Journal of Sport and Exercise Studies/Business, Politics and Sport 2011/Sport Celebrity Endorsements

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U3017206, 2011
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Business and Politics of Sport Celebrity of Endorsements

Hey everyone, check out my presentation that I've uploaded on my wiki page on sport celebrity endorsements. It summarises all the main ideas and arguments from my essay in a new dimension. To get an even better resolution, click on the link to watch it on Enjoy! Business and Politics of Sport Celebrity Endorsements Presentation

Sport celebrities and superstars have become the forefront of today’s sport media culture in both Australia and Internationally. Sport professionals have been looked upon as role models for decades and recently over the year’s companies have been trying to capitalise on specific professional sport stars images by paying famous athletes millions of dollars to endorse their products.The sporting industry is known as a multi-billion dollar global corporation and similar to that of other businesses and industries, its main aim is to prosper. This paper explores the central ideas around sporting endorsements, their purpose and how they are mutually beneficial for the endorser and endorsee. Positive and negative sporting endorsements in Australia and Internationally are outlined as well as the role business and politics play in sporting endorsements. Commodification of sports professionals is discussed with reference to sport celebrity endorsements. Impacts of endorsements on companies, brands, and sports celebrity images are outlined with reference to global superstars of the 21st century.

Nike Logo. Image By: HernandoJoseAJ
Adidas Logo. Image By: Adidas
File:213p U m A.png
Puma Logo. Image By: EEIM

Introduction[edit | edit source]

Sport professionals have been looked upon as role models for decades and recently over the year’s companies have been trying to capitalise on specific professional sport stars images by paying famous athletes millions of dollars to endorse their products. The aim of a sporting endorsement deal is to create a mutually beneficial partnership, whereby a company provide financial benefits to the professional athlete to advertise/endorse their product.

This paper explores this notion in an Australian and International context discussing the advantages of a positive endorsement contract as well as the possible negative implications that may arise. The role that business and politics play in sport celebrity endorsements is also discussed specifically relating to companies, brands and sport celebrity images. Commodification in sport is outlined with reference to how sports professionals have become commodities, with their appeal, likeability and image sold to promote products and services to the public in the aim to gain greater exposure and market share.

Sports Endorsements[edit | edit source]

According to (Epstein, 2003) sporting endorsements are usually one of contractor-independent contractor relationships meaning that withholding tax, paying insurance and workers compensation are not part of the agreement. "An endorsement contract is a contractual agreement that grants the sponsor or endorser usually a sporting organisation the rights to use (i.e. license) the athlete’s name, image, and popularity in conjunction with advertising the endorsers products or services" (Epstein, 2003, p 39). In return the endorser agrees to provide monetary compensation or the like to the endorsee (athlete) (Epstein, 2003).

The media have converted sport into a huge form of entertainment witnessed by billions of people. Due to globalisation and commercialisation of sport, famous athletes are becoming the forefront of today’s sport media culture locally, nationally and internationally. With advances in broadcast communication technology and increased media coverage, sports celebrities are constantly in the limelight, either playing their sport, engaging in ‘off the court’ activities, and/or endorsing products or services (Jones & Schumann, 2000). Sports professionals have been looked upon as role models and idolised for decades. From local state football stars to international superstars, corporations and businesses capitalise on marketing and product advertising opportunities by paying famous athletes millions of dollars annually to endorse their products or services. The corporations that sponsor athletes inscribe their logos into consumer’s minds as they promote and advertise lifestyles based on consumption (Coakley etc al, 2009). Product endorsement has become a lucrative business for marketers and athletes alike; thus, the decision to sign a particular athlete is important financially as well as strategically (Jones & Schumann, 2000) Famous athletes, in particular, when endorsing an athletic product or service, can be viewed as experts in their field (Pikus, 2005). Thus to enhance sales for their endorser, sporting celebrities strengthen their persuasive argument by associating their success with a product (Pikus, 2005).

