Blazing a New Trail in Player Endorsements with LeBron James
BY ADAM GROSSMAN
LeBron James making millions of dollars from an endorsement is no longer a surprising headline. As one of, if not the best, player in the NBA since he entered league during the 2003-04 season, James has earned tens of millions of dollars from a variety of companies to help market a variety of products.
However, the recent ESPN.com post titled “LeBron's stake in Blaze Pizza chain now worth at least $35 million” highlights two developments in player endorsements that are beneficial to both brands and athletes. First, superstar athletes are no longer only looking for guaranteed payments from companies. Instead, they are also looking to make investments with their money and / or time to help facilitate a company’s growth. For the player, having an ownership stake means that there is potential to make significantly more money than through traditional fees. For the company, having players as owners means everyone’s incentives are more aligned. More specifically, if the company does well by generating more revenue then the player does well because his / her equity stake is worth more. Both Blaze and James benefitted from their partnership as the company has grown to having 200 stores and $250 million valuation.
The second development is more subtle although no less important. Two of James’ most successful player endorsements (at least from a monetary perspective) are with Beats by Dre and Blaze Pizza. Both of these companies were new entrants into competitive industries when they started to work with James. Star athletes are very good at generating high levels of brand awareness and engagement. As co-founder of Blaze Pizza Elise Wetzel stated, “"Every time LeBron tweets about Blaze, it's like a sonic boom. It jump-starts the conversation with tens of millions of people in the U.S. and around the world and leads to a genuine interaction between people who know and love the brand and people who haven't heard of us." We found similar results by tracking and valuing social media conversation using Block Six Analytics (B6A) proprietary Social Sentiment Analysis Platform (SAP).
Building brand awareness is critical for emerging companies with similar profiles to Beats and Blaze to grow their businesses because customers need to learn more about a new company before making a purchasing decision. More specifically, customers will not buy a company’s product if they do not know anything about the company. Therefore, increasing brand awareness is essential to the company generating revenue. It is not as critical for companies that have extremely high brand awareness because customers already know their products. More mature companies are typically focused on how they can use sponsorship and advertising dollars to increase the likelihood of a purchasing decision since customers already understand these companies’ value proposition.
Fit should be an important consideration in any endorsement deal for both the company and the player. Different brands will receive different values even for the same player based on how they generate revenue and their overall marketing goals. Block Six Analytics Partnership Scoreboard enables brands to evaluate athletes based on the value they can contribute to their specific businesses. Our Software as a Service (SaaS) web-based platform allows companies to evaluate paid and earned media channels including product integration, branded content, and social media conversations in near real-time. Companies can then quickly determine how much value is being generated by its partnerships with players and where their sponsorship dollars can be spent most effectively.
For Blaze, James could maximize his impact on an emerging company that could better use his star power. For other companies, James impact would likely not be as substantial. By finding an athlete that fit with its business needs and aligning James’ incentives with the company’s growth, Blaze maximized its probability of generating value through its endorsement deal.