The potential pitfalls of endorsement

Over the last twenty years or so we have seen more and more brands using famous people to endorse their products and services, from actors and TV personalities to musicians and sports stars.

As with any form of endorsement, the level of attention it garners is dependent not only on the amount of marketing activity and budget that goes into promoting the association, but also on the level of fame that the star has achieved.

Big name association

The likes of Madonna or Leonardo DiCaprio are known the world over, and the same can be said for sports such as Lionel Messi and David Beckham, who have achieved a level of fame that will ensure their name continues to be recognisable even after they have passed away, and so makes them eternally marketable.

However, what of athletes in sports that are perhaps not as popular on the world stage – the likes of swimming perhaps, an extremely popular sport amongst its participants, but one which usually only finds its way into the mainstream consciousness during the Olympic Games?

For Olympic athletes in particular (aside from Usain Bolt and, perhaps, Michael Phelps), the Games is their best chance to raise their own profile on the world stage and, as a consequence, make themselves more marketable.

The problem for these sportsmen and women is that the Olympics only takes place every four years, and although there are the Commonwealth Games, and most sports have their own world championships that will also receive a degree of exposure, the opportunity to truly market themselves is rare.

Usain Bolt is the fastest man in history and – until his records in the 100 and 200 metres are broken – he will continue to command huge sums to endorse brands such as Virgin Media, a company that also markets itself on its speed in comparison to rivals – albeit for broadband, rather than the race track.

Likewise, Michael Phelps is the all-time gold medal record holder at the Olympic Games, and it is safe to say it will be a minimum of 12 years (if ever) before his successes are matched or exceeded. As such, he will continue to command significant sums from brands hoping to associate themselves with unrivalled success and market their products as such.

Taking advantage of opportunities

Opportunities do, of course, exist for other athletes. Take Jessica Ennis-Hill, who continues to endorse Adidas, Omega and Santander, amongst other brands, despite having recently retired, or Mo Farah, who enthusiastically endorses Quorn. But for those who are not quite as famous as their peers, opportunities will generally be limited to endorsing brands whose own marketing budgets are not quite as high as their rivals’.

As with any association with a famous person, the strength of the endorsement has a direct correlation with the strengths of the individual’s own brand and public perception. Many times we have heard of celebrities, sports stars and other famous faces who have made a high-profile misstep and seen their sponsorship deals come to an abrupt end, with this summer’s Olympics providing a striking example.

Lochtegate

Heading into the Games, Ryan Lochte was considered one of the most successful athletes in Olympics history – a CV he added to at Rio 2016, to ultimately take his career medal tally to 12.

His standing as one of the best ever US swimmers had led to a wealth of endorsement and sponsorship deals with brands in every corner of the globe, securing a rich additional funding stream that went far beyond his earnings in the pool.

Indeed, you only need to look at Roger Federer as an example of the lucrative rewards available to athletes outside of their profession. Last year the Swiss maestro earned $7.8 million in tennis prize money, but this was dwarfed by his $60 million in endorsements from the likes of Nike, Wilson, Rolex, Mercedes-Benz, Credit Suisse and Moët & Chandon – many of which he will continue to endorse as his legendary career winds down.

The 17-time grand slam champion has not won a major for four years, but he continues to garner sponsorship due to his off-court conduct and fiercely protected brand image that famous brands are more than willing to pay to be associated with as long as this is the case.

For athletes in lower-paid sports than tennis – and there are many – it is therefore vital to secure funding that will either bolster the retirement pot or continue to bring in the cash long after they hang up their boots, gloves, skates or goggles.

Exit strategy

In Ryan Lochte’s case, his big name associations with Speedo, Ralph Lauren, Airweave and Syneron Candela were worth more than $1 million a year, but were soon consigned to history after the swimmer became embroiled in the saga that would eventually be dubbed ‘Lochtegate’.

Lochte claimed to be victim of a late-night robbery at a Rio petrol station, which later turned out to be the payment of an ‘on the spot’ fine to Brazilian police following an act of vandalism reportedly committed by Lochte and three teammates. He then admitted to being intoxicated at the time of the incident and his stock plummeted. He was almost immediately dropped by several sponsors who no longer wished to be associated with him, and later banned from competitive swimming for ten months. After issuing a number of apologies, the next step for Lochte was to sign up for Dancing with the Stars, which he hopes will return him to public favour, in the US at least.

This illustrates the fine line between brand enhancement and damage that can occur when partnering with a famous name – one which all brands will have taken into account after the Games, when several new stars were made in a variety of sports.

On the one hand, having David Beckham using your shaving gel can enhance brand recognition and give sales a huge boost, but on the other hand there is a constant risk that the celebrity you have chosen to endorse your product could be embroiled in something damaging at any time – a matter that needs to be carefully considered and provided for when any new agreements are made.

If you need legal advice on any retail matters please contact Andy on 0113 227 0354 or andy.brian@gordonsllp.com. For more information, please visit www.gordonsllp.com/sectors/retail-lawyers.