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Fore! Woods' split with GM a warning for athletes
2008-11-29
Turns out, Tiger Woods wouldn't really rather have a Buick. At least not anymore. Muzi.com News 10083841-1 (muzi.com)When Woods ended his nine-year relationship with General Motors Corp. on Monday -- a mutual decision between a megawatt celebrity who doesn't need the work and a teetering corporation that needs every penny -- it offered yet another snapshot of how badly the American economy has deteriorated. Muzi.com News 10083841-2 (muzi.com) Woods is the world's most marketable athlete with an estimated $100 million endorsements a year. If his agreement with one of the world's most active sports sponsors dissolved, some experts wonder if any endorsement or sponsorship deal is really ironclad in these tough times. Muzi.com News 10083841-3 (muzi.com) "The real story here isn't Tiger," says Marc Ganis, the president of Sportscorp Ltd., a Chicago-based sports consulting firm. "It's the auto industry. ... There are a lot of parties who are going to have some difficulties finding sponsors to substitute for what the auto industry used to provide." Muzi.com News 10083841-4 (muzi.com) LeBron James ($28 million in endorsements according to Sports Illustrated's 2007 figures), Peyton Manning ($13 million) and those in the top-circle elite don't have so much to worry about because, like Woods, they have multiple deals spread over several industries. Muzi.com News 10083841-5 (muzi.com) As for everyone else, well, Ganis figures they will feel the pain. If money from the auto industry and financial world dries up, athletes and events that are lower in the pecking order will get thirsty. Muzi.com News 10083841-6 (muzi.com) "You've just got to be much more creative," said Evan Morgenstein, an agent for gymnast Nastia Liukin, swimmer Dara Torres and other Olympic athletes. Muzi.com News 10083841-7 (muzi.com) Morgenstein says sponsors have become so fidgety that his phone actually rings more on days the stock market is doing well, less when it's not. Muzi.com News 10083841-8 (muzi.com) "I think for the first and second quarter of 2009, it's going to be tenuous at best," he said. "It's more about cold calling, contacting people, pitching ideas. There's some stuff that may not actually close, but we've got to look at this as building for the next four years." Muzi.com News 10083841-9 (muzi.com) Calls to the representatives of about a half-dozen top-name athletes and their agents by The Associated Press showed that Woods and those in his stratosphere will have very little trouble making endorsement money, even in a rough economy. Muzi.com News 10083841-10 (muzi.com) Manning is spread into a number of industries -- cell phones, satellite TV, electronics, credit cards. Muzi.com News 10083841-11 (muzi.com) James and Microsoft have ended a two-year marketing partnership, though James' manager, Maverick Carter, didn't mention the Microsoft deal earlier this week when he responded to an AP e-mail asking if the economy might hurt James' endorsements. Muzi.com News 10083841-12 (muzi.com) "We have long-term deals with great partners who aren't going anywhere," Carter said. Muzi.com News 10083841-13 (muzi.com) James was similarly upbeat. Muzi.com News 10083841-14 (muzi.com) "I know I have great relationships with the partners that I have," he said. "All of them are long-term deals, so I can only comment on what I have. And looking forward there's always going to be deals out there." Muzi.com News 10083841-15 (muzi.com) The agents for Derek Jeter ($8 million in endorsements, according to SI), David Beckham ($48 million, including salary) and Maria Sharapova (between $28 million and $30 million) all said their clients were also on solid footing -- entrenched in long-range deals, much like the one Woods had with Buick. Muzi.com News 10083841-16 (muzi.com) "The only thing I have is sponsors trying to get shoots and do stuff with Maria to market her," said Max Eisnebud, Sharapova's agent at IMG, when asked if any of his client's deals might be in jeopardy. Muzi.com News 10083841-17 (muzi.com) Agents like Morgenstein look outside the box for their clients: A possible mattress deal for Liukin; more speaking engagements for everyone; a wide-ranging deal with water parks around the world that opens appearance opportunities for his stable of swimmers. Muzi.com News 10083841-18 (muzi.com) He reports general success in what he has termed a basic rethinking of his sponsorship model. Even so, Morgenstein says a lot of the post-Olympic business is flowing in more slowly than years past. Muzi.com News 10083841-19 (muzi.com) "It used to be, in August, they plan, and in September and October, they buy," he said. "This time, in September and October, the bottom was falling out of the economy and they were worrying if they were going to have a job. So, now they're coming to me in November and saying, 'We're executing our program one quarter at a time.'" Muzi.com News 10083841-20 (muzi.com) Endorsements and sponsorships are closely intertwined because it's often the same teams, athletes and companies, all dealing with what figures to be a diminishing pot of money. Muzi.com News 10083841-21 (muzi.com) NASCAR is so closely tied to sponsors and car manufacturers that it's almost a world of its own. Muzi.com News 10083841-22 (muzi.com) But while Tiger Woods is saying, in effect, that he can live without GM, it appears NASCAR won't have to. Muzi.com News 10083841-23 (muzi.com) GM still has contracts with 12 of 22 tracks where the Sprint Cup Series races. It remains the title sponsor for the fall race at Richmond International Speedway and the official vehicle provider at Daytona. Muzi.com News 10083841-24 (muzi.com) "I've been told directly by each of the companies having challenging times that one of the things that works best for them is NASCAR," chairman Brian France said earlier this month. Muzi.com News 10083841-25 (muzi.com) That said, France also is on record as saying NASCAR could survive without all the manufacturers. Muzi.com News 10083841-26 (muzi.com) How the individual teams will fare without their biggest sponsors is less certain. The flow of sponsorship money is slowing and the difference between the haves and have-nots in NASCAR is enormous. Muzi.com News 10083841-27 (muzi.com) "I think every property, be it a sports event or a sports team or a state fair, for that matter, that has sponsorships in financial services or automotive categories should be doing all they can to protect those relationships," said Bill Chipps, senior editor of the IEG Sponsorship Report that tracks sponsorship spending. Muzi.com News 10083841-28 (muzi.com) Ganis thinks the future of another hallmark of sports endorsement and sponsorship -- the beer industry -- could be up in the air. The recent purchase of Anheuser-Busch by InBev will essentially push the Busch family out the door, he says. They were always big proponents of sports advertising and nobody is quite sure how the InBev brass will approach it. Muzi.com News 10083841-29 (muzi.com) Ganis also says it's easy to project that the drain on America's biggest businesses will hurt athletes' pocketbooks -- not just the endorsement side, but the salary side, too. Muzi.com News 10083841-30 (muzi.com) Cash-strapped companies figure to also be buying less signage in the stadiums, fewer corporate suites and ticket licenses. Credit is no longer as easy to obtain, even for billionaire owners. Meanwhile, the sacred cow of these leagues, TV dollars, could eventually get squeezed if advertising money dries up. Muzi.com News 10083841-31 (muzi.com) None of it bodes well for cash flow. NFL commissioner Roger Goodell acknowledged he's looking at 2009 as a barometer of how far the bad economy reaches into the NFL. Muzi.com News 10083841-32 (muzi.com) There also is the issue of the collective bargaining agreement, which needs to be renewed by February 2010 to avoid a season without a salary cap. Muzi.com News 10083841-33 (muzi.com) "There's a reasonable chance the NBA and NFL are going to have periods of time when their sports are not playing, unless their players associations get a serious dose of reality," Ganis said. "Owners have decided that continual exponential growth in cheap and available credit are both history, and that they're not going to accept a generally break-even proposition while paying players extraordinary amounts they're paid." Muzi.com News 10083841-34 (muzi.com) Said Morgenstein: "Those people used to making $12 million sitting on the bench in the NBA, those guys are going to get crushed. The system has to change. They're naive thinking it's not." Muzi.com News 10083841-35 (muzi.com) Add it all up and it means many athletes are going to have to rethink their strategies for making more money off the field. Muzi.com News 10083841-36 (muzi.com) How much money is there to be had? That's the multimillion-dollar question. Muzi.com News 10083841-37 (muzi.com) "We see what's going on in the world, we see what's happening," says Eisenbud, who manages Sharapova. "I don't think any business is immune to what's going on." Muzi.com News 10083841-38 (muzi.com) ___ Muzi.com News 10083841-39 (muzi.com)
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