Palmer doc to air around Masters Relativity ‘in a good place’ Tweets lead to Cheesecake Factory deal What athletes like about social media Verne Lundquist: “How DO you do?” Social media index devoted to sports Minority numbers unacceptable Surprises realign endorsement market Coast to Coast Adidas opens prototype in China
SBJ/Sept. 20-26, 2010/In-DepthPrint All
Twin wrecking balls assaulted sports marketing in 2009. First, the severe recession had the country’s biggest brands slashing budgets as never before. Then Tiger Woods, who carried the golf industry on his shoulders, sank into a sex scandal that would end in divorce from his wife and several of his largest corporate sponsors.
So when you ask people across the marketing industry about the state of the individual athlete endorsement market, the best thing they can say is that while those at the top, like Nike’s renewal with Maria Sharapova and Puma’s renewal with sprinter Usain Bolt, are still getting their deals, it remains a buyers’ market.
Since marketing can always be done without a celebrity endorser, some brands have always considered endorsements as a luxury. In the worst of times, that’s even truer; so the endorsement market has always been erratic.
“The endorsement market has always been tied to the economy, so it took a gigantic and unprecedented nosedive over the past two years that’s now flattened out, but I haven’t necessarily seen the market go back yet,” said John Slusher, vice president of sports marketing at Nike, which has thousands of athletes under contract.
“You still see premium deals for premium assets, like top draft picks, but most NFL and MLB players, we are getting at a fraction of the cost they were before. Most basketball players, we are getting at a fraction of the cost they were two or three years ago. Our strategy hasn’t changed. We are buying as many athletes, if not more, but at a better price.”
Nike’s recent SEC filings show more athletes under contract, but fewer dollars committed (see related chart).
“It’s a pretty simple equation,” observed Gary Stevenson, the former principal for Wasserman Media Group’s corporate consulting practice. “Activation budgets are a lot less, so the endorsement budgets followed suit. You also see a lot of endemic business across sports tanking, and when their business is down it brings marketing around sports down. There used to be 50 guys on the PGA Tour with pretty good equipment deals. Now it’s maybe 20 guys.”
Mike Wiese, director of branded content and entertainment at JWT, said he hadn’t detected a slowdown among advertisers using celebrities, but such deals inevitably now take longer to complete. “Especially with procurement departments [at clients] having more influence, there’s just more and more people looking at every deal,” he said.
Still, the top-tier athlete seems to be getting his or her money.
“We’ve seen a lot of companies consolidate at the top,” said Sandy Montag, IMG senior corporate vice president. “So that middle tier is having a tough time.”
Apparently that is even true for Woods, who once set the standard for endorsers. IMG Golf head Mark Steinberg, Woods’ longtime agent, said he is still getting calls inquiring about endorsements, even after all the humiliation the golfer has experienced.
“There is still demand, for sure,” Steinberg said. “I’m not sure we’ve had the right offers yet. But I’d say the time is right where I’d start to look at expanding his portfolio. … There were 18 months when it was really rough sledding. Now what we are seeing is some of the staple industries in golf, like auto and financial, have started to come back strong.”
There are others who say Woods’ follies will harm the golf market for the foreseeable future. Others said they see golf marketing coming back, but believe it will take at least another year to recover.
“Tiger’s presence in golf over the past decade or more probably prevented a downturn in that market,” said Phil de Picciotto, president of athletes and personalities at Octagon, which represents Apolo Anton Ohno, Michael Phelps and Emmitt Smith, among others.
“Tiger and the economy together were a double whammy on golf, and it’s going to take a considerable amount of time for that market to return — if it ever does,” de Picciotto said.
Even if there isn’t unanimity of opinion on what effect the fall from grace of golf’s top attraction had on the sport, everyone agrees that across marketing a “Tiger effect” chilled — and to some degree is still affecting — brands’ willingness to employ athletes as endorsers.
The extent to which marketers across sports believe Woods’ scandal affected marketing is so varied, it likely depends on how close they were, or indeed, whether they or an associated brand or agency client was tied to Woods.
“As much good as Tiger originally did for golf endorsements and golf TV ratings, he may also have done that much harm,” said Matt Delzell, group account director at Omnicom’s Davie Brown Entertainment marketing agency, which helped pass muster on Woods’ endorsements with Gillette and AT&T.
“If you asked me whether the recession or Tiger had more of an impact on endorsements and sports marketing in general, I’d tell you the recession, but not by much. Tiger has that much clout.”
Added Tony Pace, CMO at Subway, whose endorsers include Philadelphia Phillies first baseman Ryan Howard, Phelps and Fox NFL analyst Michael Strahan: “Because of what happened with Tiger, everyone now gives a third and fourth look at an endorsement prospect, as opposed to just a first and second look before.”
