For example, after actors Ryan Reynolds and Rob McElhenney purchased Wrexham Football Club for £2 million and streamed the deal’s story in the series Welcome to Wrexham, the company tripled in value. Ticket sales for the Welsh club went through the roof, and another 100 million households tuned in to watch the Red Dragons last season. Reynolds and McElhenney are doing so well merging sports, entrepreneurship, and stardom that they just announced they’ve taken a 24 percent equity stake in the F1 team Alpine.
So if you’re an entrepreneur with big dreams for your company, you might want to look to Hollywood for help.
But it’s important to recognize that celebrity brands look and act differently than product sponsorships or endorsements of the past, says Paul Earle, an adjunct professor of entrepreneurship at the Kellogg School and cofounder of two new ventures with celebrities as partners: GOODLES macaroni and cheese with Gal Gadot and Big Nose Kate whiskey with Melissa McCarthy and her husband, Ben Falcone.
“What’s new is a celebrity being a real partner, a co-owner in the business, and working for sweat equity rather than cash fees,” Earle says.
George Clooney was at the vanguard of this trend when he cofounded the tequila brand Casamigos with friends a decade ago. He helped with product trials and development, in addition to being the public face of the brand. His hard work paid off. Diageo purchased the company in a one-billion dollar deal, which made Clooney the world’s highest paid actor even though he didn’t make a film that year. Today, Casamigos is the fastest growing spirits brand worldwide.
In many ways, celebrity brands are like any business partnership; you need to know what you’re getting into. Below, Earle walks through key considerations about what it’s like to share equity with a star.
Be patient: relationships take time
Celebrity brands are relationships that demand special attention, Earle says. They take an exorbitant amount of time and resources to cultivate.
Celebrities are highly selective about whom they’ll speak to and which ideas they’ll consider; it’s difficult to gain access to A- or B-list stars, he says. You have to go through the “proper channels” to access them—which Earle says usually starts with agents and managers and, as you get closer to the “inner circle,” adds personal business managers and legal counsel.
Be prepared for deep diligence, Earle says. “You as an entrepreneur and your idea are heavily vetted before you even meet a famous person,” he says.
In order to be considered for an initial conversation, you’ll need a targeted pitch that makes the case why your product and the celebrity are a perfect match. This includes an “airtight” deck with product concept, brand idea, go to market plan, business plan, financial upside, and, most importantly, product samples, Earle says.
Other times, the process works the other way. Celebrities’ agents are sometimes given the mandate to actively search for proven entrepreneurs with specific ideas in product categories of interest to their clients.
All this work doesn’t guarantee you’ll get a positive response. A celebrity will only meet with you if they love your product and connect with it, Earle stresses. “You need a great idea, and that idea needs to be a fit for the partner,” Earle says. “If not, you’ll get kicked to the curb like the hundreds that preceeded and the hundreds that follow you.”
When Earle and his partners first began dialogue with Melissa McCarthy’s team about Big Nose Kate whiskey, she had already turned down dozens of other partnership offers. But McCarthy took a particular liking to the story of the 19th Century American outlaw after whom the brand is named, as well as the product itself, which she described as “love at first sip.”
Even if a celebrity is interested, expect a long “getting to know you” stage to determine if there’s good chemistry, personal fit, and aligned business objectives, Earle says.
“Each person is taking a big chance on the other,” Earle says. “The entrepreneur is betting a big portion of the business on the celebrity, and the celebrity has reputational risk to consider. So it is key that everyone really gets to know each other on a personal and human level. Just making sure that desired outcomes are aligned is not enough. It’s like a marriage of sorts.”
Patience remains key even after you make a deal. Entrepreneurs running a “celebrand” need to adjust expectations about availability—especially if the celebrity partner is out shooting a movie or on a barnstorming promotional tour, each of which is a grueling and intensely consuming experience.
“There will be times where your partner is like a submarine underwater and you are not in regular contact,” Earle says. “That’s going to happen, and you need to be comfortable with it. You also need to nuture relationships with the person’s inner circle, so you can establish contact if you absolutely have to.”
Contract is crucial
Clearly defined roles are core to a celebrity brand’s success, Earle says. Even though a celebrity is an owner, they generally don’t have executive authority to run the business. Your contract should be explicit about deliverables and decision-making protocols.
Celebrity brands work best when the famous person rolls up their sleeves and works to increase brand awareness and engagement, instead of just posing for product endorsement shots. Sweat equity must be earned.
Time commitment is especially critical to articulate early on. Because celebrities are so busy, you need to agree upon when and how often meetings and other brand-building activities will occur. A good contract spells out all requirements in detail—like the number of retail meetings, social-media posts, and press conferences with timelines for when all these things will occur.
“There should be nothing left to chance or mystery once you actually sign a deal,” Earle says. “It should all be objective and in black and white on the schedule and the contracts.”
Your contract also protects you from the inherent risks of partnering with a high-profile person. Common safeguards include exclusivity terms to make sure that the celebrity doesn’t partner with competitors, clauses that limit partnerships with brands that could send a “confusing” message to consumers, and out-clauses that define terms for severance in case of a grievous act that could damage a brand’s reputation by association.
And once the partnership begins, the hardest misstep for companies to correct is inaction. Time-stretched celebrities sometimes lose interest and don’t follow through on commitments like attending key meetings and responding to communication. Vague expectations and weak contracts are often to blame because parties have different understandings about what the celebrity is required to do.
Earle has not personally experienced a celebrity-brand failure but has heard horror stories of business–celebrity relationships going sour.
“The contracting process can be tough. Hollywood lawyers are tough. They fight very hard for their clients and the agents are involved too, because they succeed as their clients succeed. They’re looking at all the deal terms. It just takes a really, really long time. So, again, patience is required.”
Play to their strengths
Ultimately, Earle believes that celebrity engagement comes down to finding the best ways to play to the celebrity’s strengths.
Successful stars know the difference between a good and bad line in a script and can recognize when a creative approach will or will not work, he says. They’re professionals, so give them the space to contribute in areas where they can add value—for example, like giving feedback on product and marketing development, if they’re interested. Whatever you do, don’t “overscript” their press appearances or social-media posts, he says. Just as entrepreneurs need to be trusted with respect to do their jobs, so do celebrities.
“Famous actors are successful for a reason: they’re good! They want direction, but not too much,” he says. Knowing when to get out of the way allows celebrity co-owners the space to enhance their personal brand authentically. “It can provide an opportunity to show the world another side of that person that one might not see otherwise.”
Celebrities are also highly connected, so it is in your interest to update them on key developments where they might be able to help. For example, tell them if you’re thinking about a strategic partnership or collaboration—they might have people in their network who can make connections. After all, celebrities know a lot of influential people and so do their agents.
“I think the more you can engage the celebrity, the merrier.” Earle says.