The agents for Maria Sharapova and LeBron James have come to class the last couple days to talk about the power dynamics in endorsement deals.
Common arrangements include:
- Fixed fee: where an athlete is paid the same regardless of a campaign's success. In this case, the athlete has no upside exposure. In an ideal world, this is publishers' first choice.
- Step bonus: where an athlete is paid more if the campaign meets predefined milestones. In this case, the athlete has some upside exposure, but it's often capped.
- Revenue share: where an athlete is paid a proportion of sales. The proportion may increase with sales to incentivize the athlete to spend more time promoting the campaign. This is what superstars prefer. Some are even going as far as starting their own media brands so they can be exposed to more upside.