A sports insider’s view: Can Australia’s biggest sporting brands recover from this drugs scandal?

The release of an Australian Crime Commission report yesterday has added fuel to the fire already engulfing AFL club Essendon, following revelations earlier this week of allegations of serious misuse and abuse of banned substances at the club.

The report is a result of a 12-month investigation into the integrity of Australian sport, as well as the links between professional sporting bodies and athletes, prohibited substances and organised crime.

A quick look at the news this morning reveals a range of stories, each taking a different angle on the drugs in sport issue: former players making drug taking admissions, needles being found near training grounds, threats to pull the plug from sponsors.

Coincidence or not, this flows on from reports earlier this week on AFL club Essendon, with revelations of coaches being linked to drug traffickers, and sports scientists accused of providing players with illegal performance and image enhancing drugs (PIEDs).

But what are the commercial impacts for sport?

Image can be regarded as the most important branding exercise in sport. In a competitive sporting marketplace, where rival codes fight it out to attract families, women and non-traditional sports fans, you don’t want to be the one sporting code that is seen to solicit anti-social or, indeed, criminal behaviour, or else risk losing perhaps your most valuable asset – the fan segments which hold the influence and the purse strings.

If you are found out, the families stop coming, women want nothing to do with you, and the non-traditional sports fans; well, they will simply find other ways to fill their leisure time. This presents a scenario that isn’t attractive to sponsors, the lifeblood of professional sport.

Already, Telstra has come out and warned the NRL that it may reconsider its $150 million sponsorship and new media rights deal with the code “if any substantial links between players or clubs and organised crime are proved”.

The scenario is very much the same for the AFL. Everyone wants to be associated with a winner, so while the AFL brand is strong, so is their attractiveness to sponsors. If this is damaged, then the sponsors run.

Just take a look at the Serie A (Italian football league). Years of scandals surrounding drugs, bribery and racism have seen it drop from arguably the most popular league in the world over a decade ago, to fourth or fifth behind England, Spain, Germany and France.

The AFL is already in the crosshairs given the dramas surrounding Essendon FC, and past issues, particularly surrounding their controversial three-strike rule.

Whilst past accusations of drugs in sport have fallen away like water off a duck’s back, the situation is now different due to the Armstrong effect, which has taken drugs in sports to a whole new level.

What needs to be done?

Australian sporting codes are on notice, as none of them can now lay claim to having taken a proactive stance on the issue of drugs in sport, such is the wide ranging scope of the ACCC report.

The short-term ramifications are clear. All sporting codes will need to be seen as taking drastic action after the fact – setting up advisory committees, ethic panels, and integrity units (however you want to skin the cat). They will need to name and shame culprits, oust offenders, and win back the public by taking a hardline stance against players at all levels, and not just fringe first-graders.

In the meantime, there will be a lot of sports executives biting their lower lip, hoping that nothing untoward has been happening right under their noses.

The floodgates are open, welcome to the front page.

Nic Ferraro is the editor and publisher of sports business website Sports Business Insider and a SmartCompany blogger.