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Thursday, October 30, 2008

LeBron: Selling a world sports star

By Bill Wilson
Business reporter, BBC News

LeBron James scores a basket for the US against Greece in the 2008 Olympics
The only way is up for LeBron James at present

US basketball star LeBron James is a star member of a new breed of sportsmen and women who could be called "athlete corporations".

Mainly American, or based in the US, they are headed by golfing genius Tiger Woods and are not only among the masters in their chosen field, but they are also extremely marketable individuals.

As a result they have sponsors queuing at their doors, eager to sign lucrative endorsement deals that should pay off handsomely for both sports star and brand.

Gold medal

And it has been a good year for one of this sporting elite - the National Basketball Association's LeBron James, the man they call King James.

Gold medal basketball winner at the Beijing Olympics, front page of Vogue magazine, the NBA's All Star Game Most Valuable Player and season's leading scorer, and a host of multi-million dollar endorsements with Nike, Coca-Cola, State Farm and MSN.

Cool, hip, hard-working - LeBron puts a positive spin on the hip-hop generation, away from the bad-boy scene
LeBron James' lawyer Fred Nance

"We mesh together his personality strengths with the company products, so that there is a true partnership," says James' legal representative Fred Nance.

"It is not the willy-nilly identification with any athlete that is successful, but the right athlete with the right brand endorsement that works."

Mr Nance, of Cleveland, Ohio, law firm Squire Sanders & Dempsey, told the BBC at a Sportbusiness event in London, just how his client keeps his commercial partners onside.

"Once a year LeBron brings all his endorsements together and they have a marketing summit, and we work through with them, and what their marketing has identified in LeBron as the key attributes they want to use," says Nance.

"Cool, hip, hard-working - LeBron puts a positive spin on the hip-hop generation, away from the bad-boy scene."

Important person

Not only is James - who donated $20,000 (£12,700) to Barack Obama's campaign - not part of the "bad-boy scene", he has been positively encouraging young people to get out and vote in the forthcoming US general election.

This month he was also named by Businessweek magazine as the 17th most important person in the global sports business; in a list heavy with club owners, administrators and media moguls, he is the foremost listed athlete after Tiger Woods.

LeBron James advertisement for Nike sportswear
LeBron James had a Nike contract before he had played an NBA game

Not bad for a 23 year old High School phenomenon who missed out the college strata of the sport to move straight into the NBA in 2003.

At the age of 18, he was selected with the first overall pick in the 2003 NBA Draft by the Cavaliers and signed a whopping $90m shoe deal with Nike before the NBA draft and his subsequent league debut.

Since then his cachet has soared, with rich people's bible Forbes magazine putting his total earnings at $270m.

Forbes points out that his endorsements easily outstrip his on-court earnings, and that is taking into account Mr James's $60m four-year playing deal with the Cavaliers.

Growing brands

They have remained with him since then and are already looking ahead to how they can mutually exploit their partnership.

"We talk about where we would like to be in five to 10 years from now," says Mr Nance.

"They talk about how they can grow their brands and his brand.

"It is art, not science, it is difficult to know how the public will respond in every case, but it is a system that works for us, and our partners."

As well as having a number of commercial partners, James also has his own signature clothing collection and his own sports marketing company, launched with a number of his childhood friends who also have a say in his off-court decisions.

Companies are going to have to have a more transparent rationale for making these deals, to explain it to the board or even dissident shareholders
Fred Nance
"He is represented by some young Cleveland friends whom he knows and trusts, my law firm, an accountant, and an investment advisor," says Mr Nance.

"LeBron is part of a new wave of young athletes taking control of their own business decisions. I provide information and advice but he makes the business decisions."

As well as being a top-notch sportsman and a huge commercial vehicle, James has further enhanced his credentials with the establishment of a foundation for single parents and inner-city children.

The LeBron James Family Foundation is headed by Mr Nance's wife Jacqueline Jones, also a lawyer.

"As well as a vehicle for good works, a foundation can bring a secondary enhancement to the brands that are being endorsed by the athlete, as they are recognised as being involved with something that is helping people," says Mr Nance.

"Each of LeBron's endorsement partners is contributing to the foundation."

Behaviour warning

With such a marketable commodity, it would appear to be a win-win situation all round, but Mr Nance points out that even with shining lights like James, sponsors like to protect their investment.

"In most contracts generally there are disincentives for not performing on the sports field, or for bad behaviour," says Mr Nance.

"We have seen successful athletes who have been terrible endorsement people because of their off-field behaviour."

But those decisions may become academic as companies are having to justify endorsement deals with sportsmen and women in the face of the credit crunch, and there is increased belt-tightening around what may be seen as non-essentials.

"Companies are going to have to have a more transparent rationale for making these deals, to explain it to the board or even dissident shareholders," points out Mr Nance.

"However, you will still get the mega contracts with the mega stars like LeBron James."