Page 1 of 28 ANZAM 2010 Managing Athlete Spokesperson Risk in Times of Crisis: Lessons learnt from the Michael Phelps & Tiger Woods cases Lauren Sedgman School of Economics and Business, the University of Sydney, Australia Email:
[email protected] ABSTRACT: Sponsorship is the fastest growing form of advertising by consumer firms, representing a total of US$44 billion worldwide forecasted to grow by 4.5% in 2010 (IEG, 2010). The increase in sponsorship by consumer firms necessitates a corresponding increase in risk management policies to guard against the potential damage of negative spokespeople events to shareholders. This paper examines flaws in existing risk management practices and the detrimental impact of negative spokesperson events on the firms sponsoring both Michael Phelps and Tiger Woods. This paper offers lessons for managers seeking to reduce the uncertainty associated with the management of multi-brand athlete properties in times of crisis. Key words: Managing Uncertainty, Marketing and Communication, Intangible Assets, Risk Management, ANZAM 2010 Page 2 of 28 ANZAM 2010 Conference Paper MANAGING ATHLETE PROPERTIES INTRODUCTION Growth of Sponsorship and Athlete Behaviour It has been said that “managers face uncertainty, and investors face risk” (Sull, 2006). Since the behavior of athlete properties is highly uncertain, managers of firms employing intangible assets such as athlete properties face significant uncertainty. Sponsorship is the fastest growing form of advertising by consumer firms, representing a total of US$44 billion worldwide forecasted to grow by 4.5% in 2010 (IEG, 2010). The increase in sponsorship funding necessitates a corresponding improvement in risk management policies to guard against the potential damage of negative spokespeople events.