In the wake of the egregious human rights violations in Qatar during the construction of the venues for the 2022 Fifa World Cup and the recent arrests stemming from investigations into Fifa’s rampant corruption, several brands associated with Fifa have been the subject of criticism for their ongoing support.
Consumers and advocacy groups have both been calling on major global companies like Visa, Coca-Cola and Adidas to discontinue their sponsorship of an organization popularly perceived to violating international law in order to fatten their own wallets. Some of the more creative objectors have even reimagined corporate logos to encourage Fifa’s partners to rethink their deals.
But could all the well-intentioned awareness raising of these issues actually impact these brands? Will consumers vote with their wallets and steer clear of big companies mired in controversy? If history is any indication (it always is), large, global brands almost always persevere through scandal.
Nike keeps on running
At the center of the most recent Fifa controversy, Nike is alleged to have paid tens of millions in bribes and kickbacks pursuant to its sponsorship of the Brazilian national soccer team (CBF). Nine arrests were made on May 26, 2015 by Swiss officials operating in cooperation with the FBI to extradite Fifa officials who, along with sports marketing agencies in Brazil and the United States, committed racketeering, fraud and several other crimes when securing the sponsorship deal for Nike.
Although representatives from the company have yet to officially comment on the situation explicitly, they have released a statement indicating they oppose corruption and fraud and are working with authorities, thereby implicating their part in the scandal. The long term deal largely paid off for Nike, as Brazil was the best-selling jersey at the 2014 World Cup, which was hosted by Brazil as well.
This is just the tip of the iceberg when it comes to scandal for Nike though. Through controversial sponsorships of individuals like Lance Armstrong, Tiger Woods, Adrian Peterson, Ray Rice and Oscar Pistorious, Nike has persevered. Through the ongoing saga of using child labor and providing unsafe working conditions for individuals in foreign countries, the company has continued to prosper, posting steadily increasing profits and growth in several clothing sectors.
Despite these controversies, Nike still sponsors many of the world’s largest sports teams, including Manchester United (though their sponsorship ends this year) and Barcelona, and with highly successful athletes like Michael Jordan and LeBron James, all of which drive sales of associated merchandise and have made Nike the world’s most valuable sports brand. Being a $15 billion behemoth, perhaps the adage “too big to fail” applies to Nike, but scandal is not as kind to small businesses.
Small businesses with big problems
After the Great Recession saw more than 200,000 small businesses disappear, times remain tough for companies without the global scale of Nike. Even national brands like Chick-Fil-A appear relatively insulated against the effects of controversy, but the same cannot be said for single location businesses or small franchises.
Take for example the case of 111 Cakery in Indianapolis, whose owners discriminated against a same sex couple who asked to have a cake baked for their commitment ceremony. While the owners were within their rights after a controversial law was passed in the state of Indiana, the backlash was swift, seeing the bakery close just one year after their story made headlines across the country.
A Denver bakery called Masterpiece Cakeshop also recently refused service to a gay couple and, while the store remains open, a judge has ruled that the owner unlawfully discriminated against the customers. The story has also received national criticism and while the owner promises to close his shop rather than baking for same-sex couples, if the consumer response is similar to 111 Cakery, he may not have a choice.
Owners may see such actions as taking a stand on ideological grounds, but the simple fact remains that taking any stand will undoubtedly alienate someone, and it may have a more profound impact on small business’ bottom lines than it does on changing opinions.
Controversy isn’t limited to politics and religion. The Red Velvet Café in Las Vegas was forced to close its doors after a damning health and safety inspection rated the restaurant a “C,” and the report was aired on “Dirty Dining.” Simple non-compliance with the health code and lying to customers about products is a sure-fire way to lose customers, and word travels fast when broadcast on television.
Play by the rules, keep your mouth shut
So while Fortune crowns Nike the real winners of the 2015 Women’s World Cup only months after they were embroiled in crisis of conscience over their sponsorship of FIFA, SMEs are left to rue each misstep, large or small.
The key takeaway is that sticks and stones will break bones, and your own words can be used to hurt you, so small business owners are best to stick to what they know best – running their business – and leave politics, sex, and anything else controversial at the door. Ultimately, your customers and your bottom line will thank you.