The Russian invasion of Ukraine has been one of the most tragic and worrying news events of recent years, we’d like to caveat that this blog is not ignoring the seriousness of this war, instead assessing the implication on our industry; something we are far more qualified to comment on. This analysis will focus on the potential impact of brands and rights holders being associated with toxic partners.
The fallout from the Ukrainian crisis will no doubt last for many years, if not decades, however it should also remind marketers of their responsibilities when embarking on a sponsorship as a primary communications channel. There are several examples of brands and rights holders who have parted with their respective partners because of this crisis, we’re going to analyse the impact of these decisions and how they have damaged partner integrity, in addition to pin-pointing learnings for the future.
Whilst many global brands have decided to withdraw their Russian business interests as governments’ sanctions have kicked in, there have also been a number of notable sponsorship decisions impacted by this crisis. Shortly after the invasion, Manchester United announced that they would be cancelling their sponsorship agreement with Aeroflot, Three were demanding that their logo should be removed from Chelsea’s shirt and, most notably, UEFA have terminated Gazprom’s Champions League sponsorship. Whilst there have been a number of other similar announcements, these are the highest profile and therefore our focus.
The most striking elements of these announcements is not only the high-profile nature of the respective parties but also the speed of decisions. Manchester United, Three and UEFA clearly understood the urgency of these decisions and acted swiftly. However, didn’t these organisations know the potential toxicity of these relationships in advance?
The Aeroflot deal always seemed an ill-fitting partnership given the lack of obvious synergies between the two organisations and the fact that Manchester United would only be able to use the airline on a very limited basis given that most of their travel is within Europe during the season or North America and Asia during pre-season, which are only serviced on a limited basis by Aeroflot’s routes. Therefore, since the inception of the sponsorship in 2013, this was purely a binary transaction; as long as the Russian state owned airline paid their bills (in excess of £30 million during the course of the current agreement) there didn’t need to be any credibility in the sponsorship. This level of relationship is a far cry from where successful partnerships should live. The true meaning of a partnership is mutual benefit to both parties complemented through shared values. Given the state of Russian relations with the West, and the UK in particular, has been noticeably deteriorating over the last decade, it didn’t need a geopolitical or military expert to understand that, at some stage, there was likely to be some form of confrontation with Russia, putting a huge strain on this sponsorship relationship. This is not smugly using the benefit of 20/20 hindsight; the poisoning of Alexander Litvinenko and the Skripals surely highlighted the geopolitical strains with Russia in plain sight. Therefore, why did Manchester United agree to this deal knowing that there was a good chance it would need to be reviewed at some stage due to broader geopolitical influences? Did the commercial department at Manchester United seriously believe that the motivation behind Russia’s state-owned airline’s sponsorship was anything other than sportwashing? Why did they agree to it?
There is a similar situation between Chelsea and Three. Roman Abramovich has owned Chelsea FC for 20 years. During his ownership, his connections to Vladimir Putin have been well documented. Even if this tragic invasion hadn’t been undertaken, surely Three embarked on their sponsorship knowing this information, are they now so shocked as to the relationship that Roman Abramovich had to the Kremlin hierarchy? Why are they only now realising that this is a negative association?
Either Manchester United and Three didn’t complete their due diligence correctly or they were willing to turn a blind eye on what was happening in the world around them. Either way, it highlights flaws in their planning processes. The fundamentals of any sponsorship or partnership are the alignment of values and broad objectives. Any partnership will fail if there isn’t alignment on values because there can be no credibility within the partnership without them. Whilst these two organisations now try and claim some sort of moral authority given the horrors of Ukraine, one has to wonder why these questions weren’t being asked prior to the development of these partnerships.
UEFA’s termination of Gazprom’s Champions League sponsorship has been driven by slightly different influences. This sponsorship has been persistently questioned since its inception in 2012 as UEFA were clearly providing a sportwashing vehicle, however this crisis has brought those ethical questions into sharper focus. Whilst UEFA have always claimed a position of geopolitical neutrality, this sponsorship undoubtedly added credibility to Russia’s state-owned energy corporation. UEFA have always been primarily financially driven therefore it was unlikely that they would make an ethical stand against Gazprom whilst most of Western Europe continued trading with them. However, the concern amongst other brands currently sharing the Champions League platform with Gazprom has shaped UEFA’s sponsorship termination decision. Heineken, for example, who have been a UEFA partner since 1994, have recently announced their withdrawal from trading in Russia. It would have been an untenable position to continue their UEFA association if they had to remain sitting alongside one of Russia’s largest state-owned businesses during the Champions League final. By sharing the same stage, Heineken would have been celebrating shared values with Gazprom through their respective UEFA partnerships. Had the relationship remain unchanged, it would impact their broader business once consumers judge that the brand is more aligned with the Russian state’s values rather than their own. Whilst not in the public domain, UEFA’s partners have been applying pressure to enforce distance between themselves and Gazprom through UEFA. One could question why businesses such as Heineken have turned a blind eye to Gazprom’s negative association for so long and why they are now being principled. This is a perfectly legitimate question however the pertinent point from the UEFA example is their partner brand’s ability to now affect positive change.
Sportwashing is an increasingly common tactic for brands, rights holders or sovereign nations to cover ethical floors as the influence of global sport continues to grow through increased and proliferated broadcast audiences. As a result, rights holders and brands need to be far more diligent about who and where they are associating with. The primary principle of successful partnerships is value alignment, as such, there can be no surprise when the reputations of ethically questionable organisations rub off on their partners.
Three, Manchester United and UEFA should have learnt from this sorry saga and will be more diligent when entering into similar processes in the future. Whilst this is not only vitally important to ensure that they secure ethical partners, it will also guarantee that their sponsorships and partnerships are successful going forward through associating themselves with value-aligned organisations.