Nike Inc is dropping its partnership with the Livestrong Foundation, the cancer charity founded by disgraced cyclist Lance Armstrong, the latest repercussion from the doping scandal that last year stripped him of his titles.
Nike said on Tuesday it would end production of its Livestrong gear and apparel after the 2013 holiday line, concluding a long-standing licensing agreement for footwear and apparel between the two that helped Livestrong raise a total of $100 million over the course of the partnership.
"We expected changes like this," Katherine McLane, a Livestrong spokeswoman, said in a conference call with reporters. "Could there be fallout? Of course," she said. "We remain enormously confident...We are in strong fiscal shape."
When Armstrong left Livestrong's board, Nike said it would still back the charity, but no longer sponsor the man behind it.
However, Nike spokeswoman Mary Remuzzi told Reuters late on Tuesday that the decision to drop the partnership was taken as sales of the products had not met company's expectations.
Nike also distributed Livestrong's ubiquitous yellow wrist-bands, of which 87 million were sold.
Armstrong founded Livestrong in 1997 after being diagnosed with testicular cancer. The group flourished during his cycling career in which he won the Tour de France seven times.
The cyclist, who stepped down from Livestrong's board last October, admitted in January to systematic use of banned, performance-enhancing drugs after years of denials.
"This does show there are pros and cons of (a philanthropic foundation) being so closely associated with one person," said Patrick Rooney, associate dean of academic affairs and research at the Indiana University Lilly Family School of Philanthropy.
Still, Rooney predicted a large enough number of people would be able to separate Armstrong's misdeeds and the foundation's good works that it could survive.
Livestrong said its 2013 budget is $38.4 million, a 10.9 percent reduction from 2012, but that revenue projections were ahead by 2.5 percent.
Livestrong has similar licensing deals with sports eyewear maker Oakley, owned by Italy's Luxottica and others.
Nike will benefit from distancing itself from the charity and from the scandal-tainted athlete, said Robert Boland, a professor of sport management at New York University's Tisch Center.
"Their relationship with Livestrong was so based on Lance Armstrong and his story that it's almost impossible to separate them from a branding standpoint," Boland said. "The chief thing that is motivating Nike is they're looking to move on and put their years with Lance Armstrong behind them."
(Reporting by Phil Wahba, Ellen Wulfhorst and Scott Malone; additional reporting by Sakthi Prasad; Writing by Ellen Wulfhorst; Editing by Leslie Adler, Marguerita Choy and Dan Grebler)