Is an investment in boxing still worth it for a consumer brand?
Heineken (HEINY) hopes so. Tecate, which Heineken acquired in 2010 when it bought Mexican brewer Femsa for $7.6 billion, announced Tuesday that it had signed an endorsement deal with the Mexican boxer Saul "Canelo" Alvarez. This is the first time any Heineken-owned brand has endorsed a professional boxer.
Tecate has done marketing in the sport before, with Golden Boy Promotions, the boxing promoter run by former champion Oscar De La Hoya. Now Golden Boy is ditching Corona for Tecate, which will be the exclusive beer and "presenting sponsor" of Golden Boy, and will endorse Alvarez, who will have Tecate's name on his shorts.
Think of this deal as Canelo Alvarez's coming out party in America. The boxer fought Floyd Mayweather in 2013 and went 12 rounds, but lost by decision. Before the fight, Alvarez -- Golden Boy's prize fighter -- graced the cover of ESPN the Magazine. Apart from the publicity around that bout, he is not a household name in the States. That isn't the case in Mexico, where he has legions of devoted fans and where boxing, which has lost its shine in the U.S. in recent years, remains extremely popular.
"We are going to be using Canelo not only as an endorser of the brand but front and center of our TV campaign," says Gustavo Guerra, brand director for Tecate. It's the first time Tecate has used a celebrity endorser in the U.S. The company will begin airing TV spots here in late March leading up to his next fight in May, then in September when he is scheduled to fight again. "We are preparing to introduce Canelo to a larger, mass market audience," he adds.
Why Alvarez? "Because we share a lot of traits with Canelo—we are both from Mexico and we are both about being bold," Guerra says. "Masculinity is our number one atrribute we are building into the brand. And our target consumer is second- or third-generation bicultural Hispanics, and they have two passion points in life: boxing and soccer."
This is also yet another deal in De La Hoya's business run, which has been impressive since he retired from the sport in 2009. He is a co-owner of the Houston Dynamo, an MLS team. He bought The Ring, a boxing magazine. He teamed up with Jay Z's Roc Nation Sports last year to promote Alvarez's fight against Miguel Cotto. He is continuing to use his growing business clout to try and make Alvarez a global star, though he is up against a decline in U.S. boxing fans.
Hoping to be the new face of boxing
Canelo Alvarez has worked with De La Hoya and Golden Boy since his professional debut at age 18. (He’s now 25.) He is 48-1 in the ring, with his only loss coming from Mayweather, plus one draw. He is young, serious, and good-looking, and De La Hoya has ambitious hopes for him: to become the new face of the sport.
"This is going to be Canelo’s coming out year," he tells Yahoo Finance. "By fighting Canelo on Cinco de Mayo weekend, and by fighting him the weekend of Mexican Independence Day in September, we feel Canelo is going to have his best year ever. He is a fighter who, when he steps inside the ring, has no nationality. People love his power, his speed, and at the same time they understand that he is a serious fighter and he treats his craft with the utmost respect."
Fighters who show respect have been hard to come by recently among the sport's most prominent stars. Floyd Mayweather has retired (he says) with a 49-0 record, but the end of his career was marred by multiple incidents of domestic violence against women. Manny Pacquiao, whom Mayweather beat last year, is still active but lost his Nike endorsement deal earlier this month when he compared gays to animals. In an apology video on Twitter, he seemed only to reinforce his views.
In other words, athlete endorsements are always a risk, and they have been especially risky in the sport of boxing lately. Alvarez has other endorsement deals, including a multi-year contract with Under Armour, but De La Hoya says this will be his most lucrative. Based on similar deals in the sport, it's likely this one will bring Alvarez north of $1 million per year. Burger King, daily fantasy company FanDuel, and watchmaker Hublot each spent that much to sponsor Floyd Mayweather just in his fight against Manny Pacquiao, and while it brought them brand exposure (the fight shattered Pay-Per-View records), it also brought criticism for aligning themselves with the controversial fighter. What is to guarantee Alvarez doesn't say something offensive or get into some other kind of trouble outside the ring?
Tecate's Guerra says the beer brand knows the risks. "But we feel very calm and comfortable with Golden Boy and Oscar, and Canelo, because we know Canelo. We know his effort, his popularity, the way he focuses his training, how serious this guy is. We wouldn't have moved forward unless we were 100% positive that Canelo would never betray us the way that Manny Pacquiao has betrayed other brands. We feel very comfortable with Canelo and we know he will never go down that path and make us look bad. It just won't be the case."
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Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology.
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