Big Name Marketing

Today, American culture contains many aspects that I find unexplainable. Near the top of said list would be the gross infatuation we have with celebrities. This love of all things famous includes actors and actresses, musicians and other performers, and of course athletes. If you hadn’t have guessed from the last post, that’s where we will focus most of the attention in this post.

National media efforts keep us in touch with just about every detail of information we could possibly desire about the lives of our favorite stars. Who is performing better than expected, and conversely who isn’t earning their keep, who is dating who, who is in trouble again, who is getting traded where, and of course, why are any and all of these events happening? One place where we see surprisingly few athletes is in large corporation’s marketing efforts. Granted, there are some exceptions. We see some familiar faces taking their stardom on air, but compared to what these players are being paid in endorsement contracts it is safe to wonder if they are actually worth the cost (spoiler alert: they are) and also why don’t we see them in more adds.

The top five earners from athletic endorsements are Tiger Woods, LeBron James, Roger Federer, Phil Mickelson, and Kobe Bryant, in that order, who made a combined $239 million in 2014. * The problem is, how many ads can we actually recall these people being the main character in? LeBron has done a few new spots recently, including promotion for Nike, Beats (which he is a partial owner of) and Samsung, but they come few and far between and certainly don’t account for the $53 million he is paid. So how are companies able to pay these guys so much, where does the value come from? The answer is products lines. The LeBron line of basketball sneakers moved about $300 million worth of shoes in 2013. LeBron’s jersey is also a perennial top-seller, and his line with Nike includes a lot more than just shoes. If you look at Tiger, the story is much the same whose deal and line of video games with EA Sports earned the company $800 million worth of sales through the release of sixteen titles. Nike cashed in on Tiger’s success as well to the tune of $791 million in sales of its line of golf equipment, clothing, shoes, and accessories in ’13. It is safe to say that these two have, or in Tiger’s case, had, the most successful and recognizable marketing campaigns in recent years but really the main promotion being used by the companies sponsoring them is based on their performance in their respective arenas.

Companies know that success sells, whether it is actually due to their products performance or the perception that their product is the catalyst for success. To put into perspective how valuable a big name endorser can be, look at the recent offer made to Kevin Durant by Under Armour. The Baltimore/ DC based company offered up $285 million as well as partial ownership (reportedly 10%) of the company as KD35 neared the end of his deal with Nike. The astronomical figure actually makes a lot of sense knowing that UA has 0.35% market share for basketball shoes, compared to Nike’s 93%, and that a deal with Durant would likely bring in upwards of $50 million in sales. Maybe Under Armour would have used KD heavily in commercials, more likely though, they watch him continue to be a dominating force in the NBA and their bank accounts swell.

*Four of these 5 athletes have contracts with Nike, Mickelson being the only exception.

Works Cited:

Maisonet, E. (2014, September 03). Why Kevin Durant chose Nike over Under Armour. Retrieved February 09, 2015, from http://www.sbnation.com/2014/9/3/6098457/kevin-durant-nike-contract-under-armour

Forbes.com