SBD/April 7, 2011/Marketing and Sponsorship

LeBron Inks Deal With Fenway Sports Management, Receives Liverpool Stake

James' first endorsement deal under FSM expected to be announced in coming days
Heat F LeBron James and his marketing outfit, LRMR Marketing & Branding, are now part of the Fenway Sports Group portfolio following the creation of a new broad-based pact in which FSG's Fenway Sports Management becomes the exclusive global representative for LRMR to secure marketing and sponsorship deals for James. FSM in the pact will seek out new endorsement, merchandising and other business opportunities for James, who already is believed to earn more than $30M annually from McDonald's, Coca-Cola, Nike and others. James and LRMR CEO Maverick Carter will gain a small, undisclosed equity stake in Liverpool, the EPL club FSG purchased last fall. "This adds yet another blue-chip property to our portfolio, and fits right in our wheelhouse," said FSM President and Red Sox Exec VP & COO Sam Kennedy. "LeBron is a global icon, and we believe we will do great things together and open new doors for both of us." The deal marks the first time FSM has aligned with an individual athlete after representing or holding equity in a diverse range of properties and companies including MLB.com, Roush Fenway Racing, Boston College and Dunkin' Donuts, among many others. FSM, however, is not entering the athlete representation business, and has no intent to do so in the future. Rather, this pact is fundamentally a global marketing play. The first new endorsement deal coming out of the alliance, linking James with an undisclosed luxury brand, is perhaps days away, Carter said. "We're pairing up with some of the smartest, most innovative guys in the entire business," he said. "The international opportunities are a big part of what's happening here, but it's not all of it. There are things we can and will do here (in the U.S.) as well" (Eric Fisher, SportsBusiness Journal).

MUTUALLY BENEFICIAL: The WALL STREET JOURNAL's Matthew Futterman notes the deal "marks the first time that a professional athlete at the top of his game has taken an ownership interest in a team with the size and reach of Liverpool." It also adds "yet another dimension" for FSG. Red Sox Chair Tom Werner said, "We're not interested in talent or athlete representation but we think he is one of the most remarkable athletes of his time. We believe we can open doors for LeBron and LeBron can open doors for us." A person familiar with the details said that FSG "would receive a small commission on any deals it landed" for James (WALL STREET JOURNAL, 4/7). Werner said that bringing in James will "open up new Asian markets and potential partners for the company." Werner: "This will only increase the awareness of Liverpool around the world. When we (take Liverpool) to Asia this summer we can also talk to companies about LeBron. It's another way to enter the conversation" (FINANCIAL TIMES, 4/7). In Liverpool, Tony Barrett notes James' "appeal is particularly strong in Asia, an area that Liverpool" and other EPL clubs are "increasingly looking to as they attempt to raise brand awareness and create new revenue streams" (LONDON TIMES, 4/7).

HOW IT CAME TOGETHER: Talks on the deal actively began last fall, almost immediately after FSG closed on the Liverpool purchase (Fisher). Execs involved in the transaction said that the deal "was conceived" by Main Street Advisors Chair & CEO Paul Wachter, who advised Henry and Werner on their acquisition of the Red Sox before the '02 season. Wachter also has "grown close" with Carter. The parties "gathered in February in Omaha at a Berkshire Hathaway meeting and realized their goals for global expansion were similar." Wachter said, "One group was building a global powerhouse, and the other was looking to do things differently to really move the needle." NBA Commissioner David Stern said of the deal, "It is terrific that through this partnership and their newly acquired interest in Liverpool FC, LeBron and Maverick Carter will not only enhance their opportunities from the global sports marketplace but also gain a deeper understanding of all that is involved in the operation and valuation of sports franchises" (WALL STREET JOURNAL, 4/7). Carter said, "As far as my business career goes, it's one of the most exciting times. And the opportunity for growth for us is huge" (AP, 4/6).

BUILDING HIS BRAND: Since James left Cleveland last summer to sign with the Heat as a free agent, his popularity and image have taken enormous hits, particularly due to the widely criticized hour-long special on ESPN in which he announced his decision and a subsequent set of glitzy arrival parties in Miami. But Carter said the alignment with FSM was not designed as an attempt at image repair. "I hope this isn't perceived as us giving up or not being able to do the job," Carter said. "This is a straight business deal, a true partnership that made a ton of sense for both sides" (Fisher). Bloomberg TV's Erik Schatzker said, "We have not seen this before. This is what LeBron and his marketing people have been talking about when they said taking what Michael Jordan did and building upon it. This sort of opportunity wasn't available to Jordan. It is now to LeBron James and he's seizing it." Schatzker added, "It's an amazing deal that really changes the game for professional sports stars" ("Inside Track with Deirdre Bolton & Erik Schatzker," Bloomberg TV, 4/7). In Ft. Lauderdale, Mike Berardino wrote the deal is a "doozy" for James. It is "yet another reminder" the Heat "acquired so much more than a basketball player last summer" (South Florida SUN-SENTINEL, 4/7). In Boston Nick Cafardo notes experts believe the move is a "terrific business decision" by James. He is "now a part-owner of one of the most-storied franchises in sports, and now linked with the Red Sox" (BOSTON GLOBE, 4/7). YAHOO SPORTS' Eric Freeman noted, "Business decisions like this one position him to reach out to an unprecedented number of fans" (SPORTS.YAHOO.com, 4/6).

ALL HAIL THE KING?
In Boston John Tomase writes FSG "forged a partnership that redefines out of touch." The Red Sox "have made precious few missteps since Henry's group assumed ownership almost a decade ago, but this one's a triple lindy to the face" (BOSTON HERALD, 4/7). Kennedy said that FSG chose to work with James because he is a "global celebrity." Kennedy: "We recognize that there are strong, passionate followers of (the Celtics) among (Red Sox) fans, but what's most important is to win on the field -- and to do that, we have to drive revenues to FSG" (BOSTON HERALD, 4/7). The BOSTON GLOBE's Cafardo writes, "Say this about Henry and Werner, when they do business, they do it big" (BOSTON GLOBE, 4/7).

STAYING TRUE TO PINSTRIPES: James said that he is "still a Yankees fan even though he is now business partners with the company that owns the Red Sox." James: "I am a Yankees fan. Nothing personal; just business. Strictly business." James, when asked if he will still be wearing Yankees caps, joked, "I don’t know. That’s up for discussion." He added wearing Red Sox hats is "up for discussion, too." James: "It’s a partnership. They’re not taking over LRMR; they’re not taking over LeBron James. It’s a partnership. That’s all I do. I only do partnerships. I try to help their brand; they try to help my brand and that’s all it’s about" (MIAMI HERALD, 4/7). ESPN's Kevin Connors said of the James-FSG deal, "All this from a self-professed Yankee fan." ESPN's Ric Bucher: "I was wondering about that. Are we going to see a Red Sox hat? Probably not." Connors: "If the price is right" ("NBA Tonight," ESPN2, 4/7).
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