There’s No ‘I’ In Team 10th January, 2017

Athlete endorsements are not a new concept. Brands have been using household names to increase the sales of their products for hundreds of years. It adds credibility, differentiates from competitors and becomes synonymous with the athlete.

In recent years, athletes and personalities are generating enormous revenue from sponsorships that surpass their earnings from their respective professions. Sport, is of course, the stand out example here, but movie stars are not far away. In 2016, Dwayne ‘The Rock’ Johnson is estimated to have earned more than $51 million from various endorsements. In sport, there is no bigger example than Cristiano Ronaldo who generated more than $250 million throughout 2016 from numerous deals, including; a lifetime deal with Nike and a host of other deals with brands such as Herbalife, Toyota, Armani, Tag Heuer, Castrol and Monster Headphones.

Celebrities are not just competing against each other for sponsors, they are competing against teams, in some circumstances, their own team. In 2016, Real Madrid amassed over $265 million in sponsorship revenue which is not a small amount. Compared to their star man, it is only $15m more.

The attractiveness of an individual is their engaged fans, who idolise them, some of which would purchase anything that their idol endorses. Teams, of course, have these fans but they are potentially less engaged. With stars becoming bigger than the teams they are in, teams need to become more creative with their assets and increase their offering to a potential sponsor.

What a team does have that an individual cannot offer are larger media platforms, which include branding within stadium for matches, stadium naming rights, and kit sponsorship. This provides a tangible link to the team and is where the majority of value stems from in sponsorship. However, with the increase in recent years of Social Media, athletes are catching up with the teams and in some circumstances surpassing them. Real Madrid’s Twitter followers are 6.7 million, Cristiano Ronaldo’s is 49.3 million!

The team does however, have access to not just one athlete, but an entire team of athletes. It is standard in most contracts for players to commit to sponsor activations such as player appearances, image rights to use in sponsor campaigns and even the use of their social media. This eclipses the offering one player can offer a sponsor. Team sponsorship will offer larger awareness. In addition, teams can also offer direct fan engagement, not just through media channels. Utilising stadium assets such as activation areas and hospitality for B2B engagement.

Barcelona’s partnership with tyre manufacturer Lassa is a perfect example. Through its sponsorship of Barcelona, Lassa leveraged player access and created an entire advertising campaign featuring Arda Turan, Gerard Pique, Neymar and Luis Suarez. Through this they now have multiple athlete endorsers, not just one.

Although the teams have a greater pool of assets to offer a sponsor, it is crucial they offer creative and ROI driven activations for a sponsor. If not, these individuals could even start poaching sponsors from under their nose.


Pathway To The Next Megastar – Under Armour & Athlete Owned Platforms 10th May, 2016

Athlete endorsement is nothing new, whether its Nike ownership of the once evergreen Tiger Woods to Kellogg’s deal which saw Bruce Jenner as the face of the cereal through the 1970’s. What is new however is the success which Under Armour is delivering against its more established, been-there-and-done-it, global rivals Adidas & Nike.

Not to be misquoted, it is worth acknowledging that Under Armour also has a cohort of team sponsorships with Wales RFU and Tottenham Hotspur FC, however it is the roster of athlete endorsements which has seen the brand break the sporting apparel duopoly.

One of the most recent acquisitions provides a great case study on the brands strategy and the proliferation of athlete owned platforms, Under Armour’s sponsorship of Dwayne ‘The Rock’ Johnson.

The accomplished actor/sportsman/fitness star/ social media sensation is now an Under Armour Ambassador. With one look at The Rock’s owned Instagram account it is easy for the 51.2m followers to see the brands integration across both gym and lifestyle apparel. In addition, The Rock has worked with Under Armour to design his own exclusive, limited edition range, self-titled ‘Project Rock’. Utilising both the brand and The Rock’s audiences these products have been seeded across multiple channels, with The Rock showcasing the equipment on Instagram prior to its release on the ecommerce area of UA’s website further supporting the hype. Clearly this strategy provided successful returns with the first three released products selling out in minutes of being on sale.

With the signing of The Rock it appears Under Armour have beaten the competition to the next ascending media megastar, with this tactic duplicated with a number of the other Under Armour talents (Jordan Spieth). Perhaps the rise of the brand and the subsequent affiliations are not as surprising as the fact that Nike and Adidas appears to not have provided a significant counter action to this activity.

However, it is worth mentioning that Adidas is now looking to address this having reviewed its strategy (especially around the NBA) where it will opt out of renewing the NBA league sponsorship in favour of individual athlete endorsements, where it hopes to double its NBA athletes by the end of 2017.

