Are Sharapova and sponsors heading for break point?

Maria Sharapova wearing a Nike t-shirt Image copyright Getty Images
Image caption Sharapova's future with Nike is now in doubt following her suspension

As Nike suspends its relationship with tennis superstar Maria Sharapova not only is one of the most lucrative sports partnerships under threat, but so too could be her phenomenal brand appeal to sponsors.

After the US sportswear company took action, Swiss watch maker Tag Heuer was quick to end its association with the five times Grand Slam winner, and German luxury car marque Porsche said it was postponing any planned activities with her.

Sharapova revealed on Monday that she had tested positive for the banned substance meldonium at the Australian Open in January, and faces a ban from tennis of up to four years.

'Burnt before'

Big-name global companies have been attracted to the Russian star for her mix of athleticism and glamour since she won Wimbledon in 2004 at the age of 17.

According to US business magazine Forbes, the 28-year-old is now the world's top-earning female sports star, raking in a total of $29.7m last year.

Tellingly, the vast majority of that money – some $23m – came from endorsements. And it is the biggest of those endorsements – her eight-year, $70m deal with Nike, which runs until 2018 – that is now under threat.

Image copyright Getty Images
Image caption Sharapova's relationship with Tag Heuer stretched back a decade

Sharapova is the latest Nike athlete to become embroiled in controversy, with a number of big names before her being dropped, while others have been retained but had the value of their deals slashed.

These dropped include cyclist Lance Armstrong, convicted athlete Oscar Pistorius, and boxer Manny Pacquiao, while those in the latter category reportedly include Tiger Woods.

Karen Earl, chairman of the European Sponsorship Association, says: "I can't help feeling that Nike has been burnt before; they have stayed with people like Lance Armstrong in the past, and maybe they are just being rightly cautious now.

"The use of a suspension is interesting – basically they are saying they will sit and see how things go. Given their recent experiences that is probably a sensible move. I think they have done the right thing this time round. Nike can now have the option of jumping either way," she tells the BBC.

Meanwhile, Tag Heuer has been more blunt and "decided not to renew the contract with Ms Sharapova", while Porsche has been more cautious, preferring to put its activities on hold.

Forgiven or not?

Now all eyes will be on her other commercial partners – Avon Cosmetics, Evian, Head and skincare brand Supergoop, to see what they do, or whether she is now a tarnished brand for sponsors.

Sharapova also has her own confectionery business, Sugarpova, launched in 2011, with sales last year of more than three million bags of sweets.

"These other sponsors will be thinking about what they should do now," says Mrs Earl.

Image copyright Getty Images
Image caption Sponsors will be watching how tennis and doping authorities act

"In the short-term her continued appeal to sponsors will depend on what action is taken by the tennis and doping authorities.

"In the longer term if all seems to be forgiven, and she is not out of the game for longer than the one year that is being talked about, then it might not matter to them as much.

Mrs Earl adds: "But if she is not seen to be forgiven by tennis, then sponsors will find her less appealing. It all depends what happens in the next few weeks."

The International Tennis Federation (ITF) has said the five-time Grand Slam champion will be provisionally suspended from 12 March. Whatever happens with regards to any bans, Sharapova, who turns 29 in April, says she hopes to be able to return to tennis in the future.

'Potential risks'

Mrs Earl says that Sharapova's media conference, pre-empting any statement from the tennis authorities, was an interesting move, and one designed to appeal to fans.

"However there are details about what she or her advisors knew which have still to emerge," she adds.

Image copyright Getty Images
Image caption Porsche has suspended activity with Sharapova

She points out that while Nike is sitting on the fence, other brands such as Tag Heuer have taken "a stand against drug taking and disassociated its brand" from Sharapova.

Mrs Earl says sponsors have behavioural clauses in their deals with sports stars that allow them to end the contract if players transgress through drugs or in other ways.

"If you are working with individual sports stars or sports teams, brands such as Nike have teams of lawyers to include contract clauses that offer protection against potential risks," she adds.

'One-woman marketing machine'

Andy Brown, editor of the website Sports Integrity Initiative, says these legal clauses are all about protecting sponsor brands from being brought into "disrepute".

He says that while such "break clauses" are now common in sponsor contracts, this was not always the case, and that their introduction was greatly hastened by the past scandals around the Tour De France.

"It is something that any savvy lawyer representing a brand should be putting into sports contracts," Mr Brown says.

Image copyright Getty Images
Image caption As well as being attractive to sponsors Sharapova has her own candy line

And Nigel Currie, an independent sponsorship consultant, says that five years ago the sponsors would not have reacted in the way they have.

"In the olden days the sponsors would not have done a thing and would have hoped the problem would just have gone away," he says.

"Now, brands are not only paranoid about their image, but also firms are increasingly focused on corporate social responsibility issues in a way they were not before."

For now, Sharapova must wait to see which way Nike jumps and whether it makes the suspension permanent.

"She's a one-woman marketing machine, there are lots of male stars in the world, but not many female stars, so it will be interesting to see what Nike – having made their initial reaction – do next," Mr Currie adds.