Frank Mahar at Genesco Sports Enterprises said he’s seen no slowdown in demand from clients like Pepsi and Coors, each of which has large league sponsorships they need to complement with player deals. So his version of the Tiger effect is that “we’re all a little more aware now — but we already had pretty strong contract language.”
Still, others insist l’affair d’Tigre has changed endorsement contracts forever.
“Breach language and the morals section of contracts are a lot tighter now and you are starting to see some kind of recourse,” said Mark Zablow, senior director of marketing at Platinum Rye Entertainment, which secures sports talent for sponsors including Dr Pepper and Procter & Gamble.
“In the past, all companies would be able to do is walk away from the deal and stop paying,” Zablow said. “Now, we are seeing them ask for money to be paid back. You’re also seeing spread-out and back-loaded payments to protect themselves. This is all the Tiger Woods effect. The ‘You don’t EVER have to worry about him’ sell doesn’t exist anymore.”
Davie Brown’s Delzell agreed. “Tiger’s the example we all reference now,” he said. “It’s much more difficult to get any program with a celebrity endorser sold in.”
Jordan Bazant of The Agency, which represents Colt McCoy, Reggie Bush and Troy Aikman, said the industry downturn has had some benefits. “Nothing’s being done on pure whim anymore,” he said. “The result is a more thorough strategy and a better platform.”
Steinberg noted that the overall golf market is recovering, and he’s back in the market for Woods. “It’s clear companies are taking a wait-and-see attitude,” he said. “Does that mean there will be bolstered morals clauses? I don’t know.”
Steinberg added that the pinch that Capitol Hill lawmakers put on financial services industry marketing at the height of the recession was equally deleterious as the economy and Woods.
Whatever the impact, the situation with Woods accelerated a shift by many marketers from sports to entertainment.
“We’re all still fighting the Tiger effect, some of which dates back to Kobe,” said Doug Shabelman, president of Burns Entertainment & Sports Marketing, in suburban Chicago, an agency that changed its name a few years ago to reflect a broader approach to talent representation. “Five years ago, maybe 35 percent of our business was sports. Now it’s 15 percent,” said Burns, whose company procures talent for the likes of Unilever and Dannon.
Wanting more for the money
Many of those interviewed said that in addition to price erosion, celebs and athletes are being asked to do more for their fees, whether that’s additional appearances, social media or branded content.
“The one thing fans all want, it’s access, and technology is an accelerant for more access,” said John Osborn, president and CEO at BBDO, New York, whose client list includes big sports spenders like FedEx, Gillette and AT&T. “But technology also means their lives are more exposed, whether they like it or not.”
As an example of effective use of endorsers in new media, Osborn cited campaigns for the launch of Gillette’s Fusion ProGlide razor on YouTube and Twitter around the globe resulting in “billions of media exposure, long before the traditional media kicked in.”
Gillette has been using sports endorsers for 100 years, and has generally been able to pay less than other categories, due to its heavy media spend, and its penchant for massive retail programs.
“Lately that’s been true across P&G brands,”’ said Greg Via, global director of sports marketing at Gillette, citing Ray Lewis’ recent work with Old Spice as an example. “We’re looking for 360 branding opportunities for our athletes and so are they.”
That means you’d better come to brand marketers with more than just a name and a face. “Now you have to package a celebrity with more marketing elements than ever,” said Octagon’s de Picciotto.
So, just as sports properties are becoming media companies, athletes and celebrities are moving in the same direction. Are you ready for the Kobe Network? The Lady Gaga Channel?
“Technology has enabled celebrities to become their own media distributors, and our clients want to tap into that passionate fan base,” said Greg Luckman, CEO of North America at GroupM ESP, whose clients that use sports marketing include Citi, Xerox and Unilever. “Although it remains a buyer’s market, the more forward-thinking and tech-savvy athletes will benefit from this.”
We asked people in the endorsement trenches to recall the first and largest deal they made, and to share on pitch that never got signed. Here are highlights of their responses:TONY PACE
First deal: “For Subway, it was with Reggie Bush in 2006.”
Largest deal: “1994 Monsters of the Gridiron promotions for Coke with Randall Cunningham, Emmitt Smith, Ronnie Lott, Lawrence Taylor, Howie Long and around 30 players dressed up as pseudo monsters for Halloween. It wasa phone-in-and-win promotion. Our goal was 6 million phone calls … we ended up with 32 million.”
One that got away: “Shaq. Twice. When Shaq was coming out of school, we chased him for Coke and lost. They [Pepsi] offered more dough but we had better creative. A couple of years later, we chased Shaq for Burger King and couldn’t get it done, but the agency after us finally did.”
