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Chris Hill: No one I know is as big a fan of tennis as you are. And the tennis world
crossed over into the business world this week with the news that Maria Sharapova, fair
to say one of the five best players in women's tennis over the last decade?
Bill Barker: Certainly.
Hill: Maria Sharapova called a press conference, which, when it was called, a number of people
in the sports media thought, "Oh, she's calling this press conference to announce that she's
retiring." And, instead, what she announced was that she has been taking, for some period
of time, a substance that is now banned, something called meldonium, which is a medicine produced
in Latvia that is prescribed for heart disease, which, as best I can tell, she does not have.
And this is the phrase that sends, certainly sports-related businesses running for cover:
"performance-enhancing effects." So, Nike and Porsche, two of her sponsors, suspended
their relationship with her immediately. And, in the case of Nike, it has less to do with
just, "Oh, she's been taking this banned substance," I'm sure that was the case with Porsche. But
in Nike's case, that actually hurts them, or, could hurt them.
Barker: Yeah, they don't want to be aligned with athletes whose success is derived in
any way from cheating. And whether she was taking a performance-enhancing drug with a
medical use strictly for medical reasons, or for performance enhancement, it doesn't
really matter, particularly for Nike at this point. And it doesn't necessarily matter for
WADA, World Athletic ... something.
Hill: Is this the governing body?
Barker: That is the governing body of, I think, the testing, and I think the ITF or WTA or
whatever follows their findings. So, anyway, Nike doesn't want to be associated with that,
because they want people to buy their sneakers because the sneakers are what is going to
make them, or the various other equipment that they produce -- that's what's going to
improve their performance, not that they're aligning themselves with athletes who are
using their sneakers and equipment and performance-enhancing drugs. There are plenty of athletes that don't
have this hanging over their heads. Nike can easily distance themselves and just be aligned
with the thousands of other athletes that they've got as part of their brand.
Hill: We talked about this earlier this morning. Do you have a sense of when this started?
And by this, I'm referring to companies like Nike putting into their sponsorship deals
with professional athletes clauses that address this issue, that say, "Look, we're going to
include these things, and if you're arrested, if there's anything that would damage the
brand ... " I know, when I first became aware of these type of clauses, but I can't think
of them from a business standpoint.
Barker: I don't know when they started. I think it's probably been decades, though.
You want to get out of being associated with somebody once they have broken the law and
are damaging your brand. After the first time somebody started damaging the brand by being
associated with them and they were still paying because they couldn't get out of contract,
I think the next contracts they started writing, they and everybody else included these things.
Previously, performance-enhancing drugs is not where the morality clause would have started,
because that's a far more recent innovation than other things that damage somebody's celebrity.
Hill: The first time I remember these types of clauses, it was in the 1980s, Michael Jordan
was playing for the Chicago Bulls, I believe it was his second contract that he was negotiating
with them. And the Chicago Bulls, realizing they had this transcendent player on their
team, and wanted to make sure that he stayed as healthy as possible off the court, because,
there's only so much they can do to keep him healthy on the court, had put in the contract
a number of clauses basically banning all number of activities. You can't go skydiving,
you can't ... they listed all of these different things that he was not allowed to do in his
spare time. And one of them was pickup basketball. You can't go play in a pickup game over the
summer wherever you are, and Jordan balked at that. And it became referred to as "the
love of the game" clause in his contract, because he and his agent basically made the
case, "Look, I love playing basketball, you're not going to stop me from playing basketball.
I can get hurt playing in a game for you. Yes, I can get hurt playing a game of pickup
ball, but I want to keep doing it."
Barker: Was that Nike or was that the Bulls?
Hill: That was the Bulls. But, that was the first time that I became aware of, "Oh, wait,
there are clauses in contracts that are far more complicated than here's how long the
contract runs and here's how much we're going to pay you to do x."
Barker: Yeah, and the more money that's at stake, the more things there will be in that
contract that you can't do, and ways for somebody to get out of paying, because in the world
of sports in particular -- and this differs from league to league, but baseball, you're
on the hook for now five, six, seven years, $100 million, way more than $100 million.
And if you were taking a risk that somebody would skydive or skateboard or anything like
that, it's just not worth your risk.
Hill: So, you're saying the days of the great John Kruk, who played for the Philadelphia
Phillies, smoking--
Barker: I'm not sure that (laughs) would be ... is that in there?
Hill: I just remember, he's the last, certainly the last major league baseball player, and
that's 20 years ago that he was playing for the Phillies. But, in the 1990s, Kruk was
a smoker. Barker: High-profile smoker.
Hill: High-profile smoker. (laughs)
Barker: I doubt he's the only professional athlete still smoking.
Hill: I was referring to cigarettes. (laughs)
Barker: Right. But, even so, because of their addictiveness, and, obviously, they don't
help your performance, especially over the long term, because they kill you, which always
hurts your performance.
Hill: Yeah, that does. Although, not as much as cardio in baseball.
Barker: (laughs) Right, and that was his point. I think that was his response when he was
found smoking and somebody said ...
Hill: "How could you do that?"
Barker: "How could you do this? You're an athlete!" And his response was, "I'm not an
athlete, I'm a baseball player." Hill: Right.