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Feb 16

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Michael Vick and the Duration of Reputational Damage

It wasn’t long ago that Michael Vick was the highest paid player in the NFL and was frequently tapped for high profile endorsement deals with companies such as Nike, Coca-Cola, Kraft and Hasbro.  But when news of his dog fighting activities surfaced, the endorsement deals came to a grinding halt.  A prison sentence and a bankruptcy filing followed.  At that point, the financial future certainly looked bleak for the former star.

But again, things changed.  Mr. Vick had an impressive season on the football field and was named the 2010 NFL Comeback Player of the Year.  And he is back in the endorsement business.   In late January, Mr. Vick signed what has been described as a “sizable” two year endorsement deal with a sport equipment company called Unequal Technologies.  Unequal Technologies makes shock absorbing sports pads which Mr. Vick credits with his ability to play while injured.

What can this tell us about the duration of reputational damage?  Does this recent deal signal an end to Mr. Vick’s inability to market his image in the lucrative endorsement world?  Well, as is often the case, there are many things to consider when making such an assessment.  Here are some suggestions:

  1. It might be the case that this deal is an anomaly, rather than an indication of additional deals to come.  Unequal Technologies certainly received a lot of free advertising while news reports circulated of Mr. Vick’s first endorsement deal.  However, future deals with Mr. Vick will not likely generate the same level of attention from the press.
  2. In certain industries, subsequent performance matters more than reputation.  In those industries, economic damage to one’s reputation may not be permanent.
  3. As with most marketing, buyer segmentation matters a lot.   Purchases of many products may think Mr. Vick is pretty despicable and be alienated, while others who have different values or purchase motivations may like him more, or may simply not care.  For example, certain users of the product, such as fellow athletes, may care primarily about the actual use and success with the product; they may care little about the endorser’s personal reputation.
  4. The character of the product being endorsed.  Some products are endorsed based on the ‘heroic’ qualities of the endorser.  In such cases, reputation matters more.  Companies like Nike, Kraft or Hasbro might be slower to pay for Mr. Vick’s endorsement as they wait for other indicators of his public acceptance.
  5. The economic impact time for reputational damage may be shorter when the allegations do not directly relate to the ability to perform the task which generates the endorsement income.

People often expect easy answers to these complex matters.  In most cases, a proper analysis requires customized analysis that considers the items listed above (and perhaps others).

About the author

Renee Howdeshell

Renee Howdeshell is a founding member of Fulcrum Inquiry, an accounting, finance and economic consulting firm that performs damage analyses for commercial litigation, forensic accountings, royalty & distribution audits, financial investigations, and business valuations. Ms. Howdeshell holds a degree in Finance and Marketing from the University of Virginia's McIntire School of Commerce and is a Certified Public Accountant (CPA) and a Certified Fraud Examiner (CFE). She has testified as an expert witness in federal court, CA state court and arbitration regarding the results of her work. She can be reached at (213) 787-4112 and her resume is available at www.fulcrum.com.

Permanent link to this article: http://betweenthenumbers.net/2011/02/michael-vick-and-the-duration-of-reputational-damage/

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