Importance of anti-embarrassment clauses highlighted by US Olympic swimmer Ryan Lochte being dropped by sponsors, including Speedo and Ralph Lauren.
Sponsors made the announcements after Lochte was found to have lied about being robbed at gunpoint during a night out in Rio de Janeiro.In fact, Lochte and some team mates vandalised a petrol station toilet door.
Speedo has reportedly sponsored Ryan Lochte for approximately 10 years and confirmed that it will donate $50,000 of Lochte's sponsorship fee to Save the Children in Brazil. Ralph Lauren confirmed that its agreement with Ryan Lochte only lasted for the duration of Rio 2016 and that it would not be renewed going forward.
The precise details of the various endorsement agreements remain confidential, but it is likely that sponsors triggered anti-embarrassment clauses.
It is a timely reminder of the importance of anti-embarrassment clauses for sponsors.Anti-embarrassment clauses are almost a necessity as sponsors seek to protect brand image from unknown future events.Of note in this case, is that US Newspapers ran headlines that included Speedo's name ("Liar, Liar, Speedo on fire").
A top-tip when drafting anti-embarrassment clauses is to keep the wording as broad as possible, as public perception as to what might be embarrassing or socially unacceptable can change during the lifetime of an agreement.