Tuesday, June 12, 2007

The LeBron show – yet to begin

There is a widely held belief most basketball games are decided in the last two minutes, certainly in the last quarter. If that were nothing more than an urban myth, ask any basketball coach and they’ll tell you NBA games take 48 minutes to play, college games 40 minutes and high school games 32 minutes. In the first two games of the NBA Finals the Cleveland Cavaliers have outscored the San Antonio Spurs 57 to 35. The Cavaliers problems haven’t been at the end of the game, but in the first three quarters of games one and two. And unless the Cavs find a way to play much better in the first three quarters (starting with tonight’s game three), the NBA Finals are going to be over before they even begin for LeBron James and the Cavs.

So much of the focus leading up to the start of the 2007 NBA Finals has been on LeBron James chance to lead the City of Cleveland to their first sports championship in 43 years, and the organization’s first NBA title since the Cavaliers entered the NBA 37-years ago. LeBron has scored 39 points in the Cavs first two games against the Spurs, 25 on Sunday night, after hitting for 14 in game one. The real question, at 22 has LeBron come of age and does he have what it takes to lead a team to an NBA title. Michael Jordan led the Chicago Bulls to six NBA titles, his first coming in his seventh NBA season. LeBron is in his fourth NBA season and while Jordan left North Carolina after his junior year, LeBron went directly from high school to the NBA.

You can make a pretty strong argument that Michael Jordan changed the face of sports marketing and the NBA. Larry Bird and Magic Johnson may have set the table, but it was Michael Jordan who delivered the NBA from a fledging sports league to a billion dollar money-making machine. The challenge the NBA has faced since Jordan and the Bulls won their last title in 1998, the lack of a marketable superstar to fuel the NBA’s economic engine. It took Michael and the Bulls two missed opportunities before they finally won their first NBA championship, and in all likelihood the 2007 NBA Finals are going to be more of a learning experience than anything else for the Cavalries, but the bottom line at age 22 LeBron has accomplished more on and off the court than Jordan did when he was only 22 (and just starting his NBA career). For LeBron James, Michael Jordan may have served the meal – but LeBron will be much more than the desert. By the time the LeBron era ends, the NBA and its marquee player will have enjoyed a complete second course.

At 22, "all he has to do is put on a good show — he doesn't have to win the title" to appease sponsors, says David Carter in a USA Today report, executive director of the University of Southern California's Sports Business Institute. But he eventually must win a title to satisfy Nike, which has $97 million invested in him. "Performance matters to a performance shoe company," says Paul Swangard, sports marketing professor at the University of Oregon.

LeBron has marketing and sponsorship agreements that in total will generate in excess of $157 million. Nike cultivated a relationship with LeBron while he was in high school, signing him to a multi-year agreement worth close to $97 million when he ended his high school basketball career that included the Akron native being named high school player of the year as a junior and as a senior.

Game three is the pivotal point of the 2007 NBA Finals. Generally until you lose a home game you’re team isn’t considered ‘out’ of any seven game series, and remember the Cavaliers did lose the first two games of their NBA Eastern final to the Detroit Pistons before coming back and beating the Pistons four straight to make it to their first NBA finals. Before game one it seemed as if all anyone wanted to do was talk about the Cavs and LeBron, even NBA Commissioner David Stern who talked about LeBron before game one of the NBA finals.

“The Cavaliers have demonstrated an enormous amount of growth to the world in the course of these playoffs, and there's been a lot of media coverage about LeBron. But you don't get here alone, not even the greatest of the great get here alone. We're watching this series that Daniel Gibson had, seeing Zydrunas Ilgauskas after the difficult start of his career, hitting his stride. It's just exciting to watch that team.

“And I view LeBron, just as Tim is representative of the future certain Hall of Famers, when you look at LeBron, you just think of him representative of the future of this league, whether it's his own class of D-Wade or Carmelo or Chris Bosh or the other young players that have excelled in these playoffs, whether it's a Carlos Boozer or a Dwight Howard or just the young kids in our league, Chris Paul. We couldn't be in better shape, and it's an exciting time, as I said, to be a fan.

“LeBron James was one of our best known draftees as a result of his game being televised in high school and all the hoopla around him. So there's something else happening. We've all been part of it, so sometimes you don't step outside of yourself and watch the transition.
“But right now when a player, wherever he's from, does something great, you know, you go to -- there are 10 million streams of that event amongst an audience that's much younger than the one sitting up here and out here, but it's happening so that I think that there's an extraordinary amount of publicity that really doesn't make it a function of market size. Unless you happen to live in a large market, and then the largest markets are as provincial as the smallest markets, and the question I always get, not about transcendent players, but how could the league be doing well without a successful team in New York or Boston or whatever, and the fact that we are having our fourth year of record attendance, and I think it will continue to grow.

