Sure, the best professional athletes pull in salaries to match. But to find the real money in sports, you need to look someplace else: endorsements.
In Episode 7 of “Binge Sesh,” hosts Matt Brennan and Kareem Maddox draw inspiration from Nike cofounder Phil Knight’s pursuit of Magic Johnson in “Winning Time.” With help from the HBO series executive producer Rodney Barnes and industry insiders, we explore the origin, development and explosion of athlete endorsement deals, from a $6.6-million baseball card to social media “microinfluencers” and more.
Kareem Maddox: Matt, have you heard the story of Honus Wagner?
Matt Brennan: It sounds like I’m about to.
Maddox: Yeah. So Honus Wagner played professional baseball in the early 20th century, and last year, a baseball card with his likeness on it sold for $6.6 million, making it the highest-selling sports card ever.
Brennan: Wait, how is a baseball player I’ve never even heard of worth 6.6 million bucks?
Maddox: Yeah, well, please put some respect on Honus’ name.
Brennan: Sorry, Honus.
Maddox: He’s considered one of the early pioneers of athlete endorsements. So when a tobacco company printed the cards we’re talking about, he told them to cut that out. And he went on to become the first athlete to actually take endorsement money from Louisville Slugger, the baseball bat company.
Brennan: OK, mea culpa. Now I recognize the importance of Honus Wagner, because rarely do you get an example in history that so clearly connects to the present day. Because Honus Wagner made a stink about his face being used to sell cigarettes, he sort of secured the basic terms of every athlete endorsement since, which is that athletes need to give their permission and be compensated for the use of their name and image.
Maddox: Of course, by the time the character of Magic Johnson begins his professional career in “Winning Time” from HBO, it’s no longer just about trading cards. In the show we see him being approached by the head of the then-small shoe company Nike, a guy named Phil Knight.
[“Winning Time” clip: Magic Johnson character: Y’all are making me a special pair?
Phil Knight character: Every pair. The Nike Magic.]
Maddox: What did you learn from that scene?
Brennan: I learned that Magic missed out on a pretty big windfall from not getting in on the ground floor of Nike, although who can blame him? Nike wasn’t really a proven quantity yet.
[“Winning Time” clip: Phil Knight character: I’m offering a dollar, one for every pair we ship, plus 100,000 in stock options. Right now that’s 18 cents a share. But the sky is the limit. Bet on us, you’re betting on yourself.]
Brennan: And Phil gives this, I think, pretty compelling argument that Nike is going to be the future of sports endorsements. Which — the “Winning Time” writers do have the benefit of hindsight in writing that subplot.
Maddox: But what did you make of the scene, as someone who’s not exactly a fan of sports but who understands that athletes and marketing and branding is really big business, especially now?
Brennan: I mean, I guess what struck me is how kind of informal and casual it seemed. It’s really, it’s a world of handshake deals and face-to-face meetings. Whereas today I would imagine that a player of Magic’s stature would have an army of lawyers and agents and managers and publicists going over every inch of a deal like that to make sure that it built his brand in the most effective way.
Maddox: “Winning Time” actually directly addresses that point.
[Clip from “Winning Time”: Magic Johnson character: We building Magic Johnson Enterprises.
Earvin Johnson Sr. character: It’s not Magic Johnson on my mind. You got a lot of people in your ear, son. Ain’t many of them family. You hear me?
Magic Johnson character: I hear you, Pop. I got this, though.]
Brennan: “Winning Time” writer and executive producer Rodney Barnes told us that this scene is included because these were the actual dynamics that Magic was dealing with at the time. And the writers wanted to show not only this sort of like emerging industry of athlete brand endorsements, but also capture the fact that Magic was interested in business from a young age and would go on to be a business mogul in his post-playing career.
Rodney Barnes: These are people who are coming from the Midwest. Who’ve never been on this stage, doing this type of work, so there are going to be growing pains along the way. And I think that’s what makes for good television. You’re dealing with a young athlete. This is his first season, so he doesn’t know what all of this is. You’re dealing with a businessman who’s used to regional business, and this is business on a whole different level.
