Sports Biz with Darren Rovell

The Future Of Endorsements

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As the corporate dollar has been drained, the perception is that athletes have had a tougher time scoring sponsorship deals as companies have cut back budgets.

We spoke to Patrick McGee, President of

ProVentures, a sports and entertainment consulting firm that negotiates endorsement deals on behalf of corporations with talent, to get his assessment on the state of the corporate endorsement game.
There are three kinds of strategies in this environment. The first is a risk adverse strategy, where companies pay the top tier athletes large upfront money in order to obtain exposure that is as close to guaranteed as possible. The second is the incentive strategy, where savvy companies will try to lock up future stars by providing some upfront money, but the majority of the compensation comes in the form of performance incentives, which can often be insured by the company via a third party. The third is the opportunistic association strategy, where companies do one off deals at highly visible events with players that are on the cusp of greatness and who likely will obtain a lot of short term visibility. The compensation in these deals is more like a television time buy with the potential for a longer term deal if the one off deal goes well.