This is an area which one would assume brands would have a core focus on, after all there is a well-trodden tale of Nike’s turning point to megabrand when not so long ago the challenger brand secured the signature at all costs of a kid by the name of Michael Jordan beating out the dominant brands at the time, Adidas and Converse.

Some may view this as an archaic model which the dominant brands of today have moved away from, however it might just be the pathway which Under Armour needs to become the next global megabrand.


To Buy or Not To Buy – Michael Jordan & the Cost of Two Coupons 30th October, 2015

Money is almost always a closely guarded secret, whether between friends, business relations or colleagues.

Nowhere is this more prevalent than the world of sports business with undisclosed fees for player transfers and the value of sponsorship deals rarely disclosed, so not to alert others to an inflated bank balance or be extorted for a fee. However, what happens when a company uses rights it has no possession of?

This was the focus of an unusual dispute between Michael Jordan, Safeway and Jordan’s long-term sponsors Nike.

Following Safeway’s unsolicited use of the Michael Jordan name without permission the two recently visited court to settle a proposed $10 million payment from a 2009 infringement.

In 2009 a subsidiary of Safeway’s placed in an advert and coupon incorporating Jordan’s name and Chicago Bulls number within a commemorative Sports Illustrated issue (of which only two were ever redeemed). However Jordan’s lawyers and endorsement history advise that he would not have accepted such a deal. Safeway believed this should be in the region of $126,900, more widely reported as closer to $500,000 from a licencing agreement which MJ held at one point over the last decade.

The argument posed by the athlete is that Jordan name is such a force in the marketing world that this requires a substantial rights fee, something he is keen to reinforce following a statement reporting an income of over $536 million in sponsorship alone from 2000 to 2012.

This is where Nike and other sponsors take interest.

As MJ and his legal team seek to prove how much an organisation typically purchases these rights leading to Judge John Blakely to rule that Nike and other sponsors must divulge their contracts to the court – something that they neither asked for, nor were keen to divulge to their competitors.

Despite being desperate to retain the fiscal anonymity within Michael Jordan’s contract, (a document so closely guarded reportedly only three member of staff have access and it is held in a separate area to all other contractual agreements at the Nike headquarters) the judge ruled this must be shown to the court.
The case is now settled with Safeway ordered to pay $8.6m in rights fees to Jordan, despite Michael expressing “it was never about the money”.

In the world of sponsorship it is always better to acquire those rights than use without permission – who knows it might just save you $8.1m in the long run.


Player Power – Athlete Success Impacts on Brand Fortunes 4th September, 2015

Player power is well documented across sports business with demands on endorsement deals, publicity requests and the ability to influence the many across the globe. However rarely has a player’s performance vindicated the price of company stock.

As Serena Williams appears in New York this week with sights set firmly on the US Open & ‘Serena Slam’ (winning all four majors in the calendar year) there will likely be comparisons drawn with Jordan Spieth’s attempts to achieve the same feat in the world of golf this year.

Following an examination of Spieth’s miss on the final hole at the British Open, ultimately ending hopes of the calendar Grand Slam the finance department of Serena’s sponsor Nike might be a little more focused on her success this week than the previous wins.

Recently Under Armour became the principal sponsor of the young athlete, signing a multi-million 10 year deal (read more on a previous Slingshot blog here). Following this Spieth promptly returned faith securing the Masters and US Open titles with Under Armour equipment pride of place.

Next the British Open loomed with hype surrounding Spieth’s opportunity to complete the impossible and collect a third major of the year. Jordan Spieth was in contention until the final hole where a birdie was required to keep the challenge alive for a play-off.

This is where the parallels with Serena might interest Nike’s finance department and shareholders.

As following the missed putt by their star ambassador, Under Armour’s share price dropped falling from a price of $89.46 before the putt to $88.79 minutes afterwards – decreasing the company’s value by almost £90 million.

Whilst the exact nature of this depreciation is unknown, this occurred within the 6 minutes between the putt and missing of the play-off. Sport marketing professionals have cast views on the occurrence with Nigel Currie believing the “share price to have grown due to the accumulation of previous successes and the expectation on further success”, with the drop merely showing a return to a normal level.

Whatever the explanation, Nike shareholders will be wishing Serena success at Flushing Meadows just a few percent more.