“I think he's doing a great job with his foundation, with his causes, that the companies that he's associating with to step up and begun to be very aggressive in active social responsibility. I don't think it's fair to expect our young players to be the answer to all the issues, but in talking to them at rookie transition and in talking to them individually, and we talk to them a lot, and I know the union talks to them a lot, they do have an opportunity to effect change, and we encourage them to do that, whether it's LeBron dealing with Nike or Ira Newble, encouraging our players to speak out on important issues across borders.”

LeBron may embody what David Stern wants to see in the NBA player of the near future, but LeBron may represent a great deal more than that to athletes everywhere. LeBron captured a great deal of attention after he fired his agent Eric Goodwin who negotiated endorsement agreements with more than $100 million with Nike, Coca-Cola and other companies soon after he was selected as the NBA’s rookie of the year.

In a classic case of life imitating art, LeBron announced that he and three friends: Maverick Carter, Randy Mims and Rich Paul with the expressed goal – driving the business of LeBron James into the stratosphere, where James would one day become sports first billion dollar athlete.

“Michael Jordan had a 15- to 20-year run with Nike and developed a huge business that is probably worth $500 [million] to $600 million," said Lynn Merritt, senior director of basketball sports marketing at Nike, and the guy who tracked LeBron from his earliest years in high school in an Ad Age report. "The state that LeBron comes in with now, with the internet and all kinds of technological advancements that weren't around when Michael was at his peak, well, LeBron could be the first billion-dollar athlete in all aspects."

The four Akron natives don’t want to be linked to the hit HBO show Entourage; they’d rather be called The Four Horsemen (acknowledging Ric Flair and one of professional wrestling greatest ‘teams’ ever). Four Horsemen Management was their company’s original name before they decided it made more sense to change their corporate name.

Last summer the four showed how serious they were by organizing their own sports marketing seminar in Cleveland. The goal of the summit – to set the groundwork for LeBron James to become a global marketing force by the time LeBron hopefully leads the United States to a gold medal at the 2008 Beijing Olympics. The Four Horsemen had heard it all when they first formed LRMR Marketing two years ago.

"People thought we were idiots or something," Mr. Mims told Ad Age a year ago.

"In the beginning, no one was giving us a chance," Mr. Paul said. "But it's a new day. Sports marketing in 2006 is different, athletes are different and the way people perceive athletes is different."

But for LeBron, while he appreciated the efforts of his agents, wanted to be in control of his destiny as he told Ad Age, a vision shared not only by LeBron but by those who are paying attention to the progress of LRMR Marketing.

The direction I went in the beginning -- I won't say they were bad decisions. I got a lot of good things out of my situation," LeBron said. "But I wanted to wake up in the morning and say I did it my way. I'm not being cocky and saying it's my way or the highway; I just wanted to make the decisions."
"They're going to make it client-centric, as opposed to brands writing checks against endorsement sponsorships," said Mitch Kanner, founder-CEO of 2 Degrees Ventures and an adviser to LRMR Marketing. "They're going to create a more unified message around the brand with partners so that everybody gets what they need."

"There needs to be more innovation and more creativity in the partnerships that are formed," Mr. Carter said in the Ad Age report. "In the '80s and '90s, sports marketing and endorsements were catchphrases. We need partnerships. For some athletes, there may not be a partnership. It may not fit. But for someone like LeBron James, his brand, like Michael Jordan's, will live on."

"It's not about the number of the sponsors or the number of opportunities," Mr. Kanner said. "It's whether the [potential] brand works with the LeBron brand first, and what the long-term strategy is going to be between both."

Regardless of how the next week plays out for LeBron and the Cavalries there is no doubt LeBron is going to be the face of the NBA. Coca-Cola an Olympic global sponsor is set to make James the face of their 2008 Beijing Olympic marketing efforts. Coca-Cola doesn’t make marketing mistakes (the new Coke being the exception to that rule) and if Coca-Cola is set to invest tens of millions of dollars in LeBron James, they’ve bought into what LeBron and his friends are selling.

While Nike is LeBron’s biggest single sponsor in terms of their financial commitment, Nike isn’t an official IOC sponsor. Nevertheless Nike is more than a little interested in seeing how LeBron and the Cavaliers rebound in the coming days.

