(FORTUNE Magazine) – You can't watch television these days without seeing celebrity endorsements at just about every commercial break. Kobe Bryant does ads for Sprite, Terry Bradshaw hawks 10-10-220, and Tiger Woods pushes, well, just about everything else. American businesses spent some $897 million on endorsement contracts with athletes and coaches in 2001, estimates the Sports Business Journal, a trade magazine. Given that, you might be surprised at how soft the research is on the effectiveness of those ads. Sure, TV viewers acknowledge them, even talk about the most amusing ones at the water cooler. But does a celebrity in a commercial automatically translate into improved sales? Ask a dozen marketing experts, and you're likely to hear a familiar refrain: It's hard to know. "Was it the endorser's presence?" asks ESPN.com sports business reporter Darren Rovell. "Was it what he or she said? Or was it simply the product or service itself? If company executives knew the secret of why certain endorsements work while others fail, marketing would be an exact science."

Yet in at least one case the success of a celebrity campaign is clear, and it didn't come from the annals of Nike or Coke but a little-known appliance manufacturer called Salton, which eight years ago partnered with then--heavyweight champ George Foreman and turned a strange-looking indoor grill into one of the bestselling household appliances of all time. More than 40 million George Foreman Lean, Mean, Fat-Reducing Grilling Machines have been sold since the mid-1990s, with sales going from $5 million in 1996 to $400 million in 2002. The overall housewares industry expands an average of 7% annually, while Salton has grown more than 46% a year since 1995, increasing its revenue 12-fold. For his part, Foreman awoke his inner salesman and made more money from the venture than he did in his entire boxing career, an estimated $150 million. After a long, successful run, though, sales have finally begun to plateau, leaving Salton and its executives working hard to regain momentum. But the company is, everyone can agree, destined for hall-of-fame status. What other small business can say it dreamed up and executed--with a healthy dash of good luck, of course--one of the greatest celebrity campaigns ever?

Based in Lake Forest, Ill., Salton is in the business of trendy kitchenware. It takes in nearly $1 billion in revenue a year--of which Foreman products make up 40%--from a bizarre array of 86 brands and 10,000 individual products, including Stiffel lamps, Block china, Farberware kitchen appliances, Westclox clocks, and Melitta coffeemakers. A walk through its product warehouse is like a trip through an appliance wonderland. The Foreman goods get their own corner, and there are some hopefuls straight from the lab--like a combination bagel slicer/toaster and a hair dryer for teenage girls that scents the hair with banana or blueberry fragrance.

That strange mix dates back to the company's founder, Lewis Salton, who arrived in America in 1940 after fleeing Nazi-occupied Poland. He launched Salton in 1947 around his classic invention, the Hotray, a serving-tray-meets-hot-plate that became a bridal-registry hit. For the next three decades Salton dreamed up what he liked to call "oddball appliances"--a yogurt maker, a peanut-butter-grinding machine, a pizza heater. Sold in 1976, the company changed hands several times until 1987, when its current CEO, Leon Dreimann, led a group of investors who bought Salton for $2.2 million. At that time Salton had $8 million in sales and just three products of note: an espresso and coffee maker and two waterproof radios--one for the shower and another, which floated, for swimming pools.

In Dreimann, Lewis Salton found a worthy heir. Born in Latvia and a longtime resident of Australia, Dreimann had a reputation for spotting trends and making savvy deals with retailers, and he was a marketing whiz. One of his earliest coups came while working for an Australian bedding company, where he devised a campaign using a soap opera star who also happened to be a chiropractor. "We sold more of the Chiropractic bed in the first year than the company had previously sold of all its beds put together," says Dreimann. "After two years they gave me a set of golf clubs and said, 'Go play golf for six months. We can't keep up with production.' They had to build three new factories. That was my first taste of what celebrities can do."

When he took over at Salton, Dreimann took steps to improve margins, but he knew the company wasn't going anywhere on pool radios alone. Salton came out with an electric sandwich maker that boosted sales to $25 million in 1990 and $53 million in 1991, but the IPO that followed was a bust. From 1992 to 1994, sales flatlined and profits disappeared. There was no question--if Salton wanted to grow, it needed another hit.

As the company was looking for reinvention, George Foreman was facing his own, and it wasn't his first. Throughout his career Foreman had been known as a ferocious puncher and a knockout artist, winning an Olympic gold medal in 1968 and beating Joe Frazier for the heavyweight title in 1973. But no one would have called him likable back then. In his autobiography, By George, Foreman admits he was angry and surly, the champ people loved to hate. "If someone asked for an autograph in a restaurant," writes Foreman, "I'd say, 'What do you think, that I'm going to stop eating and sign my name?'" Even when he won, audiences booed him. Leading up to the famed "Rumble in the Jungle" against Muhammad Ali in 1974, the seething, silent Foreman was a natural villain to Ali's charismatic hero, and Ali took the heavyweight belt from him in a huge upset. But Foreman's first reinvention came after a 1977 fight, when he collapsed in his dressing room and had a religious vision. He retired that night and for the next ten years rebuilt his inner life in virtual anonymity as a preacher at the First Church of the Lord Jesus Christ in his hometown of Houston.

