KoriEllis
09-20-2003, 02:43 AM
Has Corporate America changed their vision of athletes as spokespeople
www.sportsbusinessnews.co...y_id=29740 (http://www.sportsbusinessnews.com/index.asp?story_id=29740)
For the next few months, the sports headlines will continue to be dominated by dire predictions of the fall of Kobe Bryant and the end of corporate spokesmanship as we know it. That and this report from SportsLine.com's Rick Harrow
On the other hand, the next two weeks usher in the LeBron James era, as the Cleveland Cavaliers open up camp. James has the deserved moniker as the most hyped rookie in NBA history. On July 8, he appeared in a Cavaliers summer league game before 15,123 fans and 200 media representatives. This spring, James signed the blockbuster seven-year, $90 million deal with Nike.
Nike stock value increased eight percent the week the James deal was signed. Later, he signed a $6 million endorsement contract with Upper Deck, followed by a $12 million deal with Sprite and Powerade.
At that time, the Powerade deal was viewed as an attempt to use the power of endorsement to capture the remaining 19 percent of the market share that Gatorade does not dominate. The new James deal was viewed as a frontal attack on Gatorade's $3.2 billion in global retail sales. His $2 million annual fee has been called the largest in beverage endorsement ever signed by a basketball player.
At the end of the James endorsement sweepstakes, he is estimated to be guaranteed $118 million by Corporate America before his first official NBA minute. It is important to put the predicted demise of the corporate pitchman in this perspective: Michael Jordan signed his first Nike contract in 1984 for $2.5 million over five years; Shaquille O'Neal received $3 million from Reebok in 1992; then 17 year-old Kobe Bryant received only $5 million from Adidas four years later.
Nike increased its commitment to athletes and sports teams by almost 32 percent last year, spending $1.442 billion in this arena. Kevin Garnett recently received a lifetime deal with Adidas worth approximately $2 million annually. It is also important to remember that this is not just an American phenomena -- racer Michael Schumacher earns an estimated $80 million per year in endorsements, $25,000 for every racing mile.
Despite the dire predictions for corporate sports endorsements, Corporate America is spending more than ever. However, corporate marketers are protecting themselves in at least three ways: (1) corporate selectivity and long-term brand equity commitment; (2) tighter and more protective legal agreements; and (3) avoiding celebrity endorsement expenditures wherever possible.
As the endorsement fees get heftier, and as post-Sept. 11 recessionary economics squeeze corporations even more, marketing executives are becoming incredibly selective in targeting athletes whose images seem beyond reproach. That and this report from SportsLine.com's Rick Harrow
Cyclist Lance Armstrong amassed an endorsement portfolio in excess of $7 million per year before his recent win. The United States Postal Service spent nearly $7 million-$10 million in sponsoring Armstrong's Tailwind Sports-owned team (even though the Postal Service lost more than $650 million last year).
Nike, AIM Funds, Bristol-Myers Squibb, and American General Financial all jumped on the Armstrong bandwagon as well. The reason is obvious -- his tenacity, image, and the fact that CBS dedicated 23 percent of its three weekend broadcasts to Armstrong during the Tour de France.
Similarly, skateboarder Tony Hawk has amassed a $10 million annual endorsement portfolio based on his bedrock image appealing to the extreme sports demographic of 14-21 years of age. Other safe targets include skating superstar Dorothy Hamill, who has been the national spokesman for Vioxx (part of the $400 billion worldwide prescription drug sales market, growing at more than 10 percent annually).
Even celebrity endorser Terrell Owens (who has been branded with a problem image of late) signed on with Sharpie Pens after pulling a Sharpie from his sock to autograph a football after scoring a touchdown during a Monday Night Football game last season.
Rather than basing the entire brand on Owens' likeability, the company has created a nationwide charity campaign in an effort to bring money and supplies to schools. Owens proudly says that he now has "the chance to make a difference with kids."
Corporations are also focusing on the long-term brand building of young superstars. Thirteen year-old soccer player Freddy Adu signed a $1 million contract with Nike in an attempt to build his brand over time. Salton Inc., the premier marketer of outdoor grill products, paid George Foreman $9 million -- including $4.5 million paid in Salton equity shares as Foreman continues to become synonymous with the brand.
Lincoln-Mercury continues to feel comfortable with the new Magic Johnson image, partnering with the NBA Hall of Famer with a broadcast and print ad campaign for the Lincoln Navigator and other models.
