RRW: Shoe Companies Are Still Paying Athletes Endorsement Contracts in 2020 But They Are Saving A Lot As They Won’t Be Paying Out Any Bonuses If There Is No Competition
By David Monti, @d9monti
(c) 2020 Race Results Weekly, all rights reserved
(17-Apr) — Although there is no action on the field of play due to the COVID19 crisis, track and field and road running athletes are still receiving critical financial support through their endorsement contracts which allow them to train for when competition reopens, Race Results Weekly has learned.
Typically paid quarterly, endorsement contracts provide the base level of income athletes depend on, essentially their salary. Those payments are still flowing, according to half a dozen agents Race Results Weekly spoke to by telephone, and don’t appear to be in jeopardy, at least for now.
However with most retail stores closed in the United States and Europe, on-line sales cannot totally replace in-store sales. It is not known yet how much financial pressure faced by shoe and apparel companies could eventually trickle down to Olympic sports like athletics.
“We’re still the beginning stages of this,” cautioned John Hricay of Hawi Management an agency which represents runners like Aliphine Tuliamuk and Nikki Hiltz, and shot putter Joe Kovacs. “In terms of sponsorship contracts we’ve haven’t seen any change from normal times.” He continued: “Overall, the shoe companies are like any other company in America; they depend on the consumer demand for them.”
Athletes can be contracted for any length of time, but nearly all contracts are set to expire on December 31. Agents agreed that for athletes at the top of their disciplines (either globally or nationally), getting their contracts extended to 2021 when the Tokyo Olympics will take place shouldn’t be a problem. But lower on the food chain they anticipated some cutting.
“Many contracts roll into next year and beyond,” said Ray Flynn of Flynn Sports Management, one of the largest agencies representing track and field athletes like distance runners Molly Huddle and Emily Sisson. “Some will expire at the end of this year. There’s no guarantee that they’ll get rolled over.” He added: “There would be a natural changing of the guard at the end of 2020. It’s really too early to assess what’s happening in the future.”
Ironically, the shoe companies will actually be saving money this year on athlete payments because typical athlete contracts contain performance bonuses which won’t be realized. Athletes typically receive payments from their sponsors for placing well in national and global championships, making the podiums in big commercial meets and road races (especially big marathons), and achieving specific marks.
“The shoe companies right now, they will not have to pay any bonuses, zero,” observed Karen Locke who represents 2016 Olympic champions Michelle Carter (shot put) and Katerina Stefanidi (pole vault). “That saves their budget.”
Locke pointed out that in each Wanda Diamond League meet there would be around 25 performance bonuses to be paid across all disciplines which athletes could count on in addition to the meet’s prize money and any performance bonuses. They could even get paid more if they broke certain performance benchmarks stated in their contracts.
“There will also be some time bonuses,” Locke said. “None of those will have to be paid.”
Athletes with contracts which expire at the end of 2020 face an additional risk, the agents said. Typically, when a contract is lapsing athletes feel additional pressure to perform on the field of play to impress their sponsors, making the case as to why they should be retained. That’s not possible now.
“There’s a missed opportunity to show their value in competition,” said Hawi Keflezighi, founder and owner of Hawi Management. “That’s an important element for partnerships moving forward.”
The agents all agreed that the loss of field-of-play earnings –like appearance fees, prize money and performance bonuses– would mean certain athletes would see significant income dips. That would be especially true for marathon runners who can make hundreds of thousands of dollars from just one race.
“Unfortunately no bonuses from marathons, or meetings, or road races at all,” lamented Gianni Demadonna of Demadonna Athletic Promotions who represents top marathon athletes like Mary Keitany and Tamirat Tola. “Not only the bonuses of the contract are affected but more than everything the appearance fee and prize money of the races.”
Athletes can continue to provide sponsor value, the agents stressed, even though they cannot perform on the field of play. Continuing to share their athletic journeys on social medial, connecting with fans and demonstrating empathy, and sharing sponsor messaging and company values are of top importance now.
“We have been reaching out to our clients and talking to them about the value of social media, especially today,” said Keflezighi. “Now it’s one of the very few ways to promote their partners and their story. Sponsors need that type of support.”
But athletes can also hurt their standing with sponsors now, the agents cautioned. Any behavior on social media which casts the brands they represent in a bad light should be avoided, especially now.
“I’ve seen some inappropriate things (posted) by athletes,” said Locke, who declined to provide any specifics. “So what’s happening is, the people who are sponsoring them or have thought about it, marketing people, they don’t have anything to do right now. So, they’re on-line following everything, and they don’t like some of these people now.”
For collegiate athletes looking to turn professional, the situation is particularly difficult in terms of landing endorsement contracts, the agents said. There is no outdoor season for collegiate athletes to impress potential sponsors, and while some seniors have been offered the chance to further their collegiate careers after the NCAA agreed to extend their eligibility until next year, that doesn’t mean that their scholarships will still be there for them. The situation is especially challenging for athletes who are slightly below the top level who need more time to fully develop.
“The top kids will be fine,” said Brad Yewer of Flynn Sports Management. “The top few will be protected even in this environment, (but) for the rest it’s difficult. Now, we don’t know what a couple of months from now even looks like. Everybody’s kind of in a holding pattern.”
Just yesterday Alicia Monson of the University of Wisconsin, the 2019 NCAA indoor 5000-meter champion, decided to turn pro, signing with the management agency Total Sports which represents athletes like middle distance runners Shelby Houlihan and Ed Cheserek. Her decision came after her school’s athletic director, Barry Alvarez, said that Wisconsin would not extend athlete eligibility and scholarships during what he called “a time of unprecedented uncertainty in college athletics.”
“What we tried to do was encourage our seniors to go ahead and, if you’re going to graduate, graduate and move on with your life,” Alvarez said on a local radio show earlier this week.
Looking ahead, the agents saw reasons to be optimistic about athlete contracts, especially given the density of major championships which will roll out in an unprecedented sequence in the coming four years. In 2021, the World Athletics Cross Country and Indoor Championships will be held, as will the Olympic Games, athletics’ biggest stage. In 2022, the World Athletics Championships, Commonwealth Games and European Championships will be contested during the same summer season, and 2023 will feature yet another edition of the World Athletics Championships. The 2024 Olympic Games will follow after that.
Getting through the next 12 months will be the hard part, the agents said, and they encouraged their athletes to keep training and focus on staying healthy.
“I tell athletes when I speak to them that everybody’s life is upside down now,” said Ray Flynn who ran 89 sub-4:00 miles during his competitive career and who acts as the meet director of the NYRR Millrose Games. He added: “It’s painful, but we’ll get out of this.”
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