Equity Endorsement Deals Offer Advantages For Both Corporate Sponsors And Athletes

Quarterback Tom Brady signed a multiyear endorsement deal with apparel manufacturer Under Armour that includes shares of the company’s stock. A growing trend in the sports marketing field, equity endorsement deals offer advantages for both companies and sports stars that endorse their products. These deals offer athletes assets that can potentially build their wealth and provide them with beneficial tax treatment. Companies benefit from lower upfront costs and motivate athletes to behave well both in and outside their sports arenas. Baseball star David Wright’s experience with his equity endorsement deal with Glaceau, manufacturer of VitaminWater, demonstrates the potential benefits of including ownership stakes in endorsement contracts. Equity deals, however, also pose some risks, especially when a company’s stock takes a hit, or the market in general suffers declines.