Taken to the extreme, Real Madrid midfielder David Beckham lined up the biggest commercial contract in the history of sports, a lifetime deal with Adidas estimated to be in excess of $160.8 million. His role will be an ambassadorial one, "representing the brand and the company across the world." That and this report from SportsLine.com's Rick Harrow
Even though corporations continue to be careful, they do not resist the volume endorsement in some cases. Cleveland Golf received a windfall as PGA champion Shaun Micheel and runner-ups Chad Campbell and Tim Clark came from their endorsement stable. The first, second, and third place finishes generated over $4 million worth of publicity for Cleveland Golf. Japan Airlines made the ultimate commitment, unveiling a Boeing 747 with the image of Yankees right fielder Hideki Matsui. Overall, more deals are being done for less money -- from 20 to 50 percent less than those signed 15 years ago.
While all recent endorsement contracts contain some type of morals clause, the language remains very different. Most experts believe that Kobe Bryant's deal with Nike contains a broad conduct clause that could permit Nike to cancel the deal if Bryant were to bring "public ridicule or disrepute" to Nike.
Corporate attorneys usually try to include morals clauses that are ambiguous enough to allow corporations to cancel as the going gets rough. Athletes' agents, however, attempt to negotiate specific language that does not termination unless the athlete is convicted of a crime.
The result is a case-by-case approach to corporate protection. Callaway terminated John Daly in 1999 from his $3 million annual endorsement contract, becoming one of the first highly publicized endorsement terminations.
Many teams attempt to structure deals with clauses that require a certain conduct -- or lack of it. Three years ago, then Jets wide receiver Laveranues Coles signed a contract obligating him to repay $100,000 to the Jets each time he is convicted of a crime, pleads "no contest", or is suspended by the NFL.
In many cases, corporations reserve the right to fine or discipline the controversial athlete. Home Depot fined NASCAR driver Tony Stewart $50,000 for a scuffle with photographer Gary Mook last summer in Indianapolis -- the company also placed him on probation for the balance of last season.
Speaking of NASCAR, Newell Rubbermaid, the primary sponsor of NASCAR driver Kurt Busch, met with him in late August to "discuss the company's expectations" for its long-term sponsorship after Busch's altercation with driver Jimmy Spencer following the Aug. 17 GFS Marketplace 400 in Michigan.
The greatest corporate leverage remains the threat of non-renewal.
Chocolate maker Nutella terminated its $500,000 annual agreement with Kobe Bryant early into his legal troubles. Less public, but just as instructive, ESPN2 notified angler Jimmy Houston that it would not continue Jimmy's Outdoor World after he refused to wear a patch promoting BASS sponsor Busch beer on the show.
Obviously, the free market has substantial impact in this regard.
Clearly, Corporate America is more specifically evaluating the costs vs. benefits associated with long-term celebrity endorsement. In many cases, companies believe that the "man on the street" may have more in common with a product than a sports superstar. The most worldwide celebrated endorser is not immune from this as well -- Vodafone dropped Beckham from its latest advertising campaign in a bid to increase its appeal to older people. That and this report from SportsLine.com's Rick Harrow
Beckham was paid about $1.6 million to advertise the company's camera phone was replaced by a non-descript 40-something man in an attempt to expand the company's demographics. Previously, Vodafone subscribers received a recording of Beckham's squeaky voice informing callers that "this is the voicemail service for X. Please leave a message after the tone."
In a related twist, Houston Texans rookie receiver Andre Johnson signed a six-year, $39 million deal with the team that precluded him from doing any endorsements other than his Nike shoe deal for at least a year. Criticized by the NFL Players Association, the contract may become a model for future rookie deals -- with the team arguing that they "pay him enough for now" and that if he goes out and establishes himself, "the endorsements will be there over time."
Clearly, the corporate endorsement industry will remain incredibly visible through the Kobe Bryant proceedings. However, a recent TNS Intersearch poll suggested that a professional athlete is the least acceptable item for a company to sponsor (42 percent found athlete endorsements acceptable, while 60.1 percent believed that a corporation sponsoring a sporting event would be "more acceptable").
As a result, corporate boardrooms are filled with discussions on how to protect these investments over time. At the same time, however, the industry is taking some strange twists. U.S. District Court Judge Valorie Vega granted a preliminary injunction last year to online casino GoldenPalace.com permitting boxers to wear temporary tattoo ads during fights in Nevada -- citing First Amendment free speech rights.