With sport being one of the largest global phenomenon in recent history, there is no doubt in stating that fans spend huge amount money on purchasing tickets to see their favourite stars play as well as purchasing souvenirs and merchandise (Shoman, 2006). Other individuals purchase additional gear at stores specifically worn by their favourite player upon noticing their endorsements via media. Due to the popularity of athlete endorsements, more and more athletes are appearing in commercials supporting specific products or brands greatly influencing what sports fans purchase (Shoman, 2006).

Impacts on Companies, Brands and Endorsees[edit | edit source]

Marketing and advertising corporations use sport celebrity endorsement deals as a promotional strategy to launch new products, reposition brands and reinforce brand image and awareness (Kim & Na, 2007). “The use of famous sporting celebrities can contribute to greater brand recognition and can create a positive perception in regard to the endorsement product” (Fullerton, 2007, p211). The aim of the marketers is to portray the celebrity in such a way, that it persuades the consumer to purchase the product initially as well as develop a high degree of brand loyalty to encourage repeated product purchase (Fullerton, 2007).

Positive Endorsements[edit | edit source]

Mens Tennis Nike Endorsee's. Image By: JMDP

The use of a sporting celebrity as an endorser can positively influence a company's image by linking the celebrities success and public image to the product, helping to create credibility for the organisation (Fullerton, 2007) (Sassenberg & Johnson, 2010). There are three stages that occur during an endorsement deal: 1. the formation of the celebrity image, 2. the transfer of meaning from the celebrity to the product and 3. transfer from product to ad recipient (Kim & Na, 2007). This indicates that for an endorsement to be effective there must be a match between the endorser and the marketer in order to balance the needs of both parties in the partnership (Fullerton, 2007). For this relationship to be more effective and prosper, there must also be a match with the target market (Fullerton, 2007, p 212). There are a number of factors that have been identified as potentially impacting endorsement effectiveness which primarily relate to the endorser including: the endorser is a high achiever, is believable/credible, is well known, is recognisable, provides ease of recall, is congruent with the target market, is physically attractive and consideration of future prospects (Fullerton, 2007, pp217-212).

As a result of Tiger Woods' success and lucrative endorsement deal with Nike, he was able to get masses of people to purchase golf clubs, merchandise and take up the sport of golf (Fullerton, 2007). Nike’s use of an effective strategy with statements from Woods such as “I use it, so should you” was aimed to make Nike the leader in the golf equipment market (Fullerton, 2007, p 212).

Tennis info blog (2007) likewise state that Maria Sharapova and Roger Federer both famous professional tennis players, have very lucrative endorsement deals with Nike as well as several other companies, putting them on the list of the top 25 highest paid athletes in the world (Fullerton, 2007, p212). Through the growth of commercial sport, professional athletes demand higher salaries turning some into national and international celebrities, who then use their celebrity status to endorse products sold around the world (Fullerton, 2007). Not only are sporting celebrities receiving greater endorsement contracts, but companies are willing to spend millions of dollars on endorsement deals to improve their promotional strategies in an attempt to associate their products with their endorsed athlete (Kim & Na, 2007).

Negative Endorsements[edit | edit source]

Tiger Woods. Image By: U.S. Navy Petty Officer 2nd Class Molly A. Burgess

Despite the numerous positive aspects of sport celebrity endorsement deals, there are several potential negative facets that companies, brands and celebrities need to consider. Today, endorsement contracts have specific moral clauses that allow a company/brand (the endorser) to unilaterally terminate an endorsement contract with a celebrity who acts in ways which are deemed unacceptable, potentially damaging the reputation of the endorser (Fullerton, 2007). Criminal actions performed by the endorsee may cause an endorsement contract to be negatively portrayed whereby their actions may have detrimental effects on the endorser and their company and products. The endorser must re-evaluate the contract if incidents such as murder, abuse, sexual misconduct and substance abuse occur.

