USA Inc.

The high-flying Americans are also scoring big in the marketing game
July 21, 1992

Before the U.S. men's team officially qualified for the trip to Barcelona—heck, before it had even run through its first warm-up drill—these star-spangled superstars were already the most famous collection of athletes in Olympic history. Within weeks after the original 10 NBA All-Stars were announced last September, they were bounding across America's TV screens, carrying the hopes of a nation dreaming of Olympic gold, as well as the hopes of a corporate America dreaming of just plain gold.

"No doubt about it, this is the biggest, most expensive marketing deal in the history of sports," says David Burns, president of the Chicago-based Burns Sports Celebrity Services.

"With the exposure this team is getting, there are young people out there who think the Olympics are just one big basketball tournament," says John Krimsky, who, as deputy secretary general of the U.S. Olympic Committee, handles that organization's business affairs.

Commercial tie-ins are common enough in Olympic sports—for example, McDonald's has long been a sponsor of the U.S. gymnastics program, while Visa has aligned itself with track and field—but the scope of corporate involvement with the U.S. basketball team breaks new ground: Forty companies arc spending approximately $40 million in promotion and advertising to trumpet their connection to the team.

Of the 40 companies, 14 have each forked over about $750,000 to USA Basketball, this country's governing body of the sport, for the right to call themselves official team sponsors. The other 26 companies have aligned themselves with the team through separate licensing agreements that enable them to sell official USA Basketball products. The AJD Cap Company of Richmond, for instance, is "the official maker of USA Basketball caps." That's not a particularly sexy handle except in an Olympic year, when USA Basketball is inextricably linked with Michael Jordan and Magic Johnson. "We know a lot about raising money through sponsorships, but the NBA is far more sophisticated in dealing with the licensing of properties," says Krimsky. "We've taken advantage of that to sell many, many more products."

Other companies, while not official sponsors or licensees of the team, are using the appeal of the American team to spice up sales. SPORTS ILLUSTRATED is giving away an NBA Dream Team video in a subscription campaign, and USA Today set up a special toll-free number a few weeks ago so its readers could phone in to pick their Dream Team starters. (Some 10,000 responded, choosing Jordan, Magic, Karl Malone, David Robinson and Patrick Ewing.)

Nike has created an ad in which the six Olympians it has under contract (Jordan, Robinson, Charles Barkley, Scottie Pippen, John Stockton and Chris Mullin) are portrayed as cartoon monsters, stomping and crushing everything in their path. The words Olympic or United States do not appear anywhere (that would be an overt violation of licensing restrictions), but the commercial is an obvious reference to the Games.

NBC, the network that is broadcasting the Games, began with a bearish attitude about the Dream Team but has now gone bullish, according to Dick Ebersol, president of NBC Sports.

"Even with great players involved, noncompetitive routs do not generally make for great TV, and that was our concern at the outset," says Ebersol. "But as we've traveled around and seen the attention these guys are getting, we realized what a big story they really are. This team is simply quite a story, no matter what the result of its games. The power of these guys is phenomenal."

What makes "these guys" so attractive to television, advertisers and, presumably, consumers? Three things: They are already known quantities in the advertising business; they are playing the globe's fastest-growing sport; and they are considered to be an absolute lock for the gold medal. That's a trifecta that is unique in the history of the Olympics.

It's anyone's guess how much the players themselves will eventually make. They are not getting a salary for their services, and though they are entitled to a portion of the money taken in for certain products sold, some of them have indicated that they will donate their share to USA Basketball. Bear in mind, too, that the Olympics arc traditionally fallow ground for big-money endorsements. But unlike most Olympians, who disappear onto college campuses or into track clubs and ordinary jobs after the closing ceremonies, the Dream Teamers will remain in the public eye. "Frankly, I don't see how anyone on this team can keep from getting bigger," says Burns.

Even Jordan and Johnson, both of whom seem to be at the endorsement saturation point? Well, SkyBox paid Johnson about $1 million to endorse its new Olympic cards, the campaign for which includes an endearing card-trading scene between Magic and his 11-year-old son, Andre. Magic and Larry Bird, the veteran co-captains of the team, got a deal from Kraft, another of the official sponsors. "For players like Earvin and Michael, the Olympics are only going to add value to their existing endorsements," says Lon Rosen, Magic's agent.