James is closer to fulfilling his prophecy as "The Chosen One," something that Nike is counting on, said Paul Swangard, director of the Warsaw Sports Marketing Center at the University of Oregon, located not far from Nike's suburban Portland headquarters.
"They invested an enormous amount of money up front betting this would eventually occur," Swangard said. "It's a validation of not only their efforts but their investment."

Forbes magazine last year reported that James made $26 million from June 2005 to June 2006. His endorsement agreements with Nike, Sprite, Bubblicious and others total more than $150 million. James also has a partnership with Microsoft.

The first two games of the NBA Finals have failed to deliver ratings anywhere near Jordan’s Golden era. The Cavaliers' 85-76 loss to San Antonio Thursday night, which aired on Walt Disney Co.'s ABC television network, was watched by about 9.2 million people in the U.S., scoring a 6.3 percent rating, according to Nielsen Media Research.

The ABC program also failed to win the night, losing to Fox's “So You Think You Can Dance,” which drew about 11.1 million viewers for a 6.9 rating out of the 111.4 million U.S. households with TVs, Nielsen said.

Previously, the lowest-rated opening NBA championship game was in 2003, when the Spurs and New Jersey Nets drew 6.4 percent of television households. Last year's matchup between the Miami Heat and Dallas Mavericks had a 7.7 rating for its opener, while the Spurs-Pistons series in 2005 opened with a 7.2. Ratings help advertisers determine what to pay for commercials.

“The matchup is really dependent on how well LeBron plays and how many games they get,” Neal Pilson, a former president of CBS Sports who runs Pilson Communications, said in a telephone interview about the ratings after game one in a Bloomberg News report. “If San Antonio wins Game 2 easily, then the public may see this as a non-competitive series. Game 2 could be more important than Game 1.”

Sunday night with the finale of “The Sopranos,” on HBO the news wasn’t much better for ABC and the NBA in the ratings department. Variety reported that while detailed ratings for “The Sopranos” won't be issued by Nielsen until Tuesday, but metered-market overnights repping more than 55 of the nation's biggest cities show the mob drama averaging a 6.4 household rating. This is a 42% rise over the previous week's 4.5 overnight rating, which translated to 8 million viewers nationally.

In New York, “The Sopranos” topped an 18 rating, more than double the 8.2 that CBS garnered for the Tony Awards -- even though HBO is available in roughly just one-third of the nation's homes.

ABC's NBA Finals game between the San Antonio Spurs and Cleveland Cavaliers averaged a mere 3.1/8 in 18-49 and 7.7 million viewers overall, which should translate into about a 3.5 rating in the demo and 8.2 million viewers overall in the nationals -- a significant decline from the 5.3/15 in 18-49 and 12.4 million viewers overall for last year's Game 2 contest between Miami and Dallas.

There is a lot more than ratings riding on game three tonight. If the Cavaliers lose tonight, the series is over, friends and family will be the only remaining interested parties in game four Thursday night. Before the Finals began Thursday one marketing guru believed if LeBron leads the Cavaliers to their first NBA title could generate as much as $10 million in additional marketing and endorsement revenues for James.

“It's that next step of becoming the ultimate winner and getting the ring,” Bob Dorfman, executive vice president of San Francisco-based Pickett Advertising said in a Bloomberg News report. “That kind of legitimizes yourself with the casual fan. He's doing real well already and could be looking at another eight figures.'”

“In many respects, he's better poised because he can take his marketing message, his brand, much more directly to the people than Michael Jordan of a marketing generation ago, when you pretty much just had traditional forms of media,'” David Carter if the Los Angeles based Sports Marketing group told Bloomberg News. NBA Commissioner David Stern said in an e-mail that James's future is “bright, global and technologically enhanced.”

The off-court opportunities would grow even more with a championship ring, said Steve Rosner, co-founder of sports marketing firm 16W Marketing LLC in Rutherford, New Jersey.

“LeBron has a chance to do things other athletes haven't done or been able to do,” Rosner said in an interview. “He just has to do one thing he hasn't done yet: Win baby, win.”

That had better begin tonight in Cleveland – tonight could be the next step forward in the evolution of LeBron James career both on and off a basketball court. If nothing else, Tuesday night in C-Town could indeed be LeBron’s chance to become an NBA Finals shining star.

For Sports Business News this is Howard Bloom. Sources used and cited in this Insider Report: Ad Age, Bloomberg News and the Associated Press.

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