The Tiger Woods scandal is one of the most prominent in history and one of the most recent. It is a prime example of how such a prominent figure in sport can have such a negative effect on his image as well as the image of his endorsers due to his involvement in a sex scandal. In 2009 Woods was earning $100 million annually in endorsement income from several contracts, much greater than any other athlete (Knittel & Stango, 2010). (Knittel & Stango, 2010) state that in the ten trading days after the scandal occurred, brands endorsed by Woods suffered significant declines in stock market value. The core three endorsements deals with Nike, Electronic Arts and PepsiCo (Gatorade) lost over 4 percent in cumulative market value, evidently indicating the detrimental affects celebrity scandals can have on companies and brands (Knittel & Stango, 2010).

Endorsement conflicts are also prevalent whereby an athlete endorses one brand of product while the governing body involved with the athlete’s sport endorses another brand (Fullerton, 2007). Kim Clisters a professional tennis player came under such a conflict where she indicated she would not participate in the 2004 Olympic Games where her team was sponsored by Adidas, if not allowed to wear the File apparel, her main endorsement brand (Conrad, 2009).

Sporting celebrities endorsing unwholesome non-sport products is also an area of scrutiny. Several issues have become apparent over the years where celebrities not only endorse sports products but also endorse alcoholic beverages, tobacco and casinos (Fullerton, 2007). The Australian National Cricket team was endorsed by Victoria Bitter as one of their main sponsors, having printed labels on the front of the player jerseys (Phillipson & Jones, 2007). These types of endorsements have been the topic of great debates and even been catalysts for regulation changes. Today, sports governing bodies in many countries prohibit sports celebrities the ability to endorse such products in order to reduce the promotion of non-sport products (Fullerton, 2007).

National and International Endorsement Deals Throughout History[edit | edit source]

Samantha Stosur at the 2009 US Open Tennis Grand Slam endorsing Lacoste. Image By: Charlie Cowins
Marion Jones prior to her controversial steriod scandal. Image By: Thomas Faivre-Duboz

National Endorsement Deals[edit | edit source]

Name: Positive/Negative: Endorser: Amount:
Ian Thorpe Positive Uncle Toby's - Thorpedo $480,000 per endorsement
Stephanie Gilmore Positive Quicksilver $5 million (over 5 years)
Samatha Stosur Positive Oakley, Lacoste and Jetstar $800,000 in 2010

(The Advertiser, 2011) (Meyn, 2009)

International Endorsement Deals[edit | edit source]

Name: Positive/Negative: Endorser: Amount:
Tiger Woods Negative - Sex Scandal Nike, Gatorade & Gillette $100 million
Marion Jones Negative - Steriod Scandal Nike Unclear
Michael Jordon Positive Nike $50 million
David Beckham Positive Adidas $24.9 million
Anna Kournikova Positive - Tennis, Negative - Sexualisation of sport Adidas $5 million, now retired
Magic Johnson Negative - Tested positive of HIV in 1991 Converse & Pepsi $12 million in 1991

Anecdotal evidence suggests that local and many national sporting celebrities earn less than international stars (i.e. Samantha Stosur vs Tiger Woods). However due to globalisation and the commercialisation of sport, sports stars are getting endorsed by companies at a much higher rate locally, nationally and internationally. (Carlson, 2008)(NY Daily News, 2011) (Verticle Scope, 2011) (Kwek, 2011)

Politics and Business[edit | edit source]

Political Links to Endorsements[edit | edit source]

Politics is an integral part of sport on a locally, nationally and international scale. Sport evolves around political processes associated with issues such as who controls sport, the terms of eligibility, team selection, rules and rule changes (Coakley etc al, 2009). Politics include all processes of governing people and administering policies at all levels of an organisation, both public and private. These sporting organisations are commonly identified as ‘governing bodies’ (Coakley et al, 2009 p434). Without politics, policies, and governing bodies, sport would not exist as we know it today. With the ever increasing popularity of sport globally, government involvement increases with many sports professionals requiring sponsorship and endorsement contracts. Therefore we pose these questions: Has expanding business and global brands taken over the image athletes portray to their audience? Or is it the politics behind athletes actions that influence the brands?

