Equity Endorsement Marketing Deals for Professional Athletes

The following article was written by Spencer Wingate.

Allen Iverson is the most recent star to generate headlines for being broke. It does not even seem newsworthy when reports surface that another athlete has squandered millions and millions of dollars. Sports media outlets have determined 60% of NBA players are broke after leaving the league and the number in the NFL has been estimated as high as 80%. It seems athletes in all professional sports have a penchant for luxurious lifestyles and frivolous spending that leads to a vast majority losing most or even all of their money. The mismanagement of money can be due to questionable purchases, bad investment choices, or even predatory advisors. Terrell Owens’ financial trouble led him to resort to an indoor football contract. Iverson reportedly considered signing with a Puerto Rican basketball team.

One possible solution available for more prominent athletes is to sign an equity endorsement deal. Tom Brady signed a deal with Under Armour that made him not only a contracted endorser, but also a shareholder in the company. Equity was part of the endorsement that granted Brady a financial stake in the company.  An equity endorsement deal allows the athlete to be compensated through stock within the company. Instead of a material purchase that instantly loses value, the deal becomes a wealth building asset. The deal does not come without risk, as it depends on the company’s success. However, it serves to place a sense of accountability on both ends. The athlete must perform well on the playing field as well as behaving off it since his actions are reflective upon the company. Simultaneously, he is placing his support and faith by investing in the company. An equity endorsement might not be available for every athlete, but it does serve as an enticing option for athletes presented with or able to obtain the opportunity.

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