Why Market Size Won't Matter for LeBron James' Endorsements
CHICAGO (AdAge.com) -- LeBron James may or may not sign with the New York Knicks this summer, but -- contrary to a much-asserted bit of conventional wisdom -- Madison Avenue isn't going to factor in the decision.
"You can make more money playing in New York by far than you can in Cleveland," reads New York magazine's desperate plea for the sought-after free agent's services.
|CREDITS (L TO R): AARON JOSEFCZYK; JOHN ANGELILLO; RICK OSENTOSKI; ARCHIE CARPENTER|
But not from endorsements.
The long-held notion of the bigger the market the bigger the endorsement deal simply isn't true anymore for athletes in sports such as basketball and football.
Mr. James, while playing for the once-lowly Cleveland Cavaliers, has racked up deals in most key categories that dabble in sports, signing with brands such as Nike, McDonald's, State Farm and Coca-Cola. Sports Illustrated estimates his annual haul from such deals at $28 million. And Darin David, account director of the sports division of Omnicom Group's Marketing Arm, which evaluates the appeal of would-be endorsers, said playing in a bigger market does nothing to inflate Mr. James' value.
"Maybe 30 years ago that sort of thing mattered," he said. "But it really doesn't matter now."
Mr. David argues that the national TV structure and relative parity of leagues like the National Basketball Association and the National Football League essentially makes geography irrelevant. Case in point: The two busiest endorsers in team sports are Mr. James and Indianapolis Colts quarterback Peyton Manning.
Geography matters more in baseball, because there's more disparity in the exposure and competitiveness between big- and small-market teams, a major reason why New York Yankees' star Derek Jeter is so popular with marketers.
Indeed, Mr. David notes, the greatest thing Mr. James can do for his value as an endorser is to remain noncommittal about where he's headed. The only active basketball players he trails in awareness -- a key measure for national and global pitchmen -- are Los Angeles Lakers megastar Kobe Bryant and Cleveland teammate Shaquille O' Neal, and having every sports section, talk-radio show and blog (not to mention ad trade) in the country opining breathlessly about his next move is bound to move those numbers.
Beyond that, it's also worth noting New York no longer dominates the ad accounts of the biggest-spending brands in sports. Of the top five spenders in 2009, according to IEG -- PepsiCo, Coca-Cola, Nike, Anheuser-Busch and General Motors -- exactly none counted a New York-based agency as its primary ad shop. And only one of the top 10 sports spenders uses a Big Apple shop -- AT&T, which is at Omnicom's BBDO -- as opposed to agencies in Illinois, California, Michigan and Oregon.
There are, of course, non-Madison Avenue reasons Mr. James might choose New York.
The Knicks -- dreadful as they've been on the court for a decade -- are one of the few teams that have cleared enough salary-cap space to sign two players for the NBA's maximum contract (in the vicinity of $16 million per year), meaning Mr. James can play in Manhattan with the sidekick of his choosing.
And reviving a beloved franchise in a city often described as the Mecca of basketball could well present the greatest possible legacy for a player who -- in addition to aspiring to be a $1 billion athlete -- no doubt thinks about his eventual place among the sport's all-time greats.
But ultimately, experts say, if Mr. James wants to milk the most dollars out of his free-agent move, the only factor he really ought to consider is winning. "The more he wins, the more iconic he is going to be," said veteran player agent Mark Bartelstein, whose clients include NBA stars Danny Granger and David Lee. "That's really the only thing that's going to change the way he's viewed."