In 1987, when he needed money for his George Foreman Youth and Community Center, Foreman rebuilt himself again, this time physically, and staged a comeback at age 37. The boxing world gave a collective snort. "This is pathetic," an NBC commentator told Sports Illustrated in 1989. "He's overage, inept. This whole thing is a fraudulent second career to build a money fight with Tyson." After ten years out of the ring (the closest he came to being recognized then, Foreman says, was at a Houston Rockets game when a man mistook him for football star William "Refrigerator" Perry), Foreman was introducing his new persona--cuddly, avuncular, even funny. When reporters jabbed at his weight, which had ballooned from 220 to 315 pounds, Foreman beat them to the punch by having a giant tray of cheeseburgers delivered to a press conference. "I might be the fattest guy in the world, but I got the hardest punch!" he'd yell during interviews. "If I miss you with my left, I'll get you with my right!" In 1994, wearing the same red trunks he had worn against Ali, a 45-year-old Foreman knocked out 26-year-old Michael Moorer to regain his heavyweight title, 20 years after he'd lost it.

Because his comeback was so inspiring, and because he was suddenly so likable, the marketing world went wild over him. Ring magazine reported that Foreman's lawyer received over 200 business proposals. It's worth noting, though, that his success as a commercial endorser was--and still is--unusual in that boxers, even heavyweight champions, usually don't make very good pitchmen. Every pro fighter wants to do endorsements, but they rarely do, says Ring editor-in-chief Nigel Collins, for two reasons. First, few companies want their products associated with such a violent sport. Second, most boxers just aren't polished enough to sell products. Oscar de la Hoya's good looks have earned him a few deals, but he's an exception. Foreman, thanks to his revamped lovable-lug image, was an even bigger exception.

In fact, despite the thousands of professional athletes playing at any given time, it's tough to find many in any sport who work well in ads. That's why you often see the same faces over and over, selling different products. "There aren't that many athletes at the level of fame required to translate across the screens of America," says John Sweeney, professor of advertising at the University of North Carolina School of Journalism and Mass Communication. "The leading NBA star, the leading Olympic skiers and gymnasts, have it, but it doesn't move down to the second tier very much." In fact, of the $897 million spent on athletes in 2001, the Sports Business Journal estimates that $598 million went to the top 75. "We want someone who's noncontroversial, who's good on camera, at ease with the media, good in the way that TV and photographs demand," Sweeney says. "There are so few of these people."

Foreman was one of them, and he offered another advantage: clean living. Endorsement contracts routinely include morals clauses in the event that the celebrity makes headlines for the wrong reason. PGA golfer John Daly lost his deal to promote Callaway Golf after recurring problems with alcohol and gambling. And Michael Irvin, former All-Pro receiver for the Dallas Cowboys, signed a deal to do commercials for a group of Toyota dealerships in Dallas, then got caught in a hotel room with drugs and topless dancers. Foreman, a grandfather and minister who doesn't even use foul language, wasn't likely to have problems like that.

On the strength of his improbable comeback, Foreman got endorsement deals for Meineke, KFC, and Doritos, among others, but he wanted something bigger. His advisors put an idea in his head--why not put the George Foreman name on a product and keep more of the money for himself? Perhaps something connected to his well-known love for hamburgers?

Around the same time, Salton was introducing a product called the Lean, Mean, Fat-Reducing Grilling Machine. It made its debut, sans Foreman, at the housewares industry's Gourmet Products Show in 1994. (Dreimann, a movie buff, named it after a football team called "the Mean Machine" in the 1974 Burt Reynolds movie The Longest Yard.) Developed and brought to Salton by an Asian manufacturer, the grill was one of about 100 products Salton was offering to retailers that year, reasonably sure that most of them would never make it to shelves but hoping that two or three might become hits. The grill did not appear likely to be one of them. At the show nobody looked at it twice. But unbeknownst to Salton, an industry legend named Mike Srednick was aware of George Foreman's interest in finding a product to endorse. He saw the grill and, with Dreimann's blessing, took a sample to show a "mystery customer." Because the grill had gotten such little notice at the trade show, Dreimann waived all rights to it and put Srednick directly in touch with the manufacturer.