Brennan: You can see the beginnings of it in one of Magic’s earliest endorsements, a commercial for a convenience store in his hometown of Lansing, Mich.
[Clip from commercial: Magic Johnson: It’s great being home. The best thing is seeing old friends doing the same old thing and shopping at Quality Dairy.]
Maddox: Barnes says that this period in time was a moment when the idea of what athletes could mean to brands was changing. Take basketball and shoes, for example.
Rodney Barnes: We’re just getting into the endorsement idea of basketball, where guys were starting to put their names on shoes and, like Clyde Frazier for the Knicks. Puma at the time was his shoe. And I used to love those shoes. Converse was the big thing, the Dr. J Converse All Star. But yeah, I think that was sort of — almost felt like a novelty thing. But now it’s baked into what I think all-star players or even upper-tier second-level players now start to depend on as a revenue stream. And this was the beginning period of that.
Maddox: Things look very different now. So this week on “Binge Sesh,” we’re bringing you a brief history of the athlete endorsement —and explaining how the Showtime era was the start of sports stars becoming global brands of their own.
Brennan: We’ll be right back.
Maddox: Welcome back to “Binge Sesh,” where this season we’re diving into the stories behind HBO’s “Winning Time,” the saga of the Showtime-era L.A. Lakers. I’m Kareem Maddox, professional basketball player.
Brennan: And I’m Matt Brennan, television editor of the Los Angeles Times.
Maddox: So Ken Shropshire, he’s the CEO of the Global Sport Institute and he’s the Adidas professor of global sport at Arizona State University. So he’s studied athletes, brands and marketing for decades, and he took me back to when professional sports got started.
Ken Shropshire: The original competitions were taking place amongst teams. Fans would show up and pay the players for their performance. Hats would be passed to collect money from the fans. And then you divide that up. That was a lot of what took place in the earliest iteration of, uh, the major sports in the United States.
Brennan: The NBA, NFL and MLB are these multibillion-dollar businesses today, but these empires started out with amateurs, or at least quasi-amateurs, playing the games. I think that might be why people yearn for this kind of like “for the love of the game” ideal, because it really did start there. Doesn’t sound like you could be making a living if you were relying on, like, 10-cent donations from the people who were watching your games.
Shropshire: In the old days, we certainly saw athletes in the offseason — you have the classic stories — working in sporting goods stores, working at filling stations. In later years, up through the ’80s, working part time as stockbrokers in the offseason. Doing all sorts of things. Now almost across the board, you make enough money, especially in the four or five major sports, where that’s not something you have to do.
Maddox: A big part of the reason why most men’s athletes — and we should say men specifically because women athletes get paid nowhere near the same as men do — but it’s because of this influx of money from brands and companies that want to endorse athletes. And it’s changed a lot from the period of time that is depicted in “Winning Time.”
Maddox: So how did we get from there to today’s landscape where athletes sign seven-figure endorsement deals pretty frequently? Shropshire says that the Showtime era definitely played a role in setting the table for the next generation of basketball players, namely his airness Air Jordan.
Shropshire: I mean, so Magic and Bird and that whole era. Uh, getting the NBA out of tape-delayed, championship games and the like, and getting back to a level that moved away from the contamination that had come upon the league with association with drugs and the difficulty that some of America was having with the transition to it becoming a predominantly Black league. Well here was this Magic, here was this presence of someone that you said, OK , I like this guy. I mean, his likeability was at such a high level that it took away a lot of this stuff.
And then the signature shoe deal evolving in the ’90s with Jordan and otherwise was a whole new moment, the whole idea of associating a brand entirely with one person.
Maddox: Jordan might be the best example of a brand that benefited from all these forces of sports and marketing and capitalism just coming together perfectly. And in many ways, Jordan becomes the aspirational idea for a lot of athletes when they think about their brand — everyone wants to be like Mike, like the Gatorade campaign that ran. And Ken Shropshire says that there was a racial component that was also beginning to change during this time too.
