How Much Value Do Athletes Bring To The Brands They Endorse?

Under Armour’s (UAA) disastrous Q3 earnings report has ignited a debate about the value athletes bring to the brands they endorse. Steph Curry, Tom Brady, Cam Newton and Bryce Harper all wear the UAA logo, but that star-power wasn’t able to prevent company sales from declining 12% in Q3 ’17; nor has it helped to attract teens to the brand. Those that believe in athlete sponsorships will tout the brand equity received; the value a company realizes from associating their product with a recognizable name.

Howie Long-Short: As a rule of thumb (Jordan being an exception), endorsements do not correlate with significant revenue growth. In fact, among the Top 10 selling sneakers of 2016, only one was associated with an active athlete; Nike’s (NKE) Kyrie (Irving) 2 finished 10th. It’s worth noting that on Thursday evening, Adidas (ADDYY) signed Zach LaVine to a 4-year contract worth up to $35 million. I would not classify that as money well spent.

Fan Marino: Adidas CEO attributes Mark King attributes UAA’s lack of success capitalizing on endorsement deals to the “milquetoast” personalities of their athletes (i.e. Brady, Spieth); while pointing out that ADDYY athletes “Carlos Correa and James Harden have personality”. There is no way that Carlos Correa is moving merchandise. The average sports fan wouldn’t know it, if they were sitting next to him. Harden has a long beard, but even former Rockets coach Kevin McHale acknowledged that trying to lead a team isn’t in his “personality”. If he isn’t capable of being a leader on the floor (and in the locker room), what real value can he bring ADDYY off it?

The Under Armour lesson: Athlete endorsers can’t save a brand

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Author: John Wall Street

At the intersection of sports & finance.

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