Investing for the Future: Sponsorship before the Draft
4 Minute Read
• In some instances, top prospects can generate significant sponsorship interest and sign endorsement deals before they are drafted
• This strategy can help sponsors create brand loyalty with the athlete, something that can be prove to be valuable throughout the length of the sponsorship
• However, top prospects are still an unproven asset in the professional leagues and could not live up to their expectations, making the sponsorship a risky play
Last month, the Toronto Maple Leafs won the 2016 NHL Draft Lottery, earning the right to select first overall in this June’s Draft. Many are predicting that the Leafs will select Auston Matthews, an American prospect who scouts predict is likely the top player in the upcoming draft.
In the lead up to a draft, talented prospects can emerge who many predict will have successful professional careers. We have seen this in the past with top prospects such as Connor McDavid and Andrew Wiggins. When players like these are considered the top of their class, there have been instances where sponsors have wasted no time and have signed them to endorsements before their name was called by the commissioner. LeBron James signed his first deal with Nike for $90 million directly out of high school, before he was officially drafted by the Cleveland Cavaliers.
MKTG examines the benefits and key considerations of this strategy. In addition, with Auston Matthews being the projected number one selection, we break down his brand as he prepares to enter the NHL.
Gain a first mover advantage- As an early sponsor, the brand can gain a first mover advantage and maintain top of mind status on the athlete’s sponsorship roster. This can help the brand when the athlete continues to attract sponsors as their career progresses, the first brand relationship can become top of mind amongst consumers. At age fifteen Connor McDavid was already being projected as the next great hockey player. He was playing for the Erie Otters and despite being a year younger than his competition he was clearly a more skilled player. This is when CCM signed their first contract with McDavid, making him a part of the brand at an early age. With this early association, consumers are aware of the endorsement and as McDavid’s career progresses, CCM will always have the longest running association with McDavid.
Establish relationship with an athlete creating loyalty- By sponsoring an athlete at an early age, the sponsor can look to build brand loyalty with the athlete. Earlier this year when Adidas endorser and rapper Kanye West mentioned LeBron James in a new song that was negative towards Nike, James was quick to defend the brand he has partnered with since 2003. This type of brand loyalty is created with an athlete from an early investment from the sponsor, demonstrating their support. An athlete will more likely feel a sense of loyalty that goes beyond contractual obligation and act in the spirit of a good partner in order to reward the belief of the sponsoring brand.
Ability to tell organic stories- When a sponsor secures an athlete before they are drafted they will have the ability to tell the story of the prospect's road to the professional game. Prospects will participate in a number of key moments in the lead up to their professional debut. They will have the attention on them before and during the draft, and again as they make their way to training camp and finally they will be at a peak awareness point during their first professional game. Foot Locker teamed up with Slam Magazine to profile NBA prospects leading up to and during the draft. They published an online content series that included interviews and blogs on the athletes as they prepared to be selected. Foot Locker captured a unique and compelling story and were able to be present for the athletes first moments as they began their professional career.
When entering into a sponsorship with an undrafted athlete, there are a few key points that must be considered.
Investing in an unproven athlete- There have been a number of instances where an athlete has a promising career in university only fail to live up to their expectations in the professional leagues. For sponsors, this can be a risky investment. Quarterback Johnny Manziel was a star for Texas A&M University when he became the first freshmen to win the Heisman Trophy in 2012. Many expected Manziel to be successful in the NFL and become a highly marketable athlete. Nike signed Manziel to an endorsement deal a month before he was drafted. However, when he entered into the league he had public struggles on and off the field. Nike has since terminated their contract with Manziel. As a sponsor, there is always an amount of uncertainty no matter how skilled the athlete appears. Brands have shown that they understand that a highly touted prospect may not live up to their expectations and have invested more modestly when signing endorsers. When Canadian basketball player Andrew Wiggins left college to enter the NBA draft, it was reported that he would sign a contract with Adidas worth an annual $18 million. However, when the deal was announced it turned out it was a more modest $2 million deal, which would ease the financial burden on Adidas if Wiggins did not become the basketball player he was expected to be.
Unknown geographic region- One aspect a sponsor must consider when securing an athlete endorser is the market they play in. Different markets provide different opportunities for sponsors depending on the market size, the popularity of the sport in the market and geographic importance of the market to the sponsor. . When a sponsor signs an athlete before they are drafted they are not guaranteed where they will be playing. For some highly touted draft picks, they can assume that the team with the first overall pick will be selecting them. However, for some athletes it can truly be an unknown. As previously mentioned, Nike signed quarterback Johnny Manziel before he was drafted and he was not expected to be a number one overall pick. For some athletes, the market they play in may not factor in as much due to their stature as an athlete. When LeBron James signed with Nike after high school, he was assumed to go to Cleveland who had the first overall pick. While Cleveland is not the largest market, it was evident that James would be a valuable endorser whichever market he played in.
The Auston Matthews Brand
While Auston Matthews has yet to sign with a sponsor, he will likely receive plenty of interest from a number of brands. It can be expected that Matthews will sign with sponsors from a number of active categories such as apparel and sports drink. Due to Matthews being American and potentially playing in Canada, sponsors can look to appeal to fans from both sides of the border. In addition, Matthews took an unconventional route to the NHL by opting away from the CHL or the NCAA and played hockey in Switzerland’s national league. This unique story could provide sponsors with an opportunity to promote Matthews as someone who doesn’t always follow the conventional rules.
For top prospects that demonstrate potential to be a star player in the professional leagues, brands can take a calculated risk and sign them before they are drafted. However, as illustrated the move is not always guaranteed to be a success.