The Games, however, arc almost a guaranteed windfall for heretofore underexposed players like Malone and Mullin. Those two, along with Olympic teammates Robinson, Bird and Stockton, signed a deal that put them on Kellogg's cereal boxes. Pip-pen has gotten national endorsement deals with both AT&T and Coca-Cola as a result of his Olympic connection. "For somebody like Scottie, I think the Olympics are going to mean between $2 million and $3 million per year in endorsements," says Jimmy Sexton, Pippen's agent. Using that as a gauge, and the near certainty that players like Jordan, Magic and Bird are going to get more than that, the team's collective endorsement money related to their participation in the Olympics will probably approach $30 million, according to various business sources.

Considering the stakes, it is hardly surprising that a one-big-happy-family atmosphere did not immediately envelop this three-ring commercial circus. USA Basketball's sponsorship tie-ins were presented to the players as a fait accompli last October, and that got things off to a rocky start. "The first thing I know, I'm hearing about how many millions USA Basketball is going to make off the Olympics, yet my guy is supposed to want to play purely for love of country," said a lawyer for one of the players. While it would be disingenuous of the agents to suggest that they are, or ever were, unaware of potential commercial advantage from their clients' participation in the Games, it is true that some of their clients—Barkley and Malone spring to mind—did volunteer to play, immediately and unequivocally.

Russ Granik, the deputy commissioner of the NBA and the vice-president of USA Basketball, says that the Games will hardly represent an enormous windfall for USA Basketball, which incurred not only the cost of sponsoring the Portland qualifying tournament, but also the right to purchase its own NBC advertising packages for both the Games and last September's announcement show. Granik does concede that USA Basketball and NBA Properties, the agency's official marketing agent, arc hardly engaged in charity work.

"Obviously the Olympics will go a long way toward enhancing the NBA's business internationally," says Granik. "That's what's in it for us."

It was not just the question of how to split up the revenue that worried the agents—how about the myriad conflicts with their athletes' own endorsements? What was potentially the biggest one was worked out amicably and early when Converse, which for 15 years has produced "the official shoe of USA Basketball," realized that NBA players would simply not violate their existing shoe deals. And so only Johnson and Bird will be wearing the team's "official shoe." Nike was not so sanguine about what it perceived as violations of existing contracts with players, however, and for a while it looked as if the likenesses of their six Olympians would not appear on any Olympic apparel. And while it was true that the official sponsors could use the basketball stars only in "group situations," how could USA Basketball announce an existing relationship with, say, McDonald's, when Magic is a leading spokesman for Kentucky Fried Chicken? Or how could Barkley, a paid endorser for Gillette, participate in an advertising campaign for Schick, another of USA Basketball's sponsors?

After several bitter exchanges between the NBA and USA Basketball on one side, and Nike and the agents (particularly Jordan's lawyer, David Falk of ProServ Basketball and Football) on the other, compromise grudgingly began to emerge. USA Basketball would send the agents copies of proposed sponsor ads, and the agents had 48 hours to either approve or disapprove and ask for changes. Bark-ley's people asked that he be moved to the back row in the Schick ads. Nike also made some concessions. Jordan's likeness will now appear on a caricature T-shirt of the team, a major change from last winter when his face was conspicuously missing from the All-Star Game shirt.

Other deals were touchier. One of McDonald's promotional ideas was to put each Olympian on his own McDonald's cup. But that would leave Magic's mug on a product that competes with one he endorses. Similarly, Visa's strategy involved showing a series of television commercials of the Olympians—all of whom are on display, but one at a time. Does that make it appear as if, say, Jordan is endorsing the company's credit card? Who knows?

The agents also worried about possible future conflicts. Pippen's advisers, for example, were working on an endorsement deal with a McDonald's competitor when the Olympic tie-ins were announced. Did it squelch that deal when Pippen showed up on a McDonald's cup? "All I know is that the deal hasn't happened yet," says Sexton, "so maybe it did." And Nike did insist that Mullin turn down an invitation to be an official Olympic spokesman for USA Basketball, a role now held exclusively—and quite happily—by Malone.

One of the most interesting conflicts, however, may still lie ahead in Barcelona. One of the U.S. Olympic Committee's sponsors is Reebok, which is making a special suit that all U.S. medalists are expected to wear during the awards ceremonies. "And I will be watching to make sure that there is compliance," says Krimsky, ever vigilant.

Nike's own Michael Jordan, accepting the Olympic gold medal—assuming the upset of the ages doesn't happen—in a suit made by Reebok?

"Well, he [Krimsky] can watch all he wants," said Jordan when asked about it recently, "but there is no way in the world I am wearing a suit made by Reebok."

Welcome to the new world of Olympic commercialism.

SIX PHOTOSMANNY MILLAN

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HOLE YARDS PAR R1 R2 R3 R4
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Eagle (-2)
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