Adidas looks to avoid reputational risk with move to end athletics sponsorship

Reports emerged last night (24 January) suggesting that Adidas, the IAAF’s biggest sponsor, had told the athletics’ world governing body it wants to terminate its sponsorship deal three years early.

The 11-year tie-up was due to run until 2019 and is reportedly worth up to $6m annually. However, with a high-profile doping and corruption scandal currently damaging the reputation of athletics, it is understood the IAAF and Adidas are now in talks about ending the contract.

In a statement, Adidas didn’t exactly rule out the authenticity of the initial BBC report, simply saying: “As you know Adidas has a clear anti-doping policy in place. Therefore, we are in close contact with the IAAF to learn more about their reform process.”

And, one source with knowledge of the deal, says there has been growing tension between Adidas and the IAAF for some time now.

“Obviously the overall drug issues are a big factor but the IAAF’s decision to host the 2021 World Championships in Eugene, Oregon, which is obviously Nike’s HQ, did not go down well at all,” he told Marketing Week.

IAAF president Sebastian Coe was previously a Nike ambassador although he has since stepped down from the role.

“The waters were already muddied and when you start to add up all of the mistakes it doesn’t look good from the Adidas perspective.

“Trying to sell products related to a game where their purity is in direct question due to cheating is a disaster. Obviously people still need to be prosecuted in terms of the doping issues but Adidas will look at their reputational risk clauses and believe there are valid grounds for a breach of contact by the IAAF.”

The reputational impact

The IAAF’s commercial partner Dentsu, which heads up the marketing and sponsorship deals for athletics, will be most impacted financially if Adidas go ahead, according to another inside source.

In September 2014, the IAAF renewed its agency partnership with Dentsu for 15 years. However that deal was signed off by former IAAF president Lamine Diack, a man the World Anti-Doping Agency has said was “responsible for organising and enabling the conspiracy and corruption that took place in the IAAF.”

“That deal was renewed under quite suspicious circumstances by Diack and I don’t think we’ve heard the last of that,” said another senior source.

“Ultimately if Adidas pull out it will impact Dentsu more than the IAAF as they pay the marketing rights. Financially speaking, Adidas dropping out won’t hit the IAAF too badly but for its reputation it is very bad.

“If the £200m Dentsu deal was now to end too that would be the bigger worry for the IAAF.”

This isn’t the first time Adidas, which recently announced the appointment of Kasper Rorsted as its new CEO, has seen one of its high-profile sponsorships marred in scandal.

Adidas recently said it would “be forced to re-evalulate” its sponsorship of FIFA should the footballing body fail to implement reforms.