Srednick had connections to Foreman through an attorney named Sam Perlmutter, who had experience in the infomercial industry. Perlmutter got the grill in front of Foreman, but a few months later the champ hadn't so much as turned it on. Perlmutter nudged him a little. Finally Foreman's wife cooked a hamburger on it, and she got him to give the grill a try. When Perlmutter checked back, Foreman had an answer: "I like it. I tried it, and it works. Let's do it." Perlmutter considered trying to market the grill on his own but quickly realized he was in over his head, so he went back to Salton. Dreimann, the Australian, wasn't all that familiar with George Foreman, but he thought that having the heavyweight champ of the world behind his product couldn't hurt.

In a way that initial passivity was another reason the arrangement worked so well. All too often, experts say, a company or its ad agency decides to use a celebrity first, then tries to find one who'll agree do the ads. Such an approach can lead to bad matches. "The higher up you are in the decision-making process--CEO, president--the more you dictate down who you want, and usually those are the worst choices of all," says Steven Levitt, president of Marketing Evaluations/TvQ, the company that makes Q Scores, the ratings that determine how recognizable a given athlete or movie star is to different demographics. "Usually it's someone you played golf with, or someone you shared a dais with, or someone involved in a charity you support. Those choices aren't consumer-based. They're not about the connection with a product."

A better approach--and this sounds self-evident, but FORTUNE 500 companies violate it all the time--is to make sure there's some obvious connection between your product and the star. Michael Kamins, marketing professor at the University of Southern California's Marshall School of Business, points to actor John Houseman's ads for investment bank Smith Barney in the 1980s. Known to the public as professor Kingsfield, a stern Harvard Law School professor, in the film and TV show The Paper Chase, he had a gravitas that was perfect for Smith Barney's earnest slogan: "They make money the old-fashioned way. They earn it." In 1983, however, Houseman filmed an ad for McDonald's, which was a bust. "It didn't fit his image," Kamins says. "You didn't expect professor Kingsfield to be eating fast food. It wasn't credible."

Under the original Foreman agreement, Salton would manufacture, market, and distribute the grill, and after expenses the profits would be split as follows: 40% to Salton, 45% to Foreman, and 15% split between Srednick and Perlmutter. The deal was almost unheard-of in that Foreman received a percentage of the profits down the road but nothing up-front. Typically, endorsement deals are structured the other way around: The athletes get a single payment in advance for a certain number of days of work, a certain number of public appearances, and a set amount of advertising. But Dreimann was willing to give up 60% because the risk was minimal--Foreman wouldn't get a dime until Salton's expenses were covered, and expectations were fairly low. (A statement made by an analyst at the time showed equal enthusiasm for the I Love Bagels bagel maker.) Perlmutter felt the same. "If I sold 150,000 units, I would be dancing up and down Hollywood Boulevard," he says now. They were in for a surprise.

In March 1995, five days after the contract was signed, the Gourmet Products Show was again taking place, only that year it would be held in Las Vegas. Dreimann didn't know how well Foreman would do, but he figured there was no place like boxing's holy city to launch his partnership with the fighter. Salton rushed the packaging and marketing materials for the grill and invited 100 retail executives to a cocktail reception with Foreman. After an hour of mingling, Salton would give the executives front-row seats to see a performance by Siegfried and Roy.

Dreimann's first glimpse of Foreman came as the champ emerged from the elevator on the way to the reception--flanked by dozens of people screaming, "George!" All expectations of a casual cocktail party were off. The retail executives, not exactly renowned as a rowdy bunch, surrounded Foreman, and he was hastily whisked behind a table, where people lined up to meet him. They stayed for 3 1/2 hours, and the Siegfried and Roy tickets were given away to strangers. It was then that Dreimann realized he had something on his hands. "These people were really delighted, and I could see the way George was with them," Dreimann says. "He was very likable. He had an easy manner. He didn't have any celebrity baggage at all--wasn't demanding." When Foreman hit the trade show floor the next day, security had to extract him ten minutes later. It was bedlam.

Even with that popularity, however, early grill sales were sluggish. In 1996, Salton sold 200,000 units--well below average for a new small appliance. Retailers actually considered discontinuing it, but Dreimann pleaded with them to keep it in stores for a few more months. He already had anecdotal evidence of some early devotees. Foreman recalls walking through the Chicago airport and having people call his name. "I thought, boy, they must have seen my last fight five months ago," he says. "I never had people smiling at me like that." But that wasn't it. "They said, 'No, we love your grill.'" Foreman wasn't yet getting checks, but he was getting something even more powerful for a man who already considered himself wealthy enough: validation. People came up to him in bookstores not just with items to sign, but with testimonials about the grill. "When I was doing KFC commercials," says Foreman, "people would say, 'Boy, that was a funny commercial,' but they never said a thing about the chicken."

