franchise.
“Fan impact,” Chasalow said, “is somewhat unpredictable.”
As Chasalow points out, fans could decide to punish Sterling by not going to games, opting out of renewing season tickets and refusing to buy merchandise. All which in turn affects the appeal of the team to potential free agents.
