(Originally printed in Sports Business Journal, August 2, 2010)
Many of us have spent the last 12 months holding our breath, looking for signs that the sports economic landscape is beginning to return to normal. Highest ratings in Super Bowl history? Check. Upfronts went well? Yes. Consumer spending up a little? Perhaps. Things might be looking up. But in the athlete endorsement world, I’ve noticed signs that things will never be the same.
Rewind to the summer of 2008. Athletes were riding the economic wave that brought deals in multiple categories for even marginal all-star caliber athletes. Any time an athlete got hot, deals followed. And the hotter the athlete, the more leverage the agent had in negotiations with the potential sponsor. But by the next fall, athlete endorsements were dealt a 1-2 blow unlike any punch Mike Tyson ever landed. I refer to that double whammy as the “Tiger Recession.” I believe that the Tiger Recession will go down in sports business history as a 12-month span that forever changed the world of athlete endorsements.
The first blow of course was the economic crisis that began in the fall of ’08. The meltdown wiped out entire categories such as banking and autos from athlete portfolios. Advertising budgets were slashed. CMOs looking for quick budget cuts found endorsement deals an easy target. Expensive endorsement contracts dried up like Death Valley in August. One example: Two years ago, Vitaminwater boasted more than two dozen athletes on its roster. Today? Just a handful.
The second, and likely more permanent, blow came when the Tiger Woods scandal broke in November of 2009. Prior to that infamous Thanksgiving weekend, Woods sat at the mountaintop of athlete marketability. He was arguably the most marketable athlete of all time. He seemed untouchable. He was the standard bearer: champion, philanthropist, charismatic, family man. When his image came crashing down, and several of his sponsors ran for the hills, sponsors everywhere started to worry about the risk of associating their brands with such potentially high-profile falls from grace. The epilogue to the Woods mess came in December 2009, when TMZ announced plans to launch TMZ Sports. Athletes will be under scrutiny more than ever before. Top that with the LeBronathon, and you get completely new rules for athlete marketing.
Woods after reports of infidelity emerged.
As the ice begins to thaw, and sponsors are once again considering aligning with athletes to help increase the strength of their brands, it is foolhardy to assume things in the athlete marketing world will return to normal. Those of us engaged in athlete endorsement deals need to consider two key questions:
1. What will sponsors be looking for from their spokespeople?
2. What can athletes do to increase their marketability in the post-Tiger Recession world?
Because deals will remain few and far between as long as the economy sputters, it’s a buyer’s market. Expectations on spokespeople will increase, and sponsors are likely to expect more for less. During this year’s World Congress of Sports, Jackie Woodward of MillerCoors said it best: “Last year we were asking, ‘How much?’ This year we are asking, ‘How much do we get?’”
While Woodward was referring to sponsorships, the same questions are being asked regarding endorsements. During a recent pitch, a potential sponsor asked me to include an activation plan with my athlete proposal. We’ve always brainstormed activation plans with sponsors, but none has ever asked us to provide a complete activation plan ourselves. I believe this was a sign of things to come, and clearly implies much more onus on the part of the athletes and their agents to deliver more than image/likeness rights and a few appearances.
Athletes looking for deals should expect to deliver beyond a few production days. Here are the key elements of 21st century endorsement deals, and what athletes can do to deliver on those elements:
1. Shorter terms. Sponsors don’t want to get stuck with bad contracts any more than teams do. Expect more sponsor renewal options as well. Athletes will have to deliver results during the term to earn renewals.
2. Stronger morals clauses. They’ll have real teeth, allowing the sponsor an out any time an athlete is involved in controversy. Athletes interested in endorsements should embrace their role model status and deliver on it.
3. True spokesperson advocacy. Sponsors are looking for athletes who genuinely love their brands. Fit is key. Athletes need to advocate the brands, know their customers and understand their objectives.
4. Increased media obligations. Athletes have microphones in their faces after every game. Sponsors will look for more exposure through traditional media channels.
5. Authentic cause-marketing elements. Athletes need to engage in causes they genuinely feel passionate about.
6. Social media engagement. Facebook fans and Twitter followers are 21st century Q Scores. If athletes don’t have loyal, engaged and numerous fans in the social-media world, they’re not as valuable to sponsors.
7. Metrics. As marketers continue to receive more pressure to demonstrate ROI, athletes and their representatives will need to do the same. ROI can include Facebook impressions, tweets, clicks and direct sales.
8. Incentives. In addition to minimum guarantees, athletes will be incentivized. Flip is doing this now through their celebrity-branded cameras.
9. Connection with fan base. This may be the biggest lesson from the Le-Bronathon. Who are LeBron James’ fans now? Residents of Miami. He won’t be much help to sponsors in New York, Chicago, Los Angeles or Ohio any time soon. An athlete has to have an identifiable and loyal fan base. The broader the market reach and demographic base the better.
Do I believe endorsements are a thing of the past? Absolutely not. There’s no one more loyal than the fan of an athlete, and brands will always want to leverage that brand loyalty.
The tenets of athlete marketability remain the same: talent, success, integrity and charisma. To increase their marketability, athletes need to do more than win championships and appear in all-star games. They need to engage in genuine community work, embrace both traditional and digital media, and partner with brands they believe in. And they need to show sponsors with enthusiasm, professionalism and results. Those athletes will earn the lion’s share of endorsement opportunities. The rest will be sitting on the bench, wondering where all of the deals went.