First deal: “A partnership with [NASCAR driver] Carl Edwards and the American Legacy Foundation for an anti-tobacco campaign.”
Largest deal: “I don’t know if he counts as an athlete, but if you consider the amount of media behind it, which included a Super Bowl ad, it was the ‘Terry Tate, Office Linebacker’ campaign for Reebok.”
First deal: “Chris Evert/American Express U.S. Open tennis campaign, late ’90s.”
Largest deal: “Tiger Woods/American Express.”
One that got away: “Recommended a campaign with Roger Federer and Tiger Woods that would focus on their shared dreams of becoming the ‘best ever’ in their respective sports. Client passed, and a few months later Tiger was sitting in Federer’s box at the U.S. Open. The following year, Gillette launched their ‘Champions’ campaign.”
Genesco Sports Enterprises
First deal: “In 1997, I secured rights for athletes including Bob Lilly, Walter Payton, Johnny Unitas and other NFL greats to be on cups for a Pepsi/Subway promotion. I remember driving with my best friend across Florida and we stopped at a Subway and the cups were actually there. I never felt better.”
Davie Brown Entertainment
First deal: “Signing Harold Reynolds
for an appearance at the Little League World Series.”
Largest deal: “Tiger for Gillette and Tiger for AT&T.”
PHIL DE PICCIOTTO
Largest deal: “In the ’80s, it was Steffi Graf. In the ’90s it became Anna Kournikova. We established records for women’s tennis players with both. More recently it has been with Michael Phelps.”
One that got away: “We had many opportunities for female athletes to pose for Playboy and the like. We’ve never done them and I’m glad. Despite the economic benefits, we’ve stayed away from deals in all the sin categories and I’m glad we did.”
First deal: “The original sponsorship of John Madden’s cruiser with Greyhound Bus in 1987.”
Largest deal: “Madden NFL is the No. 1 video game of all time, so it would have to be that. The first deal we signed was in 1985 and we’ve sold 80 million-plus units.”
One that got away: “In 1990, TWA offered John Madden $1 million to fly seven minutes on a plane from Oakland to San Francisco. They were going to film a commercial on the plane along the lines of ‘the fares are so low, even I had to fly.’ John hasn’t flown since 1980, so when I called him to tell him about it, he hung up on me.”
First deal: “Michael Jordan’s first deal for Gatorade in 1990. People forget he was originally a Coke endorser.”
Largest deal: “The Gillette Champions program began with Tiger Woods, Roger Federer and Thierry Henry, as global and local icons as big as Derek Jeter filled in country by country, around the world. Programs don’t get much bigger than that.”
Platinum Rye Entertainment
First deal: “Partnered Johnny Knoxville and ‘Jackass’ with Converse to make a special-edition Jackass Chuck Taylor — 2005.”
Largest deal: “Programmed talent for the last four DirecTV Celebrity Beach events during Super Bowl weekend, now going on its fifth year. Secured over 30 athletes/celebrities per year including Troy Aikman, Steve Young, Eli Manning, Reggie Bush, Mark Sanchez — 2007, 2008, 2009, 2010 (and now 2011).”
One that got away: “A line of high-end Scotch from Michael Jordan.”
BBDO, New York
First deal: “Joe Montana for Diet Pepsi in 1991 with Ray Charles.”
Largest deal: “In terms of literal size, it was definitely Shaq for Pepsi’s [1-liter] Big Slam bottle. Very few athletes can bench press me. In this case, Shaq did, and I’m not referring to the fee.”
One that got away: “In the non-sports world, we had a wonderful concept for Jack Nicholson that he just wouldn’t do. But I still hold out hope that he’ll call.”
Burns Entertainment & Sports Marketing
First deal: “George Foreman with Beneficial Finance (mid-1990s, approximately).”
One that got away: “A now defunct cell phone brand’s TV ad with Arnold Palmer, Jack Nicklaus and Jack Welch.”
— Compiled by Terry Lefton
The world of player endorsements, the past 12 months may be remembered more for deals that unraveled than deals that were signed. Presented here is a timeline of notable player-brand relationships that were in the news during the past year.
DECEMBER 2009: Topps signs Washington Nationals pitcher Stephen Strasburg to a multiyear agreement that grants the trading card company exclusive rights to autographed Strasburg cards and game-used memorabilia cards.
JANUARY2010: Nike signs tennis player Maria Sharapova to an eight-year, $70 million sponsorship extension. The deal includes a line of dresses designed by Sharapova, and she will receive a percentage of those sales.
