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SBD/Issue 42/Sponsorships, Advertising & Marketing
Tom Brady Deal Fills Under Armour's Desire To Land A QB Endorser
Published November 9, 2010
|Brady Was Attracted To Under Armour In Part
Because Kevin Plank Was An Ex-Football Player
Under Armour Senior VP/Sports Marketing Matt Mirchin indicated that the company's new sponsorship of Patriots QB Tom Brady came about because Under Armour "had wanted to add a QB this year" to its roster of endorsers, according to Donna Goodison of the BOSTON HERALD. Mirchin said, "Tom Brady was a clear choice. About two years ago, he was at an event with (founder) Kevin Plank, and Tom loved the fact that Kevin was an ex-player and the entrepreneurial spirit and culture of the company." Burns Entertainment & Sports Marketing President Marc Ippolito said that signing a top athlete is a "big statement for a brand that competes with the likes of Nike, Adidas and Reebok." He also noted that Brady's "equity stake in Under Armour is unusual." The stock in the "cash-and-stock deal will be passed to Brady over a four-year period." Ippolito: "He was presented with an opportunity from Under Armour that obviously was impressive. He had the chance to be ‘the guy’ vs. Nike, which has a stable of athletes from Michael Jordan to Tiger Woods" (BOSTON HERALD, 11/9). CNBC's Darren Rovell speculated the Brady agreement is "probably in the $1 million range" and is likely the "biggest deal Under Armour has ever done." Rovell: "It's probably worth it for Under Armour. They clearly don't have as much money as Nike to play with these guys and to get a Super Bowl champ like Brady is big for them" ("Power Lunch," CNBC, 11/8). In Baltimore, Matt Vensel wrote signing Brady "is a big get for Under Armour." By teaming Brady with Ravens LB Ray Lewis, Under Armour "now has two of the NFL's most recognized faces on its roster" (BALTIMORESUN.com, 11/8).
WHAT'S AT STAKE? FORBES.com's Robert Boland wrote under the header, "Brady's Under Armour Deal To Include Equity Stake -- Why Don't More?" By taking equity in the apparel company, Brady "has a growth asset for after he retires and one where any appreciation will receive more favorable tax treatment as a capital gain." He also has "put his interests and those of his sponsor into direct alignment and that is a very strong position." Historically, the "most lucrative endorsement relationships have involved equity stakes rather than straight fees." There are "downsides to having an equity stake and that is the athlete is truly tied to the sponsor and could stand to lose everything if the stock drops." But Boland added, "Then again doesn’t that mean the athlete must also be on his best behavior publicly and professionally to maximize his potential gain? Given the beating athletes have inflicted on sponsors via scandal lately, perhaps the equity stake’s biggest disadvantage is also its biggest advantage" (FORBES.com, 11/8).