Outstanding athletic skills can equate to multi-million dollar endorsement deals and the creation of a brand. Major companies gravitate toward sport stars with unique, stellar talent and a clean-cut image that will help sell their product. Damage to the image via a human misstep, self-inflicted or not, can initiate crisis mode among sponsors. Contracts are downgraded or reneged and millions of dollars are lost. Here's a look at the financial repercussions of five sports stars' dishonorable moments, and whether they were able to rebuild their brand.

In Pictures: 6 Biggest Millionaire Flops

Tiger Woods
Pepsi Cola's (NYSE: PEP) Gatorade became the latest major company to end its sponsorship with star golfer Tiger Woods. When revelations of Woods' admitted infidelities were initially made known to the public, telecommunications giant AT&T (NYSE: T), and Accenture (NYSE: ACN), a global consulting firm, backed out of their endorsements. In addition to those that dropped out of endorsements, Gillette and Swiss watchmaker Tag Heuer downgraded his image.

Woods, who has made more than $100 million a year in endorsement deals, offered a public apology for his sexual indiscretions, took accountability, and laid out a course of action for a remedy in a televised event. Nike Inc. (NYSE: NKE) and Electronic Arts Inc (Nasdaq: ERTS), which have made hundreds of millions of dollars around the golfer, supported him, claiming Woods' historic athleticism as the focus of their long-standing partnership. (Read more about Tiger's financial mishaps in The Tiger Woods Effect - $12 Billion Wiped.)

Serena Williams
Tennis star Serena Williams' cursing tirade last summer barely rattled her sponsors though her wallet still took a hit. William's unsportsmanlike verbal lashing occurred at the U.S. Open during the singles semifinal against Kim Clijsters. When a line judge called Williams out for a foot fault on a second serve, an angered William's unleashed a verbal attack while wielding her tennis racket. In Williams' statement, she indicated her behavior was inappropriate stating she was a "very prideful," " intense" and "emotional" individual.

Major sponsor Nike stood behind Williams. In 2004, Williams inked a $40 million five-year endorsement deal with the sportswear maker and has been among the highest paid female athletes in the world. Kraft Foods and most recent sponsor, Tampax, also continued their endorsements. In spite of their support, Williams was still required to pay a maximum fine of $10,000 for her threatening language and gestures and another $500 for racket abuse. (Learn more about what happens when fame goes wrong. Read Stars Behaving Badly: Disastrous Celebrity Hirings.)

Michael Phelps
Olympic swimmer Michael Phelps racked up numerous endorsements following his record winning of eight gold medals in the 2008 Beijing Olympics. However, these endorsements were endangered by a misstep caught on camera. A photo showing Phelps inhaling from a marijuana pipe was published by a British tabloid and soon circulated on the internet. Phelps admitted his actions were "regrettable" and demonstrated "bad judgment." Speedo, a sportswear company, and Omega watches considered it a non-issue, while Subway condoned the behavior. The U.S. Anti-Doping Agency, which has athletes prove they compete drug-free, had second thoughts and will evaluate its future relationships with Phelps.

Michael Vick
The majority of former Atlanta Falcons star quarterback Michael Vick's sponsors fled when he was convicted for participating in a dog-fighting operation in 2007. The reported atrocities committed against underperforming dogs sent the once highest paid football player to prison for 18 months. Nike first suspended then terminated its contract with the football star after he pleaded guilty. Upper Deck removed autographed memorabilia and Reebok stopped sales of Vick's #7 Jersey. Vick was extended offers to play for the Cincinnati Bengals and the Philadelphia Eagles upon leaving prison. However, it was the Eagles that awarded him the second chance and a $1.6 million one-year deal with a team option for the second year at $5.2 million. Sponsors of the team voiced concern, indicating that they would have preferred advance notice in order to inform their customers.

Kobe Bryant
L.A. Lakers star Kobe Bryant's sexual assault charges in 2003 scared off sponsors. The charges were dismissed and the woman agreed to an out-of-court settlement in a civil suit. McDonald's (NYSE: MCD), Sprite and Nutella all terminated or did not renew contracts with the NBA basketball player; Bryant lost $6 million in deals. Nike, which had made an endorsement deal with Bryant worth $40 million, scaled down his image but resurrected it three years later in a Nike commercial.

Bottom Line
A celebrity sports stars' brand can be damaged when their image is scarred by human error. Some sports stars begin hemmorhaging endorsement deals while others have their sponsors' full support. Either way, as long as sports stars apologize and take responsibility for their mistakes, their star power and cash flow can be resurrected. (These stars were able to save their endorsements, but it's not always so easy. Read about it in 7 Costly Pro Athlete Screw-Ups.)

Related Articles
  1. Retirement

    Why Some Celebs Say 'No Inheritance for My Kids'

    To some of the super rich, inherited wealth is not the ultimate gift, it's a burden. Here's how their children—as well as charities—stand to benefit.
  2. Investing

    Kevin O'Leary Biography

    Kevin O'Leary is a television personality, businessman and investor from Canada. A brash public personality with a net worth of roughly $300 million, he is considered to be the Canada’s answer ...
  3. Entrepreneurship

    7 Top-Earning Child Stars

    These seven top-earning child stars earned millions through different parts of the entertainment industry, including television, film and music.
  4. Stock Analysis

    Top 3 Stocks for the Coming Holiday Season

    If you want to buck the bear market trend by going long on consumer stocks, these three might be your best bets.
  5. Investing News

    This is the Fastest-Growing Consumer Complaint

    There’s no way to guarantee that your Social Security number won’t fall into the wrong hands. Here are some ways to make yourself less of a target.
  6. Entrepreneurship

    8 Top-Earning Country Singers

    These eight country singers have built careers singing about men and women who’ve done them wrong, and they’ve shared their heartache to the tune of millions of dollars.
  7. Investing Basics

    Tiny House Movement: Making Market Opportunities

    The tiny house movement throws all assumptions about household budgeting and mortgage management out the window, and creates new market segments too.
  8. Budgeting

    Top 7 Money Saving Tips for Eating Out

    Discover seven money-saving options available to consumers who are looking to partake in the luxury of dining out while cutting down on cost.
  9. Economics

    What's the Velocity of Money?

    The velocity of money measures the rate at which money goes from one transaction to another in an economy.
  10. Investing News

    3 Stocks to Play a Falling Unemployment Rate

    Three stocks to consider as the unemployment rate falls.
  1. Is Japan an emerging market economy?

    Japan is not an emerging market economy. Emerging market economies are characterized by low per capita incomes, poor infrastructure ... Read Full Answer >>
  2. Are Social Security payments included in the US GDP calculation?

    Social Security payments are not included in the U.S. definition of the gross domestic product (GDP). Transfer Payments For ... Read Full Answer >>
  3. What economic indicators are important to consider when investing in the retail sector?

    The unemployment rate and Consumer Confidence Index (CCI) rank as two of the most important economic indicators to consider ... Read Full Answer >>
  4. How do changes in interest rates affect the spending habits in the economy?

    Changes in interest rates can have different effects on consumer spending habits depending on a number of factors, including ... Read Full Answer >>
  5. What is the difference between an OEM (original equipment manufacturer) and a VAR ...

    An original equipment manufacturer (OEM) is a company that manufactures a basic product or a component product, such as a ... Read Full Answer >>
  6. How much does seasonality affect the net sales figures of companies, such as retailers?

    Seasonality affects both sales and net sales figures of companies in different ways. For some companies, seasonality has ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  2. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  3. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  4. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  5. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  6. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!