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Jul 5, 2018

Sneakernomics: Celebrity Endorsements and Sports Retail

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Two events happened recently that highlight the dilemma that sports markets face.

Last week, LeBron James emerged from the “Decision Cave” and announced that he was taking his talents to LA. Then, Roger Federer agreed to be paid $30 million per year for 10 years to endorse Japanese retailer Uniqlo.

Many have assumed that LeBron’s change would somehow benefit sales, but in my opinion this is not the case. Yes, a lot of Lakers “number 23” jerseys will be sold, but there are thousands and thousands of Cleveland 23’s still left in inventory. These jerseys started at 50 percent off two weeks ago. Today, they are merely historic artifacts that could take years to clear.

I do not expect to see a big lift in basketball shoe sales either. When Kobe Bryant was at the height of his game, he had the top-selling jersey in the NBA, but he never sold a lot of shoes in the U.S. Los Angeles is more of a flip-flop market than basketball shoe market. Given the lead times in the sneaker industry, it will take many months to have LeBron shoes in Laker colors. And even then, there will be little appetite; performance basketball shoes remain solidly out of fashion in the U.S.

As a side note, it is important to point out that Kobe’s shoes sold in much greater quantities in China than they did in the U.S. However, LeBron has never been that popular a player in China. If U.S. basketball goes out of fashion with Chinese consumers who follow the sport, brands will surely struggle in China.

Turning to tennis, Federer played his first match at Wimbledon in Uniqlo apparel. It was announced that he would be paid for 10 years, regardless of whether he played tennis or not.

Tennis players earn amazing endorsement deals even as participation has stagnated. Their appeal is more to the ultra-wealthy than it is to the average consumer. Teen consumers are not even in the picture.

I’m in London as I write this, surrounded by fans of Fedo. Some might be interested in what he wears or which liquor he drinks, but none of these folks appear to have set foot in a mall, let alone a fast fashion retailer.

What we are realizing is that the paid endorser model is simply broken. Fans know that athletes and celebrities are paid to wear products, and only wear them because they are paid. Celebrities’ relationships with brands are based on compensation, and not on any true emotional attachments.

Consumers have begun to realize how phony these pay-to-wear deals are. Celebrities have not loyalty to brands, or fans. They simply will endorse whatever they are paid to wear.

The sports industry needs to return to the days of authentic and honest endorsement, where the relationship is guided by passion and emotion, not by big paychecks.



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