If you’re anywhere within cooey of Australia, you’ve heard about the recent implosion of Rugby League team, the Cronulla Sharks. I keep trying to write a response, but I get two paragraphs into it and something else happens. It’s very, very ugly – defcon 1 ugly – and as the scandals and allegations piled up, I struggled to find sound angles for strategic advice. The condensed version is, “stay well away”, but to be fair, there is something to be learned from a meltdown of this magnitude.

To bring all of you non-Aussies up to speed:

• In August 08, star player, Greg Bird was arrested for allegedly “glassing” his girlfriend in the eye. He tried to pin it on his best friend, who was not impressed. In late April, he was found guilty of malicious wounding and false accusation. (Click here for more.)
• Player Brett Seymour was fined $20,000 for his drunken antics one memorable evening out. Not his first incident.
• In early-May, a young New Zealand woman accused Sharks players of group sexual assault in a Christchurch hotel room seven years ago. While Sharks players did not deny it happened, they maintain it was fully consensual. Apparently, this group bonding activity is so common across the League that players even have a name for it. It belies belief that the whole of our region all now knows what a “bun” is. Only one former player (and current major media star) was named, but up to 12 players were involved, casting doubt on everyone who made the trip.
• On 15 May, after a week or so of frenzied muckraking, several sponsors ended their association with the club, for a total loss of $150,000 per annum.
• Then it came out that the CEO accidentally punched a female staff member in the face in a “shadow boxing incident” last year. She was paid $20,000 and no longer works for the Sharks.
• Almost simultaneously, it was alleged that a local “porn king” had entered the locker room on a game day with two prostitutes. It is also alleged that players were supplied with their pick of adult, er… novelties, to bring home to their wives and girlfriends. The “porn king” in question has denied all of this, as has the team.
• And on 20 May, star player, Reni Maitua, had a second sample test positive for a prohibited performance-enhancing substance, likely earning him a two-year ban.
• On 21 May, the club’s major sponsor, LG, pulled their reported $700,000 sponsorship after nine years, citing club scandals as a major factor in the decision.
• Finally (we hope), Captain, Paul Gallen fined $10,000 for using a racial slur in last weekend’s game against the Dragons.

The Sharks were on the brink of financial disaster before this appalling run of scandals. It looks like their only hope of survival will be if the NRL bails them out or they find a cashed-up buyer. But are they worth saving? Is the club culture so toxic that they no longer have any marketing value? Have they alienated so much of the community and so many sponsors that they are no longer viable? Reports are that attendance is down 30% this year, and while some of that could be attributed to poor on-field performance, there is no question in my mind that the scandals would be a contributing factor.

And what about the League? With sex, booze, and drug scandals cropping up across the League with increasing frequency, they were already dealing with plenty of tarnish on the sport. How do they manage when sponsors and fans are wondering whether these aren’t just isolated occurrences – whether every team is like the Sharks – and we just haven’t heard all the ugly details yet?

Will it all fall to bits? I really don’t know, but with major sporting events and even entire leagues folding around the globe, it’s not outside the realm of possibility. Honestly, I don’t think the NRL will fail, but it will require a cultural reinvention of epic proportions, and they should be prepared to see some key sponsors exit both the NRL and clubs. There are certainly plenty of rumblings to that effect in sponsor-land, and when budgets are under pressure, dumping an expensive, scandal-plagued sport seems like a strong option.

All bets are off for the Sharks. I don’t think they’ve lost their last sponsor. Bailing would be the smartest move for many of the brands on their current roster, as reflecting their target markets’ and employees’ outrage and taking a stand probably provides more marketing value than the team does.

And any clued-up company wouldn’t even consider investing at this point. While being a sponsor at a time when a major scandal erupts may shrink the marketing platform that the sponsor can leverage, reducing the value of the investment, it doesn’t tend to reflect on the sponsor. The view is that they were just a blindsided as the fans. Embarking on a sponsorship of a club in the midst of scandal, however, is very risky, as the brand can look like they are sanctioning the culture. I wouldn’t consider sponsoring a team in crisis until – at the very least…

1. Their board and senior executive team are replaced. In this case, the board who presided over the near financial ruin of the club and a culture that could spell its death knell are hardly the right people to turn it around. But with management absolving the board of responsibility, and at least one board member taking a permissive stance when it comes to a top player accused (now convicted) of domestic violence, it’s looking unlikely.
2. A zero-tolerance, no-dickheads policy is instituted. (several Australian teams now have a no-dickheads policy.)
3. Player management overhauled and individual and team accountability for behaviour substantially raised.
4. Enough scandal-free time had passed to show progress. The problem for the Sharks is that they may not survive financially to the point where their commercial value starts to rise again.

Whether the NRL bails them out will be entirely to do with whether they’re viewed by the League as a liability or a wake-up call. It could go either way, but if the NRL did frame this as a wake-up call and save the club, it would also mean admitting that their current efforts to curb inappropriate behaviour haven’t worked and reinventing – again – their approach to the sex/drugs/violence culture within the sport. It would probably be easier for them to simply classify the club as a malignant anomaly, cut them loose, and hope to God this is the last of the major scandals, but I’m not sure how realistic that approach would be.

The other option would be a white knight buyer or major sponsor owned by a cashed-up, long-time supporter with a bit of a hero complex. A local entrepreneur (and passionate fan) stepped in just in the last week or so, sponsoring the club with his company, InterPark, for the remainder of the season. As already mentioned, I think this is a strategically risky move for the sponsor, but it’s also risky for the Sharks. Pursuing benefactor-style sponsorship before the dust has settled on the issues – before they’ve had a chance to regroup – smacks of desperation and could impact on their appeal down the track.

I know, I know… this is a long, rambling blog that covers a lot of ground, yet doesn’t provide a lot of advice. The situation is both so bad that there isn’t a lot of strategic worth to say, and so big that the implications for sponsorship across major sporting codes is going to be substantial. This blog has been written and rewritten so many times I’ve lost count, and if I thump my head on the desk in frustration any more, I’m going to leave a dent.

The upshot is that I am trying to find the lessons to learn from a situation so ugly that it belies belief, and a situation that feels for all the world like there is another shoe still to drop. I hope I’m wrong. I hope it turns around and that all of the ardent fans, hardworking staff, and good blokes playing the game don’t pay the price for the selfish, moronic acts of a few.