The Ball’s in His Court

Having served as product pitchman for high-powered companies like Reebok, Pepsi-Cola and Taco Bell, Los Angeles Laker star Shaquille O’Neal now hopes to strike out on his own with a line of Shaq-branded basketball shoes and on-the-court apparel.

The line, which is still being developed, comes to the fore as several of the National Basketball Assn. star’s original sports-marketing contracts are ending. And, at the same time, marketing opportunities for big-name athletes seem to be dwindling.

O’Neal lost a high-profile assignment this month, when he and Reebok agreed to let their five-year endorsement contract expire. Observers tied the development to an industrywide push by shoe companies to trim endorsement rosters.

“We’re seeing a retrenchment among [sports-related] companies that a few years ago were running out to sign athletes left and right,” said Keith Bruce, director of sports marketing for San Francisco-based Foote, Cone & Belding.

O’Neal’s proposed line of basketball shoes, hats, shirts and shorts also will face inevitable comparisons to an established line from Chicago Bull star Michael Jordan. But Jordan’s credibility is enhanced by what O’Neal lacks: a collection of NBA championship rings and a close association with Nike Corp.

Leonard Armato, O’Neal’s Santa Monica-based agent, argues that the time is right for the 26-year-old center to introduce the line aimed at youthful basketball players and kids who take fashion cues from sports stars.

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Armato said the quality of O’Neal’s basketball shoes would be comparable to top-line product from companies like Nike. Armato added that O’Neal would chase price-conscious consumers with a line that retails for “noticeably less” than the $100 or more that many shoe companies charge for premium styles.

O’Neal placed third--behind Jordan and golf superstar Tiger Woods--on a recent top 10 list compiled by Westport, Conn.-based Sports Marketing Letter, with an estimated $28 million in endorsement income this year. But as some of O’Neal’s initial long-term contracts come to an end, sports marketers are speculating about future deals.

Pepsi’s newest Shaq commercial aired in the spring, and Pepsi spokesman Jon Harris describes O’Neal as “a valued member of the Pepsi family. . . . Consumers love Shaq’s multifaceted personality, whether it’s basketball, movies or singing.”

But while O’Neal has a year left on a contract with Taco Bell, he hasn’t starred in a commercial in more than a year, and a company spokeswoman said there are no immediate plans to include him in future pitches.

Sports marketers also point to a budding rivalry with Laker teammate Kobe Bryant.

Shortly after O’Neal’s four-year contract with Spalding Sports Worldwide expired late in 1997, the Chicopee, Mass.-based company signed an agreement with the 19-year-old star. “We had a sense of where fans’ interests are turning and believe that Kobe can offer the kind of excitement we need for our more youthful target market,” said Dan Touhey, product manager for Spalding’s basketball business.

Armato said the expired contracts with Reebok and Spalding are just part of the business.

“It’s part of an evolution for Shaq,” Armato said. “He’s come to the end of the first chapter of the traditional marketing cycle available to top stars like Michael Jordan and Tiger Woods,” Armato said. “He has had to decide to continue what he was doing before or take it to the next level.”

Armato, who uses words like “icon” and “brand” to describe his client, believes O’Neal has enough cachet to lure corporate sponsorships beyond traditional consumer goods. An example, Armato said, is the All-Star Cafe chain, in which O’Neal holds an equity stake along with famous athletes such as Ken Griffey Jr. and Wayne Gretzky.

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Armato also envisions an expanded roster of corporate partners that’s tilted toward high-tech, including cellular telephones and portable computers that highly mobile NBA players regularly use. Armato said O’Neal recently incorporated a Microsoft product into an upcoming music video--in effect, an unpaid promotion designed to court marketing executives at the software firm.

But the cornerstone of Brand Shaq will be the shoe and apparel business. The line won’t be named Shaq, but Armato said it will be aimed at basketball players--and feature a logo showing O’Neal flying through the air for a dunk.

O’Neal hopes to have samples of the proposed line in about a month, but it’s too early to say when the products will be on store shelves or which retailers will carry them.

And there is no guarantee the line will succeed. So far, Shaq’s compact-disc, movie, book and children’s television projects haven’t been blockbusters.

Sports marketers say that if O’Neal misses with his sportswear line, it could brand him as a loser. And they point to other potential short-term barriers.

Relationships with sponsors could cool if an ongoing player lockout by team owners eats into the 1998-99 season. Some Laker fans wonder what O’Neal will do if longtime Laker executive Jerry West--a prime reason O’Neal moved to L.A.--makes good on his promise to leave the franchise.

Armato, though, remains confident about O’Neal’s business future: “To me, it’s really a no-risk situation. What we’re doing is exploiting our own brand--Shaq. It’s much like [Walt Disney Co.] exploiting Mickey Mouse.”

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He’s Got Name

Sports Marketing Newsletter recently describe Shaquille O’Neal as “the most visible man in the NBA next to [Michael] Jordan.” That visibility will translate into an estimated $28 million in endorsement revenue this year. A look at O’Neal’s major deals.

Reebok: Five-year shoe deal expired early in July.

Spalding Sports Worldwide: Four-year basketball endorsement expired in December.

Taco Bell: Endorsement contract extends into 1999. Last commercial featuring O’Neal (“Taco Neck Syndrome) ran more than a year ago. O’Neal will appear in upcoming public service advertisement for a Taco Bell youth program.

Pepsi-Cola: O’Neal’s most recent commercial began running in April. Pepsi did not disclose length of contract.

A&M; Records: A joint venture with O’Neal’s Twism label. Co-owned and distributed by Polygram. O’Neal’s latest single, “The Way It’s Going Down (Twism for life)” is now playing on radio stations in Los Angeles.

Scholastic: O’Neal has a contract to write a series of fairy tales.

Warner Bros. Sports: A cross-licensing deal that gives Warner limited rights to distribute O’Neal-related apparel and footwear to mass-market retailers. O’Neal also has small licensing arrangement with Kenner.

NBA Properties: Rights to use O’Neal’s image in league-related marketing. O’Neal also is affiliated with CBS Sportsline’s web site.

Source: Leonard Armato and companies notred above