A marketplace response to corruption

The scandal was around a scheme to scuff the ball on a piece of yellow sandpaper, hidden in the pants pocket of a bowler, Cameron Bancroft. (Scuffing the ball makes it harder to hit.) He was instructed to do so by (now former) team captain Steve Smith and (now former) vice-captain David Warner. All three have been thrown off the team. 

While there has been incessant debate in Australia over the team’s and former captain’s and vice-captain’s actions, one of the things that most struck me was the reaction of the Australian business community and indeed the marketplace. It was their collective response that has some significant implications and applications to the global struggle against bribery and corruption.

The repercussions for Smith and Warner have been devastating, with both men losing upwards of $5 million AUD (U.S. $3.8M) in annual sponsorship revenue, including such companies as Magellan, LG Electronics, and the shoe company Asics. As powerful as these statements were about the individuals involved, the marketplace response to the oversight body of Cricket Australia has been equally telling.

If your conduct is so antithetical to customers they refuse to give you their money, what does that do for the long-term health of your business?

Cricket is decidedly not baseball or (American) football or even soccer, as it holds itself as a game of sportsmen who simply do not cheat. (Hence the phrase, “it’s not cricket”). In cricket, unlike football, there is no joy taken in deflating footballs in a championship game; unlike in baseball, no morality in stealing the catcher’s signs and relaying them to the batter in a playoff game; or as in soccer no bragging that scoring a World Cup goal with a handball was the Hand of God.

Sanitarium, the maker of Weetabix breakfast cereal, issued a statement that said in part, “Cricket Australia updated us on this issue as the story broke yesterday and we’re continuing to follow it closely. It’s a shameful moment for Australian sport. Regarding our sponsorship relationship with Steve Smith, we will assess our response once the management team of Cricket Australia has finalized its investigations. Like the rest of Australia, we’re incredibly disappointed. The actions taken by the team in South Africa are not aligned with our own — Sanitarium does not condone cheating in sport.”

Magellan Financial Group terminated its naming rights sponsorship of test matches involving the Australian men’s cricket team just one year into a three-year deal. The overall deal was estimated to be worth some $20 million AUD (U.S. $15.5M) when it was signed. At the time of the announcement of the sponsorship, Magellan had said it was “based on shared values and reputations of integrity, leadership, dedication, and an unwavering customer-first culture.” Magellan CEO Hamish Douglass was very direct in explaining why the company terminated the sponsorship after the scandal erupted: “A conspiracy by the leadership of the Australian Men’s Test Cricket Team, which broke the rules with a clear intention to gain an unfair advantage during the third test in South Africa, goes to the heart of integrity. Regrettably, these events are so inconsistent with our values that we are left with no option but to terminate our ongoing partnership with Cricket Australia.”

It is this marketplace response to the cricket cheating scandal that may well be the most important sanction. In the anti-corruption world, regulators can bring criminal sanctions and fines; if other companies will not engage in business with you because the association would so tarnish their reputation, this could start to change things going forward. If your conduct is so antithetical to customers that they refuse to give you their money, what does that do for the long-term health of your business?

While you might wonder when the last time was that you saw an American advertiser raise such sentiments about any of the cheating scandals in American sports (NCAA comes to mind about now), you might consider how poorly FIFA is thought of by international advertisers these days in the context of the lack of sponsorships for the 2018 World Cup.