 


“Enter At Your Own Peril” : Sponsor Association With Controversial Brand Ambassadors 23rd September, 2013

 

“The role of a brand ambassador – the brand ambassador is a marketing model that employs trusted, credible personalities to promote and give greater visibility to its brand products

It seems, historically, that sport and scandal have gone hand-in-hand. Over the past five years there have been multiple athletes in the upper echelons of their respected fields that have been subject to a public fall from grace. For the sponsor, the usual protocol will be to run for the hills, and withdraw any association with the respected star. However, there are some exceptions, and brands do, in some cases, stick by or re-invest in their asset – but under what circumstance and why?

Level Of Association

If the player is either an integral part of the sponsors make up, or headline star, then it makes the job of getting rid of them, and keeping to your marketing strategy a lot harder. Woods, of course, has been embezzled with the swoosh his entire career, this can also be said of Wayne Rooney. However Ryan Giggs has not been so fortunate, despite being held up as headline moral ambassador for his maturity, the star ended up being shunned by a number of his sponsors for a comparable offense to that of Rooney or Woods.

Bankability

The commercial revenue generated by any ambassador is integral to their credentials, and can play a significant role in the decision making process. In Woods and Rooney’s case, both EA games and Nike had complete product ranges centered on them, and commercially had too much to lose.

Sponsor’s market place

Accenture was Woods’s big loss in the aftermath of the scandal around his affair. The firm could not justify sporting a star whilst marketing themselves as a trusted Business Consultancy. Brands have ambassadors for a multitude of reasons, but they must be able to link their common values and business goals. In contrast, Alex Rodriguez, was still used by Guitar Hero in their adverts even after he admitted to taking banned substances. The business case for this was that Guitar Hero’s product was not affiliated with his sporting attributes, but his public personality.

The Offense

The line with which most brands have consistently taken when suspending contracts, has been when the ambassador’s actions directly affect the relationship they have with the respected brand’s promotional attributes. In the case of Drugs there has been a 100% termination rate in sport. However, in the case of Kate Moss and the fashion industry, the offence was taken very differently. Although she did lose substantial contracts, Moss managed to retain seven, and go on to re-build her career, something which has never been seen on such a scale in sport.

There is no doubt that trust in ambassadors has publically waned, as such, there has been a shift in how brands market their ambassadors. Recent campaigns by brands such as Nike illustrate that the focus is now upon empowering the consumer, rather than showboating the skills of an untouchable star. Even in fashion, couture designers are collaborating with high street fashion chains to bring their products to a consumer level. This shift undoubtedly showcases ambassadors but does much to bring the star or garment to the consumers level, retaining brand loyalty, which is essential in a very fickle market place.

It’s the end product that matters

As the quote above states, ambassadors uphold the values of the product they promote, and being the lucrative tool which they are, brands will do anything to protect them. However no one is bigger than the brand and on a case-by-case basis, the outcome of each offense is dictated by the relationship between the star and the value of the product they endorse.


Can too many Sponsors Dilute a Rights-Holder’s Brand? 22nd August, 2013

In sports leagues around the world, success on the field is ultimately driven by commercial revenue. As a consequence, their response has been to bring in sponsors to help facilitate the gap in funding.  But this growing emphasis upon sponsorship has left many people asking – are too many sponsors diluting the right-holder’s brand?

Sponsors make the brand more vibrant

When discussing the ever increasing number of sponsors in sport, it would be hard not to mention Manchester United, having just signed another spread of partners across the globe. The club has recently signed the Indonesian tyre producer bringing the club’s sponsorship total to 33. It begs to ask the question – are these sponsors devaluing the Manchester United brand?

Jonathan Rigby CM for MU, has rejected that the club has anywhere near reached its limit. He states that by implementing a local model amongst the 77 countries they have sponsors in currently, they are appealing to each fan individually, making the brand more vibrant and producing a follow on effect which will ultimately benefit all sponsors involved.

This certainly seems to be the case when you look at their operating profit, which has increased this year by 13.7%. The club has also just signed a new shirt deal worth nearly £500 million over 8 years, increasing their commercial sponsorship revenue to £118 million annually.

More value lies in fewer partners

In comparison, Juventus believe going the other way is more rewarding. The club believes that having valuable relationships with fewer brands will bring you more credibility amongst your following, and as a result will lead to greater financial weight behind the deals. This is the case for Jeep who is currently their headline sponsor, and one of 15 corporate partners.  In a public image driven market, and where it is only public interest which governs your reach; keeping it close to home can be seen as vital.

It’s the end product that matters

Brands enter into sponsorship for a multitude of reasons, but generally speaking, brands sponsor rights-holders for the audience, exposure, association and to fulfill their own brand objectives.  For rights-holders, one of the main things they rely upon, aside from funding, is the fans/ their audience.  As a platform, sponsorship allows both the rights-holder and brand to connect to their audience in a wholly tailored way.