Shropshire: I think all this idea of advertising begins to emerge at a time that the Black athlete emerges. And the idea of, “Can you have a Black athlete be the face of your brand?” And that too — a lot, a lot of bad things about O.J. Simpson, but you got to give O.J. credit for that as well. Kind of breaking through that moment where it became a possibility that you could have that association.
So it really wasn’t, again, until the ’90s that that full breakthrough took place. And to some extent you give Magic credit for, for breaking through and getting those associations with different products at a level that hadn’t been in place before. But when it really went full speed was Jordan, Tiger Woods, that era. We can look at these guys becoming the dominant force in sports of the Black athlete, take their images beyond the sport itself, beyond just balls or shoes and those sorts of things.
Maddox: When it comes to athletes and endorsements and the sums of money being tossed around these days, I hear some people complain that all of this has somehow ruined the game. Have you heard that argument before?
Brennan: I don’t know if I’ve heard it before, but it kind of makes intuitive sense that people would make that argument. I think there’s kind of like a prevailing desire in a lot of aspects of American culture for a return to a quote unquote simpler or less corporatized time. But I am sympathetic to the idea that endorsements in celebrity kind of have taken over modern professional sports. These leagues, particularly the NBA and the NFL, because they’re so big, are these massive industries where I do sometimes feel like the game can come second to all of the accouterments.
Maddox: I wanted to know if Ken Shropshire had heard the argument that money is ruining sports, or has ruined sports. And he said he’s heard it.
Shropshire: Oh, sure. I mean, it’s right after “football’s too soft now.” I mean, sort of the same, same camp.... So, sure, people will criticize this advancement that’s taken place. And I think in the end you have to ask yourself, why were these constraints there in the first place, whatever they might be? In terms of “We can’t use athletes for this or that,” or “We don’t want that association.”
Now that we get so much exposure to these athletes via social media and otherwise in a way that we didn’t know before, the upside is we’ve learned so much for those who didn’t know that these athletes are just like us. The idea of “Be like Mike” is much more feasible.
Maddox: And now these endorsements and branding opportunities, more than ever before, are going to athletes who use their voices to talk about controversial stuff — because of how the media landscape is changing again.
Shropshire: I’d say we’re on, on the, on the cusp of a possible new evolution in terms of athletes and endorsements.
LeBron [James] has changed the part about being apolitical, the part about being able to speak on issues and still do endorsements, but then we also saw what happened to [Colin] Kaepernick and, and that’s an interesting dilemma there where he loses his job but he gets a huge deal with Nike as a result of his activism.
So it is, it’s much different than it was historically in terms of the possibilities. And it really is, “What is it that people will buy? What is it that people are, are in support of?”
Brennan: So we’ve already talked about how brands help create the superstar athletes of the ’90s, but I’m sort of curious about like what the brands are looking for in the deal. And we’re going to talk about that right after this break.
Maddox: Welcome back. So, Matt, my friend Sennai is the VP of brand marketing at a company called Gymshark, which is a clothing brand. He was formerly at Nike and his career has always involved working with athletes.
Sennai Atsbeha: we work with athletes to do everything from integrate athletes into the stories that we as a brand tell, we as a brand integrate into the things that those athletes have going on. And then true collaborations where it’s — we come together, we work with them to outline something that we see as a mutual opportunity to essentially elevate their brand, elevate our brand, and do it in a way that’s really aligned.
Maddox: What do you mean, “aligned”?
Atsbeha: So as an example, every athlete is so much more than an athlete, right? LeBron famously said that way back. And so every athlete has their own way of positioning themselves, whether they know it or not. Certain athletes are much more irreverent. Others are much more aligned to specifically their sport. We focus on this ability to be dynamic and not just be one-dimensional.
Maddox: What makes athletes so important?
