Sponsors put Australian cricket on notice as ball-tampering scandal engulfs a nation

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* Corporate sponsors put Cricket Australia on notice

* Incident occurs at height of broadcast rights negotiations

* Cricket's clean brand tarnished - analyst

By Jonathan Barrett

SYDNEY, March 26 (Reuters) - Australia's major cricket sponsors, including Qantas Airways, breakfast cereal maker Sanitarium and brewer Lion, said on Monday they were assessing their relationship with the country's favourite pastime as the fallout from a ball-tampering scandal escalates.

The incident, which Australian captain Steve Smith said involved senior players hatching a plan to tamper with the ball during a game against rival South Africa, also threatens to upset current negotiations over broadcast rights.

Weetbix-maker Sanitarium, which counts Smith as a brand ambassador, said it was reviewing its sponsorship pending the outcome of an investigation by governing body Cricket Australia.

"Certainly it's under review as the actions taken by the team in South Africa don't align with our own values – Sanitarium does not condone cheating in sport," Sanitarium said in a statement.

The sentiment was mirrored by almost all of the sport's commercial partners in Australia, including Qantas, apparel sponsor ASICS, Commonwealth Bank of Australia, insurer Bupa, Specsavers, Toyota, and brewer Lion, which owns beer sponsor XXXX.

"Like the rest of Australia, we're deeply concerned," a Lion spokesman said in a statement. "This is not what you'd expect from anyone in sport at any level."

Singapore Telecommunications' Optus, which is a commercial partner and broadcasts cricket on its mobile network, said it would not comment on the incident as it was a matter for Cricket Australia.

The camera vision of Australian player Cameron Bancroft hiding a piece of yellow tape that was used to try and rough up the ball to benefit the bowler has stunned a sports-loving nation where "back-yard" and "beach" cricket are a national hobby. Roughing up one side of a ball can help it to swing through the air, making it more difficult for the batsman to hit.

The position of Australian cricket captain is even locally referred to as the second most important position behind the Prime Minister.

Indeed, Australia's Prime Minister Malcolm Turnbull intervened on Sunday to demand quick action from Cricket Australia.

BRUISING PAY DISPUTE

The sport's past heroes, including the late Sir Donald Bradman, are revered for their conduct as much as their victories, helping create a clean, attractive brand to attract corporate sponsors.

That's now tarnished.

"This is deeply disappointing and certainly not what anyone expects from our national cricket team," Qantas said in a statement. "We are in discussions with Cricket Australia as this issue unfolds."

Cricket Australia earned A$338.4 million ($261 million) in media, sponsorship and spectator fees in the financial year ended June 30, 2017, according to its most recent annual report. The value of its individual sponsorships are not disclosed.

Cricket Australia did not immediately respond to Reuters' questions on Monday.

The ball-tampering incident has struck at the climax of talks about a five-year broadcast rights deal with Australian television networks.

Long-term cricket broadcaster Nine Entertainment did not immediately respond to questions on Monday.

Cricket players and the governing body have also recently come out of a bruising pay dispute.

Independent media analyst Peter Cox said the ball-tampering scandal could prove disastrous for cricket's reputation and negotiating clout in Australia.

"It could not have possibly come at a worse time," Cox told Reuters in a phone interview.

"The individual incident will eventually blow over but they will lose a segment of the viewing market because of this." ($1 = 1.2945 Australian dollars) (Reporting by Jonathan Barrett in SYDNEY Editing by Martin Howell)