38
QUANTIFYING THE COSTS OF INTEGRITY BREACHES
mercial colossus. That summer, however, Bryant was charged with sexual
assault on a 19-year-old hotel employee in Colorado. The case was settled
out of court with a public apology by Bryant and an undisclosed payout.
However, Bryant lost several lucrative sponsorship deals, and sales of his
best-selling number 8 shirt plummeted. His major sponsor, Nike, neverthe-
less retained him, although deciding not to feature him in advertising until
the resolution of legal proceedings.
Settlement of the case facilitated Bryant’s rehabilitation. He has avoided fur-
ther controversy while continuing to demonstrate mastery on the court and
clinching two more NBA championships in 2009 and 2010. After the settle-
ment, Bryant and his advisors concentrated on rebuilding his image, with
good results. Eight years later, his shirt –now number 24–has regained its
position as a top seller. Overall, it is likely that Bryant’s franchise will have lost
about $166 million in value, about 30 per cent of the projected pre-scandal
amount (Figure 4.2). While enduring a significant loss, Bryant’s story indi-
cates the potential for recovery when breaches are well managed
ex post facto
.
FIGURE 4.2: KOBE BRYANT’S PROJECTED FUTURE EARNINGS (PRE-SCANDAL VS. POST-SCANDAL)
Pre-Scandal
Post-Scandal
10000000
20000000
30000000
40000000
50000000
60000000
70000000
80000000
2002
2000
2004
2006
2008
2010
2012
2014
Projected Future Earnings (Pre-Scandal)
1
Projected Future Earnings (Post-Scandal)
2
$17.6
$21.1
$26.0
$28.8
$33.7
$33.0
$37.3
$45.0
$48.0
$48.0
$43.0
$43.0
$43.0
$20.0
$28.9
$42.3
$41.2
$46.0
$55.4
$55.4
$67.2
$67.9 $58.9
$62.3
$57.7
$53.5
Note: Analysis assumes that the length of an NBA superstar’s playing career is 19 years (Based on careers of Michael Jordan, Shaquille
O’Neal, and Karl Malone);
1
Pre-scandal scenario assumes that Bryant’s endorsement earnings over remaining 12 years of his
assumed playing career would have grown at the average rate of Jordan’s and O’Neal’s endorsement earnings during equivalent
stages of their careers;
2
Post-scandal scenario assumes Bryant’s earnings will drop slightly from his $28 million salary and $15
million endorsements (his 2010 levels) over the remainder of his anticipated playing career (to 2014). Value calculations assume a
discount rate of 1.79% (U.S. Treasury Department Real Long Term Rate on 25/2/2011).
Source:
Forbes
,
Sports Illustrated
.
$8
$70
$60
$50
$40
$30
$20
$10
$0
$ Millions
© MONITOR QUEST LTD. 2011
GUARDING THE GAME Preserving the Integrity of Sport
1...,32,33,34,35,36,37,38,39,40,41 43,44,45,46,47,48,49,50,51,52,...124