Word of mouth was growing, but Dreimann was still waiting for the tipping point. Almost a year after the grill's launch, it finally came. Foreman went on QVC to sell the grills, and Dreimann went along to watch. The QVC presenters were talking, the grills were selling at a decent pace, when suddenly Dreimann saw flashing red lights and people running. He began to look for a fire exit, when someone explained that the flashing light meant that the phone lines were full, so consumers couldn't get through. It was a rare occurrence, but when it happened, every available QVC employee had to man extra phones. Later Dreimann reviewed the tape to see why the rush came at that moment. He saw that at one point the presenters were chatting, leaving George with nothing to do except look hungrily at the sizzling burgers. So he took a roll, grabbed one, and started eating. Unscripted, completely natural. Says Dreimann: "It was so spontaneous. It was a real reaction. People saw that he eats what he sells."

For the next 32 years, Salton couldn't make the grills fast enough. QVC alone has sold more than 1.5 million units. Salton made FORTUNE's annual list of 100 Fastest-Growing Companies every year between 1998 and 2001, with sales rocketing upward each year--$183 million in 1997, $506 million in 1999, $792 million in 2001, $922 million last year. "There's just no explaining it, except he was a highly charged personality, very likable, a noted carnivore who was selling a good and inexpensive product," says Bob Garfield, a columnist at Advertising Age. "If I had seen the boards originally, I would have said, 'You know what? No, I don't think so.' But it worked."

In fact, the grill met with so much success that it created unexpected problems. While the initial deal was based on a "Why not?" attitude, the terms of that deal meant that Salton was having to pay Foreman a major chunk of its profits. To develop new products and expand beyond the grills, the contract would have to be renegotiated. So in 1999, Salton stunned the sports-marketing industry with the largest known endorsement deal ever for an athlete, paying Foreman and his partners $137.5 million over five years for the right to Foreman's name in perpetuity for use in cooking appliances. (Michael Jordan's deal with Nike may be worth more, but those terms have never been made public.) Foreman's payout was more than he'd made in his entire boxing career, and it exceeded Salton's total annual revenues just three years earlier.

Foreman had every reason to be thrilled, but he wasn't. He felt as if he'd been fired, and he walked away disappointed. "I was really scared," says Foreman. "I'd found something I loved, and I didn't want to lose my job." Luckily for Salton, he came up with a solution agreeable to both sides: He'd keep selling the grills anyway. He had some legal obligations to continue pitching the grill, but according to Dreimann, Foreman does far more than what's required. In fact, the contract expired a year ago, and Foreman has no plans to quit. "I'm obligated as long as I've got the health and strength to do it to give them 100% of me," he says. "I wouldn't trust anyone else out there with the product." He's in touch with the company every day, and Salton still won't put Foreman's name on a product unless the champ approves. Contractually the company could, but Dreimann says it wouldn't.

It's tempting to look back now, eight years after Foreman first signed with Salton, and turn this into a case study that other businesses might go to school on. But part of why it worked is Foreman's one-of-a-kind presence. He appeals to men and women in different but equally powerful ways: Women see him as warm and cuddly while men see him as a champ. The grill also has that dual appeal: Women, who are still more likely to prepare the family meals, can cook and clean up more easily and faster. Men, on the other hand, may eschew cooking, but grilling? Could anything be more manly?

One lesson that does apply to other businesses, though, is that sincerity counts. For all of Foreman's salesmanship, even a cynic can see he loves this product. It has become part of his identity. When he lost his last fight, to Shannon Briggs in 1997 despite dominating the match, he accepted defeat and then gave HBO commentator Larry Merchant a brief sales pitch. "No home should be without this thing," he said. "God bless you. Go get one."

In the past year or so, domestic sales of the grill have declined, but international sales have compensated. Salton continues to tweak and invent new Foreman products. Toasters with translucent-colored bread warmers to match the colored grills are on their way, and this holiday season Hasbro and Salton are teaming up for a $12.99 toy version--press the lid onto Play-Doh food and hear a tiny sizzle.

Of course, Salton has other products in the works as well and the kind of promotional plans you might expect. "There isn't a product we wouldn't want to pair with a celebrity," says Dreimann. Actress Linda Evans already pitches a line of its facial products, and Salton once offered Michael Jordan $25 million to endorse a smoothie maker. (Jordan turned it down because of his commitment to Gatorade.) Currently Dreimann is seeking a pitchman for his new Ultrasonex toothbrush. "Maybe a newsperson--like Dan Rather," he muses. "It has to be someone really credible, who's sincere about toothbrushes." And there's another project in the works involving Foreman's daughter, Freeda, who also boxes and is helping develop a line of kitchen gadgets and exercise products to fight childhood obesity.

As for George, he signed a deal in March with food giant ConAgra to helm a new line of lean meats. But while he's been offered dozens of endorsement opportunities lately, so far no other big corporations have appealed to him. "I want something small that I can grow with," he says. "Let me grow with you."

E-mail FSB at fsb_mail@timeinc.com.

For more coverage of small business, look at the latest issue of FSB magazine, now on the newsstands. On the web, log on to www.fsb.com. Call 800-777-1444 to subscribe to FSB.