Athlete Endorsements Seeing Subtle Changes Amid Tiger Scandal

Exec Says Advertisers Seeking Shorter Deals After Woods Scandal

McDonald's multi-year endorsement deal with Cavaliers F LeBron James is an "early sign that the Tiger Woods debacle hasn't put marketers off celebrity endorsements altogether," but it "does indicate that the landscape is subtly changing," according to Hawkins & Vranica of the WALL STREET JOURNAL. GroupM Entertainment Sports & Partnerships President Greg Luckman said that backlash from Woods' situation "is helping to soften the market" for endorsement deals. But he added, "The impact of that is being seen more in how the deal terms are being negotiated." Luckman noted that advertisers now are "seeking shorter agreements and more flexibility." Luckman: "If it's a 10-year deal and something happens, it's a lot more complicated to get out of it." Sports marketing experts said that the "biggest change" to endorsement deals following the Woods scandal is that "advertisers are crafting tougher 'morals clauses,' the provisions that let them out of the contract if the star misbehaves." Octagon First Call VP & Managing Dir David Schwab said that "refusing major corporations a greater say in morals clauses 'has become a deal breaker.'" McDonald's VP/Marketing Peter Sterling said, "We only sign with athletes that we believe have a good fit with the brand." Sterling noted the company has not signed a lot of athlete endorsements lately. While that is not specifically due to the Woods scandal, Sterling said that has "certainly shined a spotlight on this." He said that McDonald's "has known Mr. James since he was in high school," and the QSR "has confidence in him." Sterling: "All we can do is look at the past behavior and hope that will be a future indicator of what that person is going to be like. He's got a passion for what he does, he's family-oriented, he's community-minded, and he's charitable. Those are all the things McDonald's stands for" (WALL STREET JOURNAL, 2/1).

INSURANCE PLANS: In N.Y., Belson & Sandomir report in the wake of the Woods scandal, insurers are "being inundated with inquiries from corporations seeking to protect their investments, their brands and even their sales when their celebrity endorsers suffer public embarrassment." More companies are "trying to insure against the potential loss of sales when an athlete product endorser is involved in a scandal," but "calculating the amount to insure against is not easy." Insurers said that they "based their assumptions on how much revenue grew after an athlete or celebrity became a company endorser." Octagon President of Athletes & Personalities Phil de Picciotto believes that the "recent scandal and the growing dollar value of athlete endorsement deals is going to lead more companies to pursue more insurance." Companies also are going to "push for shorter-term contracts that push for a greater percentage of their money in the form of incentives payable when athletes meet certain on-field targets" (N.Y. TIMES, 2/1).