Atsbeha: The way that I look at an athlete is this ability to be both aspirational and relatable. You know, we all grew up dreaming of — regardless of how old we are, right, we go out to the court, the backyard or wherever we go, and we envision ourselves as that individual. Right? And that’s the aspirational element and I think more and more, we see the relatability being a key factor where we can actually see ourselves in those individuals.
Maddox: OK. And what makes an athlete relatable?
Atsbeha: That they’re real people. I think a lot of times when we look back at history, the way that the Jordans of the world before social media was a thing or what it is today, they were untouchable, right? They were bigger than life. They were something that, while we all aspire to be them, I think we all knew that we would never be them.
What makes athletes relatable today is, one, we have access to them 24/7. We see them going through very similar things that we go through on a daily basis. And we see them struggling. We see them succeeding. We see them being challenged. All the different emotions that we have as, um, regular people — I’ll say that with air quotes — we see them having, and I think it’s a really unique way to showcase just how real they are.
Maddox: Athletes are now more admired for just how normal they are, which is so different than what we were looking at during the Showtime era.
Atsbeha: We live in this much more three-dimensional world now where athletes understand that the sheer power that they have, that what they do off the court, what they do throughout all aspects of their lives, are something that they can monetize. The challenge back then was folks looked at it as sport first, and sport was everything. And now I would argue that sport is potentially second, because you don’t have to be great at your sport to be the most popular or the most relevant.
Brennan: In some ways I totally buy that someone who you have a little bit more of an intimate social media relationship with would be more influential. I think there probably does have to be some amount of critical mass of followers for that person to have, though, for the scale to work for brands. But I don’t have any data to back up that assertion. That’s just a gut instinct.
Atsbeha: It’s in a place where, you know, if you look at micro-influencers and the power of a micro-influencer versus a macro, somebody could have millions upon millions of followers and not nearly the level of connection with somebody who has tens of thousands. And at the end of the day, that individual who has tens of thousands, they’re creating a micro-community of support that is super loyal: When they say jump, folks say how high.
And that’s again, that goes back to the relatability element because these are real people that they can touch and feel. When you do a deal with a Russell Westbrook, that check is not going to be small. Whereas a lot of these, these folks who are kind of on their way up, on their ascension, on their journey, they’re much more open to finding ways to build with a brand, whether it’s through equity deals, whether it’s through smaller deals, whether it’s just finding partnerships that help build their brand. ’Cause at the end of the day, building their brand is by far and away the most important thing, much more so than a couple of grand in terms of checks.
Maddox: But like now it’s at the point where Gymshark is like, “We actually might be better off going for the UCLA gymnast who inspires a lot of little girls than we are going for Russell Westbrook, who is on the Lakers currently and has car dealerships in the Valley. But like, he’s not gonna move the needle for us at Gymshark or, you know, a smaller brand.”
Brennan: Westbrook has dealerships in the Valley?
Maddox: Oh yeah. There’s Russell Westbrook Toyota or something.
Brennan: Oh my God. I love it. That’s so funny. I mean, that makes sense to me. Like, I think about the way that in the ‘80s and ‘90s, the goal was to reach the widest possible audience. And you didn’t necessarily have the ability to target, like, individual niches.
In that case you don’t need to have, like, the biggest star in the world. So yeah, it totally makes sense to me that in a world where niche audiences and micro-targeting reign supreme, that these influencers are sort of better value for money for brands.
Maddox: I just wanted to get a view from a brand’s perspective of how they think about approaching these deals with athletes. So you’re going after Magic Johnson for your company. How do you approach that?
Atsbeha: Magic Johnson today or Magic Johnson —?
Maddox: Magic Johnson in his prime.
Atsbeha: OK. I think, for me, the first piece is understanding what he meant to the sport, understanding what he meant to culture. Really being able to leverage him as not just an athlete, but really being able to lean into all the elements of him.
The Showtime era and what that meant — and this is what I loved about Showtime without going too in-depth — is when you had the blue collar of Boston versus the lights, camera, action of Showtime. It really made you pick a side. Right? And I think that’s fantastic, especially within sport.
