Feat over Pepsi: James' Coke deal sets new endorser standard

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Coca-Cola Co.'s signing of NBA rookie LeBron James to an eye-popping $12 million contract has other athletes and their agents eagerly looking forward to the next time they sit down at the negotiating table.

"When you begin to pay these sums of money, it sets a standard. Now everybody else is going to want that kind of money," said Tom Pirko, president of Santa Barbara, Calif.-based consultant Bevmark.

As reported first by Advertising Age, Coca-Cola last week signed Mr. James, a teenage phenom who is skipping college to play in the pros, to a six-year deal reported as worth $12 million to promote the company's Powerade sports drink and Sprite, the lemon-lime soda brand. Coca-Cola declined to discuss financial terms of the agreement. But an executive close to the deal confirmed a published report that Coca-Cola will pay Mr. James $2 million a year. It is apparently one of the biggest athlete endorsement deals in the beverage category. Only Nascar drivers Dale Earnhardt Jr. and Jeff Gordon earn more endorsing Budweiser and Pepsi, respectively.

"Does this up the ante for beer and soda endorsers? Well, let's put it this way: I'll be working the phones for my guy, that's for sure," said a VP at an athlete-representation firm who handles a high-profile National Football League player.

Gatorade talks

Coke's deal with Mr. James comes less than a week after negotiations between his agents and Gatorade broke down. Mr. James was seeking a similar $2 million annual contract to endorse Gatorade, a division of PepsiCo.'s Quaker Foods and Beverages division. Gatorade has an 80% share of the sports-drink market-Powerade's share is about 17%-and a gaggle of major endorsers that include baseball star Derek Jeter, football's Peyton Manning, basketball's Yao Ming and U.S. soccer star Mia Hamm.

Coke's signing of Mr. James represents somewhat of a coup over Pepsi, traditionally the brand with more youthful endorsers. But some still question the signing of an athlete yet to play a single minute of professional sports. The Cleveland Cavaliers selected Mr. James with the first pick in the June draft and signed him to a $12.96 million contract.

looking to stay relevant

"Coke has been attacked as being dowdy and ultra-conservative, so they want to stay relevant," Mr. Pirko said. "But I can't figure this one out. The way things are going right now, there have been a lot of failures with celebrity endorsers. There just aren't a lot of people who have the ability to ring the cash registers."

Coca-Cola disagrees. "LeBron James has brought more excitement and anticipation to the game of basketball than any player in recent history, and we think he's just getting started," Jeff Dunn, president, Coca-Cola North America, said.

WPP Group's Ogilvy & Mather, New York, handles the $43 million Sprite account but Coca-Cola last month invited at least four independent agencies-Wieden & Kennedy, Portland, Ore.; Modernista!, Boston; WongDoody, Seattle; and DiNoto, New York-to pitch ideas.

Coca-Cola has stopped running ads that featured Kobe Bryant in Sprite's "Obey Your Thirst" campaign, but it has not severed its contract with the Los Angeles Lakers star. Mr. Bryant remains under contract until 2005. The ads were due to come off the air when the NBA season ended in late June; Mr. Bryant was arrested in early July, charged with the sexual assault of a 19-year-old woman in Colorado. Read more: AdAge.com QwikFIND aao93w

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