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Advertisers worry: Who's next?
Case against popular NBA star Kobe Bryant could chill other athlete endorsement deals.
July 22, 2003: 3:08 PM EDT
By Chris Isidore, CNN/Money Senior Writer

NEW YORK (CNN/Money) - Superstar athletes had better watch out. Kobe Bryant's legal problems may end up hurting their endorsement paychecks, as well as his own.

Experts in sports marketing say the sexual assault charge against Bryant late last week is making advertisers nervous about signing big contracts with other athletes, even those who thus far have stellar reputations.

Bryant, the star guard for the L.A. Lakers basketball team, has been one of the leading pitchmen in sports, with deals with McDonald's (MCD: Research, Estimates), Coca-Cola (KO: Research, Estimates) brand Sprite and Nike (NKE: Research, Estimates).

Those companies have issued cautious statements, neither endorsing Bryant's claims of innocence nor distancing themselves from the 24-year-old who was one of the first player to jump straight from high school to NBA stardom.

But whatever happens to the contractual relationship between Bryant and his sponsors, the arrest of a star athlete who once had a rock-solid reputation could have a chilling effect on other big-dollar sponsorship deals, even with athletes whose public appeal remains intact.

"I think right now, the watch word is hesitation," said Bob Williams, president of Burns Sports & Celebrities, which arranges celebrity endorsement deals. "This is an eye opener, making many advertisers step back and say, 'If it can happen to Kobe Bryant, it can happen to anyone.'"

Kobe among leading endorsers

Bryant's recently signed Nike deal is worth a reported $40 million over 5 years, while his other deals are believed to be worth about another $12 million a year.

Kobe Bryant at next news conference  
Kobe Bryant with his wife Vanessa Friday after he was charged with sexual assault.

Tiger Woods earns the most from endorsements, according to Forbes magazine, which reported he earned $70 million last year from sponsors and appearance fees.

The NBA's No. 1 draft pick LeBron James signed a $90 million, seven-year deal with Nike before graduating from high school. The recently retired Michael Jordan received more than $30 million in endorsement and appearance money last year, according to Forbes, but that income is declining.

Those athletes and other endorsement All Stars -- like Tour de France defending champion Lance Armstrong, with a reported $16.5 million in endorsements, Yankees star Derek Jeter and Chinese NBA star Yao Ming -- all have flawless public images at this point, as did Bryant before he was charged last week.

While athletes getting in trouble with the law is not new, Bryant's case has caught the attention of Madison Avenue in a way most others have not.

"The athletes who ended up on police blotters were generally the mid-level to lower level athletes who did not affect advertisers," said Williams.

Williams said that makers of athletic shoes will continue to use sport stars, perhaps even those that run afoul of the law. These marketers believe they need athletes to sell their products, and a start with some legal problems, like Philadelphia 76ers star Allen Iverson, can give the advertisers an edge when it comes to reaching their audience.

But most makers of mass-market consumer products will stay away from any potential endorser who has even a whiff of legal problems, he said.

Successful defense could still hurt deals

Bryant, who has a wife and a six-month old daughter, admitted to a sexual encounter with his 19-year old accuser but claimed it was consensual.

That may not be enough to save his endorsement career, even if he wins in court, said Henry Schafer, executive vice president of Marketing Evaluations Inc., a firm that charts the appeal of public figures with its "Q-Ratings."

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CNNfn's J.J. Ramberg reports on Kobe Bryant's big endorsement deals and the impact his legal trouble might have on those deals.

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Schafer pointed to former NBA star Magic Johnson, whose endorsements disappeared after Johnson said in 1991 that he had contracted the AIDS-causing HIV virus after having an affair. Johnson, once one of the top pitchmen in sports, finally signed a deal with Lincoln Mercury last week for an undisclosed sum -- his first major endorsement deal since disclosing he was HIV positive.

Schafer said even though Johnson's public image had been repaired for some time, advertisers had been reluctant to be the first one to sign him.

There are exceptions. Former Chicago Bull Jordan has thus far weathered an admission of an affair.

Bryant's defense, if successful in winning acquittal, probably won't trigger the end of his endorsements under any morals clauses written into the deals, said Marc Ganis, a sports marketing expert.

 
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"The morals clause has been relatively weak – if you're convicted of a felony, the contract can be void, but that's about it," said Ganis. "I don't know if this case will cause a backlash against other athletes, but it'll give some teeth to sponsors for negotiation of morals clauses in the future."

He said until now the athlete endorser has been in a strong enough bargaining position to keep the clauses relatively weak.

"Convicted of a felony is not a high enough standard," said Ganis. "They (advertisers) are buying reputation. If the reputation gets sullied, they're not getting what they paid for."  Top of page




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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.