Sponsors dumping Ryan Lochte was a smart business move, but not for the reason most people think

On Monday, Ryan Lochte’s bizarre “robbery” story during the Rio Olympics seemingly hit rock bottom when all four of his sponsors dumped him as a spokesperson.

According to Darren Rovell of ESPN, industry sources estimate that the four deals were worth $1 million to Lochte (presumably that is annually).

On the surface it may seem logical for a company to distance themselves from somebody who admittedly got drunk in a foreign country, vandalised a gas station, and then later “over-exaggerated” (his words) the story. But by making such a public spectacle of dumping Lochte these companies actually did just the opposite and it appears they did it on purpose as way to profit from his fall.

The timing

If it seems like the four companies  — Speedo, Ralph Lauren, Airweave, and Gentle Hair Removal  — acted fast in dumping Lochte, it is because they did. 

Adrian Peterson, Michael Vick, and Johnny Manziel all lost sponsors over off-field troubles. In each case, it took longer than Lochte to lose their deals. And yet, all three of those athletes were actually indicted and were facing charges far more serious than filing a false report.

Lochte hasn’t even been indicted yet and his sponsors are already gone, less than a week after questions began to rise about what really happened.

On the other hand, despite rushing to dump Lochte, the companies waited until Monday and within hours of each other to make the move.

Why? Eric Smallwood of Apex Marketing Group, a company that analyses sports sponsorship deals, says the timing of the moves was definitely to maximise exposure.

“The timing definitely maximized exposure for the brands,” Smallwood told Business Insider. “I think the timing was done on purpose. The sponsors were well prepared to release on Monday and would have gotten pressure if they held until this Friday.”

Smallwood also noted that several factors played into maximizing the exposure, including Monday being the first day without any conflicting Olympic events as well as Monday night’s interview of Lochte by NBC’s Matt Lauer.

The benefit.

But why would companies distancing themselves from a bad seed want to maximise exposure? In fact, Lochte may be more marketable than ever: he didn’t commit a major crime, nobody is surprised Lochte would do something like this, and he is arguably more famous than ever.

But consider this: how many people even knew Lochte was sponsored by these companies before they dumped him on Monday?

Most of these companies weren’t risking bad exposure by having Lochte on the team, with the one exception possibly being Speedo and their acceptance within the swimming community. Ralph Lauren, Airweave, and Gentle Hair Removal could have quietly just walked away and nobody would have noticed.

Instead, they made a big spectacle out of the situation by standing up on a soap box and using a megaphone to announce that they were dumping Lochte.

And it was smart.

These companies likely gained more exposure by dumping Lochte than they ever gained by having him endorse their products.

Look at us, we dumped the big bad American frat boy swimmer! Our company has morals and standards! If you despise him, you’ll love us! 

At the end of the day, it can easily be argued that Lochte deserved to lose the deals. But at the same time, it is kind of ironic that it actually took dumping Lochte in order to maximise the value of the original partnerships. And it is a scary sign that companies may have found a way to profit off of the misdeeds of their athlete spokespersons.

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