Business Links to Endorsements[edit | edit source]

Sport is a multi-billion dollar business, unique to other industries as it involves contract rights, free agency, eligibility, endorsement deals, corporate sponsorship, construction of sporting infrastructure and event management just to mention a few (Conrad, 2009). Sport is multifaceted and does not focus on the manufacturing of goods but rather the exposure of athletes participating in sports, pertaining to the entertainment industry (Conrad, 2009). Professional athletes have become global stars in the 20th century and have given rise to an increase in economic activities in the industry (Conrad, 2009). The increased popularity and complexity of the sports industry has resulted in the expansion of this global business (Conrad, 2009). Endorsements are much the same, with professional athletes demanding higher economic benefits from companies to endorse their products. A company i.e. Adidas seeks famous athletes who will endorse their products with the aim to increase consumer consumption ultimately increasing the companies market share value. However, should athletes such as Stephanie Gilmore be earning over 10 times the amount in endorsements contracts, than their earnings from their achievements in sport? (The Advertiser, 2011). Is business taking over or is it all politics? Inevitably, business and politics are interlinked and revolve around increasing exposure of specific sports, athletes, products,companies and brands whilst maintaining structure in the industry.

Sport as big business. Image By:YoTuT

Commodification and Endorsements[edit | edit source]

David Beckham endorsing Adidas. Image By: Calebrw (talk) at en.wikipedia

Commodification relates to the notion that economic value is assigned to something that previously was not considered in economic terms. In a sporting context this refers to a product, activity or perhaps even a person that originally existed for utility or pleasure purposes, now is made into something that can be used to make money, by promoting and selling the product (Christensen & Levinson, 2005). As sport has become a form of public entertainment, the prospect of making money is a definite motivation for sport organisers and athletes. Sport in essence has become corporate sport with corporate sponsorships supporting world class events, teams signing major sponsorship deals and high profile players obtaining million dollar endorsement contracts. Sport endorsement deals are a prime example of how sport has become a commodification and the drive to make money anywhere and anyway possible is becoming more apparent. Sports professionals have become commodities, with their appeal, likeability and image sold to promote products and services to the public in the aim to gain greater exposure and market share (Christensen & Levinson, 2005).

Conclusion[edit | edit source]

The sporting industry is one of the largest growing businesses in Australia and globally. In the 21st Century, sports professionals have been recognised not only as athletes but as superstars and celebrities. Today, with athletes becoming huge role models for consumers, companies and brands capitalise on professional sport stars appeal and likeability by paying famous athletes millions of dollars to endorse their products. With some athletes earning 10 times or more than their earnings from their annually sporting achievements, there is no questioning why athletes strive to obtain lucrative deals.

This paper analysed sporting endorsements, their benefits and negative impacts in an Australian and International context. Furthermore, the role that politics plays on influencing sports endorsement deals was outlined and how sport today has changed into a commercial, business driven global industry. Commodification was also made reference to, illustrating how professionals have become commodities, with their appeal, likeability and image sold to promote products and services to the public in the aim to gain greater exposure and market share. Evidently in the 21st Century, business and politics play a major role in sport celebrity endorsements affecting the perception that consumers have of companies, brands and sport celebrities.

References[edit | edit source]

  • Jones, M & Schumann, D (2000) ‘The Strategic use of Celebrity Athlete Endorsers in Sports Illustrated: An Historic Perspective’ Accessed 10 October, 2011
  • Phillipson, L & Jones, S (2007) ‘Awareness of Alcohol Advertising Among Children Who Watch Televised Sports’ Proceedings of the Australian and New Zealand Marketing Academy, University of Wollongong, pp 2803 – 2810
  • Sassenberg, A, & Johnson, M (2010) ‘Scandals, sports and sponsors: what impact do sport celebrity transgressions have on consumer’s perceptions of the celebrity’s brand image and the brand image of their sponsors?’ Sport Marketing Strategies in Hard Times, 26-29 Oct 2010, New Orleans, LA, USA
  • Showman, J (2006) ‘Endorsements in Sport’ Accessed 15 October, 2011