In another arena, California-based porn film company Vivid Entertainment Group is introducing a snowboard this fall featuring the Vivid Girls. The snowboard, with an image of porn star Briana Banks, will retail for approximately $400 and be specially packaged in a black bag. While local ski resorts have not decided whether they will embrace or ban the boards, athlete endorsements will continue to increase, though a level of mutual sophistication on the part of both endorser and Corporate America will continue to be called for. That and this report from SportsLine.com's Rick Harrow
www.sportsbusinessnews.co...y_id=29740 (http://www.sportsbusinessnews.com/index.asp?story_id=29740)
For the next few months, the sports headlines will continue to be dominated by dire predictions of the fall of Kobe Bryant and the end of corporate spokesmanship as we know it. That and this report from SportsLine.com's Rick Harrow
On the other hand, the next two weeks usher in the LeBron James era, as the Cleveland Cavaliers open up camp. James has the deserved moniker as the most hyped rookie in NBA history. On July 8, he appeared in a Cavaliers summer league game before 15,123 fans and 200 media representatives. This spring, James signed the blockbuster seven-year, $90 million deal with Nike.
Nike stock value increased eight percent the week the James deal was signed. Later, he signed a $6 million endorsement contract with Upper Deck, followed by a $12 million deal with Sprite and Powerade.
At that time, the Powerade deal was viewed as an attempt to use the power of endorsement to capture the remaining 19 percent of the market share that Gatorade does not dominate. The new James deal was viewed as a frontal attack on Gatorade's $3.2 billion in global retail sales. His $2 million annual fee has been called the largest in beverage endorsement ever signed by a basketball player.
At the end of the James endorsement sweepstakes, he is estimated to be guaranteed $118 million by Corporate America before his first official NBA minute. It is important to put the predicted demise of the corporate pitchman in this perspective: Michael Jordan signed his first Nike contract in 1984 for $2.5 million over five years; Shaquille O'Neal received $3 million from Reebok in 1992; then 17 year-old Kobe Bryant received only $5 million from Adidas four years later.
Nike increased its commitment to athletes and sports teams by almost 32 percent last year, spending $1.442 billion in this arena. Kevin Garnett recently received a lifetime deal with Adidas worth approximately $2 million annually. It is also important to remember that this is not just an American phenomena -- racer Michael Schumacher earns an estimated $80 million per year in endorsements, $25,000 for every racing mile.
Despite the dire predictions for corporate sports endorsements, Corporate America is spending more than ever. However, corporate marketers are protecting themselves in at least three ways: (1) corporate selectivity and long-term brand equity commitment; (2) tighter and more protective legal agreements; and (3) avoiding celebrity endorsement expenditures wherever possible.
As the endorsement fees get heftier, and as post-Sept. 11 recessionary economics squeeze corporations even more, marketing executives are becoming incredibly selective in targeting athletes whose images seem beyond reproach. That and this report from SportsLine.com's Rick Harrow
Cyclist Lance Armstrong amassed an endorsement portfolio in excess of $7 million per year before his recent win. The United States Postal Service spent nearly $7 million-$10 million in sponsoring Armstrong's Tailwind Sports-owned team (even though the Postal Service lost more than $650 million last year).
Nike, AIM Funds, Bristol-Myers Squibb, and American General Financial all jumped on the Armstrong bandwagon as well. The reason is obvious -- his tenacity, image, and the fact that CBS dedicated 23 percent of its three weekend broadcasts to Armstrong during the Tour de France.
Similarly, skateboarder Tony Hawk has amassed a $10 million annual endorsement portfolio based on his bedrock image appealing to the extreme sports demographic of 14-21 years of age. Other safe targets include skating superstar Dorothy Hamill, who has been the national spokesman for Vioxx (part of the $400 billion worldwide prescription drug sales market, growing at more than 10 percent annually).
Even celebrity endorser Terrell Owens (who has been branded with a problem image of late) signed on with Sharpie Pens after pulling a Sharpie from his sock to autograph a football after scoring a touchdown during a Monday Night Football game last season.
Rather than basing the entire brand on Owens' likeability, the company has created a nationwide charity campaign in an effort to bring money and supplies to schools. Owens proudly says that he now has "the chance to make a difference with kids."
Corporations are also focusing on the long-term brand building of young superstars. Thirteen year-old soccer player Freddy Adu signed a $1 million contract with Nike in an attempt to build his brand over time. Salton Inc., the premier marketer of outdoor grill products, paid George Foreman $9 million -- including $4.5 million paid in Salton equity shares as Foreman continues to become synonymous with the brand.
Lincoln-Mercury continues to feel comfortable with the new Magic Johnson image, partnering with the NBA Hall of Famer with a broadcast and print ad campaign for the Lincoln Navigator and other models.
