Los Angeles Clippers Take Sponsorship Hit in Light of Donald Sterling's Comments
The economic fallout of Los Angeles Clippers owner Donald Sterling's words happened so rapidly, hours after being outed for making derogatory remarks about minorities, with sponsors dropping the toxic owner at rapid pace prior to National Basketball Association (NBA) Adam Silver banning the owner from the league.
Within days of TMZ.com releasing the bombshell tapes that reveal Sterling -- who admited to NBA Commissioner Adam Silver that it was his voice -- arguing with his girlfriend V. Stiviano about being friends in public with minorities.
"I'm just saying, in your lousy [expletive] Instagrams, you don't have to have yourself with, walking with black people," said Sterling on the tape.
Automakers Mercedez-Benz and Kia, Amtrak, the Chumash Casino, used car dealership CarMax, airline Virgin America, insurer State Farm, beverage company Red Bull, retailer Lumber Liquidators, AQUAhydrate, Corona beer, Yokohama Tire, LoanMart and Sprint telecommunications have all suspended their sponsorship deals with the Clippers as they decide what to do next with Sterling gone from the team.
"I would advise any of my clients to distance themselves completely from the situation," said David Spencer, who does sports marketing for Talent Resources, to Forbes.com . "I don't see a negative of jumping ship at all. The only negative would be to stay on the sinking ship."
The Clippers name brand has never been better, prior to the controversy, after trading and re-signing perennial NBA All-star point guard Chris Paul, drafting power forward Blake Griffin and replacing former head coach Vinny Del Negro -- who won a franchise-record 17 games in a row and finishing out the regular-season with a team-record 56 wins, claiming the Pacific Division title -- with Doc Rivers, who Sterling hoped would help win an NBA championship like Rivers did with the Boston Celtics.
Tickets sales and television ratings have never been better for the Clippers -- who are normally overshadowed by their more glamours neighbors -- the Los Angeles Lakers -- averaging 96,000 television viewers for the 2013-2014 NBA season.
Forbes has the franchise currently valued at $575 million (Sterling bought the team for $12 million in 1981) with the Clippers most recent brand valuation of the franchise (which is the portion of franchise's value attributable to its brand) is estimated at $64 million and generating $128 million in revenue (ranked 19th in the league). While the franchise value may not suffer in the short-term, the brand valuation will likely take a hit after Sterling's comment.
"Clipper sponsorship has grown dramatically and in direct relationship to the success curve of the team over the past few years," said John Ivey of Altus Marketing & Management to business website The Motley Fool. "But as the events of the last few days have shown, the team's new image, no matter how hard-earned by the players -- was as fragile as it could possibly be."
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