The focus, therefore, shouldn’t be based on the amount of sponsors, but upon the end product – what the partnership has created for the fan, the overall experience and the club. MU’s model works because it has such a wide fan base and global sponsorship platform that allows them to associate with their following in all corners of the world. Juventus, on the other hand, has had success through its emphasis upon a few partners that have a strong affiliation to the club, keeping it close to home allows them to stay true to both the sponsor and the rights-holder’s objectives.

The Outcome

So long as the sponsorship is delivered and is aligned to the brand’s objectives and these objectives align with those of the rights-holder, the end product should ultimately benefit both club and sponsor.  Dilution of the brand will come when parties lose sight of their overall objective.

Michael Jordan: The Original Brand Ambassador! 25th February, 2013

On February 17th 2013 Michael Jordan, one of sport’s great personalities, turned 50. Not only is ‘Mike’ a sports legend but also the face of arguably the most successful brand endorsement deal of all time. Due to the recent headlines involving sports stars such as Oscar Pistorius and Lance Armstrong the value of brand ambassadors is being questioned more than ever (see Mark Mylam’s blog). Michael Jordan’s sponsorship deal with Nike however, proves what kind of positive impact such an agreement can have for both the brand and the celebrity. Let’s recap this incomparable success story:

“The 1984 Olympics was Michael Jordan’s coming out party” describes his agent David Falk. Up until this point Michael Jordan had not even played a single game in the NBA and yet at the time top three major basketball shoe brands Adidas, Converse and Nike were after him. Before his NBA career even started Jordan already knew who he wanted to partner with – Adidas. The German sports brand and Converse were the leading shoe suppliers for the NBA stars in the mid and late 80’s. Michael Jordan himself had never worn any Nike basketball shoes before and was convinced by the quality of Adidas’ products but the first brand that Michael Jordan met with was Converse. During this pitch Jordan mentioned his worries about the endorsement deals that Converse already had in place with superstars like Magic Johnson or Larry Bird and asked: “With all these stars, where do I fit into the conversation?” John O’Neil, the president of Converse, took that question and replied: “We’ll treat you like all our other superstars.” This is obviously not the answer that the upcoming star wanted to hear and the $100,000 per year that Converse offered him could not change his mind either.

The next invitation that Michael Jordan received was from Nike, however he was not interested in what they had to tell him and declined this invitation at first. In the end it was Jordan’s mother who convinced him to at least listen to what Nike had to offer so he took the plane and the rest, as they say, is history. Nike  decided to spend all of its marketing budget on Jordan and offered him a five-year deal worth $500,000 annually plus royalties; five times as much as any other NBA superstar was receiving at the time. It wasn’t only the sound of the money that made Nike suddenly attractive to Jordan: Nike offered Jordan his own signature shoe line. This is the kind of special treatment that Converse didn’t offer Michael and as a result they were out of the running.

However Adidas was still in the race – Jordan’s “favourite shoe”. If Adidas could have matched what Nike put on the table then Michael would have teamed up with the German brand. However Adidas missed out on this opportunity and this mistake became known as one of the worst business decisions in the last 50 years. “They didn’t feel it was worth it,” said Jordan. “Which in hindsight is perfect for me, because it made my decision much easier. And I ended up with Nike, and it became a great relationship.”

The Jordan brand was born (with the jumpman logo appearing in 1987). Since 1984 Nike’s subsidiary coproduced 27 basketball shoes with Michael Jordan. Last year, the U.S. Jordan Brand sneaker business alone had $1.25 billion in wholesale revenue. Although Michael Jordan himself isn’t playing anymore there are still active NBA players (Carmelo Anthony, Blake Griffin, Chris Paul etc.) acting as Air Jordan ambassadors and supporting the brand’s huge success within the basketball industry. Whereas in the mid and late 80’s Converse and adidas were dominating the U.S. basketball shoe market, 30 years later it is the Jordan brand that is controlling 58% of it, followed by its parent company Nike (34%), adidas (5.5%), Reebok (1.6%) and Under Armour (0.6%).

Michael Jordan himself is still earning more than $80 million per year through corporate sponsorship deals and the majority of this income is related to his partnership with Nike. The current details of this deal are a well kept secret but royalties now generate more than $60 million annually for MJ, according to a Forbes article.

You can buy yourself a lot of nice Birthday presents with that amount of money – Congratulations Michael! But also, congratulations Nike!