Athletes tie endorsements to equity stakes in upstart companies
More athletes are seeking a cut of what they’re selling, in some cases signing endorsement deals that may sacrifice in the short term but offer the chance for larger payouts later.
“The one trend that I’ve seen is athletes’ willingness to take on a bit more risk and potentially forgo some of the cash in a deal, depending on if there is stock available or a startup that has private shares,” said Lowell Taub, head of endorsements at CAA Sports. “I would call it the 50 Cent phenomenon.”
The rapper famously negotiated an equity stake in Glaceau’s Vitaminwater brand as part of an endorsement deal and then reaped millions when Coke bought the company for $4 billion in 2007. Author Dan Charnas estimated the rapper’s take to be in the range of $60 million to $100 million. Another investor in Vitaminwater — New York Mets third baseman David Wright — had a much smaller slice of the company but also netted a healthy payout as a result of the Coca-Cola deal.
|David Wright is among the athletes who hold an equity share in Mission Athletecare, a maker of skin protection products.|
With or without equity, an athlete and a company can tout the authentic nature of product collaborations, and help build lasting legacies for athletes that can pay off well beyond their playing years.
Maria Sharapova, like the Williams sisters before her, delved into fashion with a designing role that has included launching a line of casual shoes with Cole Haan. Earlier this year, David Beckham, in partnership with clothing chain H&M, released nine styles of underwear carried in the retailer’s 1,800 stores.
Tony Hawk and Shaun White, X Games heroes past and present, have taken aggressive approaches, putting their names on clothing, video games and, in White’s case, even chewing gum. Target works with White on boys and young men’s clothing lines.
“The transition between an athlete with an endorsement and an athlete with an apparel line should be natural,” said Dan Griffis, Target director of strategic partnerships, lifestyle marketing and events. “We don’t have a formula.”
Griffis said the company wants to avoid haggling over contracts and to focus more on a constant conversation about working together with White and other athletes.
“The athletes get it,” said Mission founder Josh Shaw. “They understand, ‘I can move the needle for your company.’ And they say, ‘My fans can see through an endorsement when I just take a check.’”
Erik Spanberg writes for the Charlotte Business Journal, an affiliated publication.