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Around the Horn: Show Me The Money

     Many have heard our moms say that we needed to eat our Wheaties so we could grow up big and strong like the athletes on the cover of the box. However, we didn’t realize they didn’t eat Wheaties. They were paid to endorse the cereal.

     Athletes have multi-million dollar salaries but team contracts only make up a small portion of their income. Companies pay athletes millions of dollars to endorse their product and/or be spokespeople.

     Some athletes are willing to make fools of themselves if it means a hefty paycheck. For example, Ray Lewis was in an Old Spice commercial that premiered this past Sep­tember. In the commercial, he comes out of a shower in a huge layer of suds that looked like he was covered in bubble bath. He then picked up a saddle, got on a terri­bly crafted raven that flew off and blew up Saturn. Lewis stated that his teammates mercilessly made fun of him. Who wouldn’t? But I guess that means his dignity was worth the price they paid him.

     Losing endorsements can also hurt athletes. Tiger Woods is a prime example of how damage from a scandal can affect an athlete’s wallet. Woods is one of the highest earning athletes in the sports market. According to Forbes Magazine, Woods reportedly made $110 million in 2009. Woods is sponsored by several major companies including Nike, who paid Woods a reported $30 million each year. That doesn’t include Woods’ cut of all Nike golf apparel and equipment sold. Nike Golf makes around $700 mil­lion in revenue each year.

     In late 2009, there were several women who came forward with claims of extramarital affairs with Woods and they had the tapes and messages to prove it. On Dec. 11, 2009, Woods released a statement stating that these stories were true. The day after his statement was released, several major sponsors dropped him including Accenture, a management consultancy firm, and AT&T. This re­duced Woods’ income but also caused shareholder losses in the companies that sponsored him. A study was done by two economic professors, Victor Stango and Christo­pher Knittel, at the University of California at Davis that explored the financial losses that Woods’ scandal caused. They concluded that shareholders lost approximately $5 billion to $12 billion due to the reduced values in the companies’ stock.

     Some may think that endorsements can be limiting. For example, if an athlete had an endorsement with Adi­das, they would be expected to wear nothing but Adidas. But some companies are willing to work with athletes to let them have the choices they want and let them have free reign to design what they want. Steve Nash, a point guard for the Phoenix Suns, stated that he has an apparel and lifestyle deal with Luyou, a China-based company. They allow him to design shoes and apparel.

     Endorsements may offer more opportunities to make money but products shouldn’t be bought just because your favorite athlete is on it. The American public has bought into this idea of celebrity and it seems to take away the ability of making our own choices and having our own thoughts. We shouldn’t depend on the person on a cereal box to tell us what we need. It has been my experience that many bad products are endorsed by athletes just for the payday. But then again, you wouldn’t buy a product from a man riding a robotic raven, would you?

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