FEBRUARY 2010: McDonald’s reaches a multiyear deal with LeBron James, who later in the year delivers his much-anticipated decision to join the Miami Heat.
FEBRUARY 2010: Nike signs top NFL prospect Ndamukong Suh.
FEBRUARY 2010: Adidas signs a lifetime contract with 22-year-old Serbian tennis player Ana Ivanovic, the youngest athlete to sign such an agreement with the company.
FEBRUARY 2010: Under Armour signs swimmer Michael Phelps to a multiyear endorsement deal for outside-the-pool training. The deal will extend beyond the 2012 London Olympics.
APRIL 2010: Nike signs a seven-year extension with LeBron James. Terms were not disclosed but his original seven-year contract with Nike, signed in 2003, was worth $93 million.
JUNE 2010: Reebok signs Pittsburgh Penguins center Sidney Crosby to a deal for between five and seven years worth $1.4 million per season.
JUNE 2010: Reebok signs No. 1 overall NBA draft pick John Wall to a five-year, $25 million deal.
JULY 2010: Panini America signs No. 2 NBA draft pick Evan Turner (below) giving them exclusive rights to use the player’s autograph in card products.
JULY 2010: Russell Athletic signs Cleveland Browns third-round draft pick Colt McCoy to a multiyear deal for all of Russell’s brands including Spalding, Bike and Russell Outdoors.
JULY 2010: Jockey International signs Denver Broncos rookie Tim Tebow to a three-year agreement that is believed to be much larger than the player’s recently signed EA Sports and Nike deals.
JULY 2010: Red Bull signs a deal with San Francisco Giants pitcher Tim Lincecum.
AUGUST 2010: Puma signs a four-year extension with Jamaican sprinter Usain Bolt, worth a reported $40 million.
WINTER 2009-10: AT&T, Accenture, Gatorade and Buick each drop Tiger Woods from their endorsement roster following the golfer’s admission of marital infidelity. Watchmaker Tag Heuer downscales a similar deal.
JANUARY 2010: Adidas ends its endorsement of Gilbert Arenas after the Washington Wizards guard pleads guilty to a felony gun charge.
APRIL 2010: PLB Sports, which marketed “Big Ben Beef Jerky” for Pittsburgh Steelers quarterback Ben Roethlisberger, terminates its five-year business relationship with the player after details of Roethlisberger’s encounter with a 20-year-old college student emerge. That same month, Pittsburgh Zoo & PPG Aquarium replaces Roethlisberger’s image on a display with one of hockey great Mario Lemieux.
MAY 2010: The Boston Celtics’ Kevin Garnett opts out of his Adidas lifetime contract and signs a multiyear deal with ANTA Sports Products, a China-based sporting goods company.
MAY 2010: Nutrisystem ends its deal with Lawrence Taylor following the Pro Football Hall of Famer’s arrest on rape charges.
JULY 2010: Under Armour terminates its short-lived relationship with Dallas Cowboys rookie wide receiver Dez Bryant after the player shows up at Cowboys training camp wearing Nike shoes.
SEPTEMBER 2010: Reebok decides against finalizing its proposed endorsement deal with New England Patriots rookie Brandon Spikes after a sexually explicit video of the player emerges on the Internet.
SEPTEMBER 2010: AT&T and Reebok terminate deals with Floyd Mayweather Jr. after the boxer releases a 10-minute Internet video diatribe against fighter Manny Pacquiao, in which Mayweather makes racist and homophobic remarks.
Source: SportsBusiness Journal research
Dawn Kotowski’s title is general manager of a Taco Bell, but last month she orchestrated one of the summer’s most successful bang-for-the-buck athlete endorsement campaigns.
Her restaurant is just a few minutes from the SUNY-Cortland campus in upstate New York where the Jets held training camp. Jets second-year quarterback Mark Sanchez frequently visited the restaurant for a chicken taco and chicken burrito, hold the tomatoes. Sanchez developed his fondness for Taco Bell growing up in Mission Viejo, Calif., minutes from the company’s headquarters.
On one of Sanchez’s visits, Kotowski bypassed the traditional marketing route with agents and negotiations, and simply asked Sanchez if he would wear a Taco Bell baseball cap at practice, hoping it would be seen on HBO’s “Hard Knocks” reality show.
“She really thought there was no way he would do it,” said Will Bortz, senior manager of public relations and sponsorships at Taco Bell.
Sanchez was shown several times wearing the hat during the five-episode series. So for the price of a hat, Taco Bell received the equivalent of about $68,000 in advertising exposure, according to data provided exclusively to SportsBusiness Journal by Front Row Marketing.
For thinking outside the bun, Kotowski’s savvy was recognized by the company “in a number of ways,” according to Bortz.— David Broughton