Taken to the extreme, Real Madrid midfielder David Beckham lined up the biggest commercial contract in the history of sports, a lifetime deal with Adidas estimated to be in excess of $160.8 million. His role will be an ambassadorial one, "representing the brand and the company across the world." That and this report from SportsLine.com's Rick Harrow
Even though corporations continue to be careful, they do not resist the volume endorsement in some cases. Cleveland Golf received a windfall as PGA champion Shaun Micheel and runner-ups Chad Campbell and Tim Clark came from their endorsement stable. The first, second, and third place finishes generated over $4 million worth of publicity for Cleveland Golf. Japan Airlines made the ultimate commitment, unveiling a Boeing 747 with the image of Yankees right fielder Hideki Matsui. Overall, more deals are being done for less money -- from 20 to 50 percent less than those signed 15 years ago.
While all recent endorsement contracts contain some type of morals clause, the language remains very different. Most experts believe that Kobe Bryant's deal with Nike contains a broad conduct clause that could permit Nike to cancel the deal if Bryant were to bring "public ridicule or disrepute" to Nike.
Corporate attorneys usually try to include morals clauses that are ambiguous enough to allow corporations to cancel as the going gets rough. Athletes' agents, however, attempt to negotiate specific language that does not termination unless the athlete is convicted of a crime.
The result is a case-by-case approach to corporate protection. Callaway terminated John Daly in 1999 from his $3 million annual endorsement contract, becoming one of the first highly publicized endorsement terminations.
Many teams attempt to structure deals with clauses that require a certain conduct -- or lack of it. Three years ago, then Jets wide receiver Laveranues Coles signed a contract obligating him to repay $100,000 to the Jets each time he is convicted of a crime, pleads "no contest", or is suspended by the NFL.
In many cases, corporations reserve the right to fine or discipline the controversial athlete. Home Depot fined NASCAR driver Tony Stewart $50,000 for a scuffle with photographer Gary Mook last summer in Indianapolis -- the company also placed him on probation for the balance of last season.
Speaking of NASCAR, Newell Rubbermaid, the primary sponsor of NASCAR driver Kurt Busch, met with him in late August to "discuss the company's expectations" for its long-term sponsorship after Busch's altercation with driver Jimmy Spencer following the Aug. 17 GFS Marketplace 400 in Michigan.
The greatest corporate leverage remains the threat of non-renewal.
Chocolate maker Nutella terminated its $500,000 annual agreement with Kobe Bryant early into his legal troubles. Less public, but just as instructive, ESPN2 notified angler Jimmy Houston that it would not continue Jimmy's Outdoor World after he refused to wear a patch promoting BASS sponsor Busch beer on the show.
Obviously, the free market has substantial impact in this regard.
Clearly, Corporate America is more specifically evaluating the costs vs. benefits associated with long-term celebrity endorsement. In many cases, companies believe that the "man on the street" may have more in common with a product than a sports superstar. The most worldwide celebrated endorser is not immune from this as well -- Vodafone dropped Beckham from its latest advertising campaign in a bid to increase its appeal to older people. That and this report from SportsLine.com's Rick Harrow
Beckham was paid about $1.6 million to advertise the company's camera phone was replaced by a non-descript 40-something man in an attempt to expand the company's demographics. Previously, Vodafone subscribers received a recording of Beckham's squeaky voice informing callers that "this is the voicemail service for X. Please leave a message after the tone."
In a related twist, Houston Texans rookie receiver Andre Johnson signed a six-year, $39 million deal with the team that precluded him from doing any endorsements other than his Nike shoe deal for at least a year. Criticized by the NFL Players Association, the contract may become a model for future rookie deals -- with the team arguing that they "pay him enough for now" and that if he goes out and establishes himself, "the endorsements will be there over time."
Clearly, the corporate endorsement industry will remain incredibly visible through the Kobe Bryant proceedings. However, a recent TNS Intersearch poll suggested that a professional athlete is the least acceptable item for a company to sponsor (42 percent found athlete endorsements acceptable, while 60.1 percent believed that a corporation sponsoring a sporting event would be "more acceptable").
As a result, corporate boardrooms are filled with discussions on how to protect these investments over time. At the same time, however, the industry is taking some strange twists. U.S. District Court Judge Valorie Vega granted a preliminary injunction last year to online casino GoldenPalace.com permitting boxers to wear temporary tattoo ads during fights in Nevada -- citing First Amendment free speech rights.
In another arena, California-based porn film company Vivid Entertainment Group is introducing a snowboard this fall featuring the Vivid Girls. The snowboard, with an image of porn star Briana Banks, will retail for approximately $400 and be specially packaged in a black bag. While local ski resorts have not decided whether they will embrace or ban the boards, athlete endorsements will continue to increase, though a level of mutual sophistication on the part of both endorser and Corporate America will continue to be called for. That and this report from SportsLine.com's Rick Harrow