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- Don D., California
McDonald's Happy Deal
The world’s largest hamburger chain has recently inked a deal with arguably the world’s most recognizable basketball star. Lebron James, who at only 25 years of age takes in more than $30 million annually in endorsements, signed a multi-year contract with the burger behemoth further enhancing his image. Although financial terms were not disclosed, the deal will include multiple primetime commercials featuring James, plus appearances at various sponsored events like the McDonald’s High School All-American Game (an event James participated in back in 2003).
Lebron’s “golden boy” reputation on and off the court has made him a popular figure among most demographics and McDonald’s (MCD) appears willing to gamble that he will continue to handle himself accordingly. In our view, this is a good indicator that corporate marketers will still consider shelling out large sums of money to top athletic figures, despite the recent Tiger Wood’s saga.
Indeed, amid accusations of widespread infidelity, the golf superstar’s financial empire was turned upside down, as marketers from Accenture (ACN) to Proctor & Gamble (PG) began to reassess their relationships with the golfer. Consequently, these lucrative endorsements deals were lost. Couple this issue with poor economic conditions, and there was a period of time where it was largely uncertain if this sector would be as appealing to marketers as it had been in the past.
However, the landscape does seem to be changing somewhat. No longer will long-term contracts be as popular as they once were. With athlete scandals appearing a lot more frequently in today’s newspapers, this group as a whole now carries increased risk. As a result, corporations may not want to jeopardize their brands reputation over longer time frames, instead possibly vying for shorter, less-riskier ventures. Meanwhile, marketers have actually begun adapting to the new environment in other ways by adding special clauses that allow them to void contracts if the endorser misbehaves in a certain way. At the present time, the corporations have all the leverage, and it is probable these clauses will become the standard moving forward.
Either way, Lebron James appears to be the most sought after athletic figure on the planet right now and seems to resemble the great Michael Jordan more and more by the day. With Lebron’s most recent venture, he now has ties to three of the largest brands in the world: Nike (NKE), Coca Cola (KO), and McDonald’s. In the most recent Bloomberg BusinessWeek list of America’s most powerful athletes, James ranked second behind only Tiger Woods. Due to Tiger’s recent transgressions, James appears poised to attain the top spot.