They Make TV Exposure Pay Off
Ten television cameras will track Shaun White as the red-headed skateboarder soars high above the Staples Center arena floor during Friday night’s vert competition. ESPN clearly hopes that the 18-year-old will generate some “SportsCenter” moments by pulling a new trick or two during his 2005 X Games debut.
But the subsequent volley of slow-motion television replays also will capture the clothing labels and stickers adorning White’s helmet and skateboard. And that prospect will cheer the corporate executives at Volcom Clothing, Burton Snowboards, Mountain Dew, Target and the growing roster of marketers that have helped turn White, who is also a star snowboarder, into one of the world’s most recognizable and highly paid action-sports heroes.
It is a symbiotic relationship. As the action-sports sector muscles its way into the mainstream, athletes can earn a living by playing the games they love, and corporate giants, including TV networks, are able to reach young consumers.
The X Games, which run today through Sunday at Staples Center and the Home Depot Center, helped spawn this phenomenon during their inaugural season 11 years ago. The personable White has four Winter X Games gold medals for snowboarding, but his celebrity has transcended his athletic prowess.
For marketers trying to connect with males in their teens and early 20s, “It doesn’t get much better than Shaun White,” said his agent, Mark Ervin of IMG. White last year pocketed more than $1 million from corporate sponsorship and endorsement deals, more than triple his contest earnings.
White is playing the same game that Jean-Claude Killy honed during the 1968 Winter Olympics, when the gold-medal winner carried his skis, with the manufacturer’s brand facing the cameras, into post-race interviews. Killy drew thunderbolts from the Olympic hierarchy but White, the talentedCarlsbad athlete known as the “flying tomato,” is being paid handsomely and aboveboard for pitching products even as he soars.
One measure of White’s commercial appeal is that he is represented by IMG, the same company that advises Tiger Woods on business affairs. White’s slice of the endorsement and sponsorship pie is a relative crumb compared to Woods’, whose estimated $80 million in endorsement deals dwarfs what all of the X Games competitors are paid. But up-and-coming skateboarders, snowboarders, surfers and BMX riders clearly are faring better than the top veterans could have dreamed about a decade ago.
Though this year’s X Games jackpot total is essentially flat at $1.3 million (because the number of events and contestants has dropped), overall prize money in the action-sports arena continues to inch up. The Dew Action Sports Tour, a six-city circuit sponsored by NBC and Clear Channel, is offering $2.5 million in prizes, including a $1-million bonus to be carved up by the top 10 riders and skateboarders.
“We’re finally getting a bigger piece of the pie,” said Dave Mirra, 31, a BMX star and 13-time X Games gold medalist from Greenville, N.C., who earned $1,000 for finishing second during the initial X Games. In contrast, the second-place finisher in Dew Action Sports Tour events will earn $10,000.
The heftier paychecks are partly the product of the burgeoning popularity of action sports. The number of skateboarders in the country jumped 47% to nearly 11 million in the six years leading up to 2004. The Sporting Goods Manufacturers Assn. also reports that snowboarding grew by 30% to more than 7 million participants in the same period.
But it is TV that is driving the sports’ finances. When the X Games return this week, contests will be broadcast into about 1 million homes, a 47% increase since 2003. The Dew Tour will generate 22 hours of network coverage on NBC, along with 10 hours on the network’s USA cable channel.
IEG, a Chicago-based company that tracks sponsorship deals, first broke out action-sports sponsorships in 2004 when the category approached $100 million. “In our view of the world, that makes it a significant category unto itself,” said IEG Senior Vice President Jim Andrews. “It’s proven that it isn’t a fad.”
When the X Games first took to the airwaves, IEG estimates that corporations were spending less than $25 million to sponsor events and athletes. Next year’s total will grow to an estimated $107 million, Andrews said. That is substantial growth for what many Americans still view as alternative sports, but the category noticeably lags competitors. Tennis drew an estimated $430 million in sponsorship money during 2004, according to IEG, and golf drew $925 million.
Though purses have grown, sponsorship and endorsement deals are the major reason a handful of action-sports athletes are earning six-figure salaries. Some athletes, such as skateboarder Danny Way and surfer Kelly Slater, are estimated to earn seven-figures annually.
Even youngsters who show promise, such as skateboarder Ryan Sheckler and surfer Carissa Moore, have signed high five-figure deals.
Those who do well can reap off-the-court benefits. Burton, for example, has augmented White’s signature snowboard and helmet with the “White Collection” of jackets and snowboarding pants.
Quiksilver will pay its athletes as much as $32.9 million during the next five years. Quiksilver and other sponsors also pump money directly into action-sports events rather than specific athletes because “individuals have a limited dollar appeal because nobody knows what their shelf life will be,” said Marc Ganis, a sports finance expert who heads Chicago’s SportsCorp Limited. “The stars themselves are not well known outside of a relatively small band of followers.”
Furthermore, sponsorship opportunities may be shrinking because of a trend toward consolidation and expansion of product lines by single entities. For example, now under the Quiksilver/Roxy umbrella are DC Shoe Co. and Rossignol, both of which produce clothing and accessories along with their traditional lines of footwear, skis and boots. VF Corp., best known for its Lee Jeans line, also owns Vans, which helped to spark the action-sports games with its long-running Triple Crown series, and Reef.
Companies with broad product lines want to sign athletes to “head-to-toe” arrangements, keeping them from hitching with rivals.
The role of agent is becoming trickier with this changing landscape. For example, Peruvian surfer Gabriel Villaran recently signed with Quiksilver, and also with Oakley to endorse sunglasses and watches. As part of the contract arrangement, since Oakley now also produces apparel and accessories, any Oakley ad Villaran appears in must clearly state “eyewear” and “watches.”
This reduction of opportunities, primarily for smaller-name athletes, is “creating a divide” among athletes and sponsors, said Circe Wallace, a senior manager at Octagon, a global sports marketing and athlete management company. “We’re seeing a lot of issues pop up where there’s something in the contract that says an athlete cannot ride for a company selling competing products.”
This phenomenon is leading to dwindling sponsorship opportunities for lesser names.
That may be one reason the Dew Tour is awarding prize money across the field. The first three finishers in each of the tour’s five events will earn $15,000, $10,000 and $7,500. The last finisher in a field of 30 will earn about $1,000. “That’s by design,” said Dew Tour General Manager Wade Martin. “We obviously want to reward the person who won, but we need an entire field to compete, not just the top guys.”
Though sponsors and event organizers are quick to recognize that athletes are hungry for bigger paychecks, they caution that the action-sports sector must be careful not to replicate the disastrous events that led to professional volleyball’s implosion during the mid-1990s. “The inmates were running the asylum,” said one event organizer who asked to remain anonymous. “You have to be a successful business first because that’s what’s going to build the platform that makes prize money available in the first place.”
The Martin said that action sports “still have a way to go in the maturing process to get to the point where we think we could survive labor unrest or the other things that other leagues have managed to survive. If these sports go away, I’m not sure they could come back in the same way. So it’s something that everyone, the athletes, manufacturers, corporate sponsors and event organizers have to work carefully on.”
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X Games prize money
Prize money has increased steadily since the beginning of the X Games. Figures represent total annual purse:
* All prize purses in each sport and discipline have increased, but the 2005 total is $2,500 less than 2004 because of the elimination of aggressive in-line skate vert, which features 10 athletes, and the addition of BMX vert best trick, which has only five athletes.