It’s also fantastic from a brand perspective, right? Because as a brand, you don’t want to mean everything to everybody because if you do, you probably don’t really mean anything to everybody.
Maddox: And so, so now you’re trying to get me like a brand deal and you know roughly my profile — Olympic hopeful, play on the pro circuit, whatever. How do we go about it?
Atsbeha: For you? And again, this is where I think it’s a really exciting opportunity because what you have is that aspirational but relatable component that we talked about earlier, right? Because you are, while you’re an elite athlete and folks who are elite at basketball still can’t mess with you on the court, you’re by far and away one of the best players I know, but also one of the best players that we have in the states that doesn’t play for an NBA team. Your path is very much one that other folks like you can relate to. Right?
There’s 60 guys that get drafted every single year. And outside of those 60, right? Thousands that come out of playing college basketball. And what you represent to me is a path to continue to stay hyper-relevant in a sport that you love, and in a competitive space with a lot of which, a lot of folks love, but not in the traditional linear path. Right?
And you can do things like perform at the highest levels in terms of the Olympics. You can try, you can travel the world and see amazing things. You can interact with amazing people. You can make amazing friendships. You can do all those things through basketball. That’s really, really special.
And there’s a lot of people that are going to resonate with that and are going to say, I want to sign up for that too, because I’m not going to be one of those 60. And so I would really position you as an inspirer who figured out another way to continue along your hoop dream.
It’s not just about what you do on the court, but how you live your life in totality.
Brennan: The ways that athletes can become famous is wider than certainly it was when I was born in 1987. But even then when I was growing up in the ‘90s, I think the example of Colin Kaepernick is a really important one. Given the sort of like tenor of the ‘90s in politics, I can’t really see someone as outspokenly political, as Kaep getting an endorsement deal to the same level that he has his deal with Nike.
I never remember athletes talking openly about mental health like Simone Biles has. I think that we’ve started to see even greater diversity beyond Black and white in athletics with someone like Sunisa Lee, the American gymnast who’s of Hmong descent. I think that is a lot because of the advocacy of athletes themselves to like, say — as for example, Simone Biles and Naomi Osaka have — “I’m allowed to be a human being in addition to being a star athlete.”
So like, in some ways, what we’ve traced is an arc from the brand that mattered when Dr. J or Magic signed their contracts was Nike or Converse. The company’s brand was sort of like the locus of power. And what has shifted is that now the brand that matters in any endorsement contract is the athlete’s brand — like it’s LeBron or Colin Kaepernick or Tiger Woods or Michael Jordan. And I think that, that it’s interesting to go back to the way this is depicted in “Winning Time.” In the end Magic Johnson accepts a pretty simple deal: We will give you a check in order for you to wear our shoes, maybe appear in a few ads. Whereas now it’s like: We will sign you to a multimillion-dollar, 10-year contract to be an ambassador for us. And that is because ultimately like these very top-tier athletes are some of the biggest celebrities in the world.
Maddox: But fame comes with temptation and scrutiny, which created plenty of complications for the Showtime Lakers and the NBA as a whole.
That’s next week on “Binge Sesh.”
Brennan: What, how do you, how does it make sense to, you know, pay an athlete like a $60-million or $100-million, whatever it is, endorsement contract? Like what’s the dollars and cents of that? I want spreadsheets, baby. I want, I want spreadsheets. I want data analysis. I want, I want hard numbers.
That’s a real journalist dream, like, “Oh yeah. Nike just handed me all their accounting.”
Everything you need to know about the true story of the Showtime Lakers, all in one place.
Dennis DeValeria and Jeanne Burke DeValeria, “Honus Wagner: A Biography” (2014)
Phil Knight, “Shoe Dog: A Memoir by the Creator of Nike” (2016)
Jeff Pearlman, “Showtime: Magic, Kareem, Riley, and the Los Angeles Lakers Dynasty of the 1980s” (2013)
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