Ryan Lochte’s Millions Swim Upstream and There’s Nothing He Can Do

August 22, 2016

#Lochtegate is more than just a hashtag on social media. It symbolizes the public scandal that 12 time Olympic medal swimmer Ryan Lochte finds himself in as he finishes the 2016 Olympic Games in Rio and awaits the decision of the United States Olympic commission on any disciplinary action he might face. This entire situation is a professional athlete’s worst nightmare.  Not only might he be banned from future Olympics, today he watched his lucrative endorsement deals swim away, and there’s nothing he can do.

Let’s face it, Lochte, despite his success in the past Olympic Games, was never a household name. However, he did what most athletes who compete in the Olympic games desire to do, and that’s turn their medals into hard cold cash through lucrative endorsement deals with major brands.

After the 2012 Olympics, he secured endorsement deals with Speedo, Ralph Lauren, Marriott International  and Airweave. By some estimates, Lochte’s endorsements were worth over $2.3 million. But as the swimmer faces the end of his career, the question coming out of Rio was whether he would be able to continue these lucrative deals and perhaps acquire new ones.

All that came to a screeching halt as he and three of his Olympic teammates were accused of fabricating a story of being robbed at gunpoint while returning to the Olympic Village over the weekend. The ever-changing story of Lochte and his fellow mates have been regurgitated in the mainstream media and even in an earlier blog that I posted. In short, they claimed that they were robbed by men posing as police officers. We later learned that in fact they vandalized a bathroom at a gas station and a gun was pulled by a licensed law enforcement officer who was working as a security officer in order to prevent them  from leaving the location. These two stories vary dramatically.

After changing his story multiple times, Lochte finally tweeted an apology and did an interview with Matt Lauer whereby he acknowledged that he “over-exaggerated” and failed to provide key details of the incident. He stopped short of a full apology, although he did accept full responsibility for the incident.

Neither the tweet or the interview have gone over well. More importantly, Lochte’s admission that he was drunk and that he misrepresented the facts have caused him to lose key endorsements. To sports enthusiast an experts, this development is not surprising. We have watched sports legends such as Kobe Bryant, Tiger Woods, Michael Phelps and others lose endorsements because of their public conduct.

After making a similar prediction last week on FOX and while doing a Facebook chat, viewers asked me were the companies violating the terms of Lochte’s contract and could he in turn sue them. The answer to those questions is no and probably not. Companies that enter into endorsement deals with high profile athletes and celebrities always force them to sign what’s called a morality clause. These clauses essentially state that the company can terminate the agreement at any time if the athlete or entertainer does anything that tarnishes their reputation, thereby  tarnishing the brand. Essentially, these clauses say your conduct matters and if that conduct is unbecoming, we can cut you loose. The vanquished athlete or celebrity has little, if any, legal recourse.

Some viewers also queried if this was a violation of the athletes rights to privacy. This is an excellent question and in fact one that first year law students may see on a constitutional law exam. The reality is those rights are not absolute. An athlete may have a right to privacy in their medical, employment and other sensitive records, but by signing an endorsement deal with a morality clause, they essentially forfeit those rights in exchange for monetary compensation. It’s called a classic quid pro quo.

Some athletes are lucky enough to get a second chance and after apologizing and in some cases going to rehab, they are able to regain lucrative contracts. After all, America is the land of second chances. It remains to be seen if Lochte will be so lucky. His iDonald Trump like tweet did very little to cause people to change their opinions about his conduct. In fact, The cold and flat tweet incensed most people wanted to see him come out in a press conference and personally face the millions of people he disappointed. Also, his frat boy like persona that may have worked well for him ceased to have any appeal after he was actually caught drunk and lying.

The end of the story has not been written, but it’s already taken a positive turn.  Speedo agreeing to donate $50,000 of money that otherwise would go to Lochte to a children’s charity in Rio, is the beginning of a good ending!


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