A familiar face can help a small brand get noticed fast. In 2012, LeBron James, business partner Maverick Carter, and financial adviser Paul Wachter invested less than $1 million in Blaze Pizza, according to a 2017 ESPN report. Blaze had opened 200 restaurants in four years, and the research firm Technomic called it the fastest-growing chain in North American food history.
From a small investment to a $25 million stake
Rick and Elise Wetzel dreamed up the make-your-own-pizza concept in 2011, with James coming on as an early investor in 2012. He and Carter had already made about $30 million from a stake in Beats by Dre, which Apple bought for $3 billion, and were looking for the next big thing. Wachter said he does not usually advise clients to invest in food businesses, but he liked the management team and the product. James could not promote Blaze at first because of his deal with McDonald's, but Rick Wetzel said his involvement was huge.
That changed in 2015. James and Carter had a decision to make with three years and $14 million remaining on his McDonald’s deal. James departed McDonald’s and became a spokesman for Blaze Pizza. His reach was enormous, with 37 million Twitter followers and 32 million on Instagram at the time. Every time he tweeted about Blaze, it was “like a sonic boom,” said Elise Wetzel. A YouTube video of James working undercover as “Ron” behind a Blaze counter also drew millions of views.
What the 2017 report said about the payoff
ESPN reported that by July 2017 the group's original investment was worth $25 million. The figure was realized when Blaze sold an undisclosed stake to private equity firm Brentwood Associates a few weeks earlier, at a company value of around $250 million. Including payments associated with an undisclosed sales target, James' stake was valued at between $35 million and $40 million. That is where the $35 million figure comes from.
Why a big name helps a young brand
{{/usCountry}}ESPN reported that by July 2017 the group's original investment was worth $25 million. The figure was realized when Blaze sold an undisclosed stake to private equity firm Brentwood Associates a few weeks earlier, at a company value of around $250 million. Including payments associated with an undisclosed sales target, James' stake was valued at between $35 million and $40 million. That is where the $35 million figure comes from.
Why a big name helps a young brand
{{/usCountry}}A study can help explain why a familiar name matters to a young brand. Harvard Business School's Anita Elberse and Jeroen Verleun examined athlete endorsers and the brands they represented in a 2012 study in the Journal of Advertising Research, looking at sales and stock returns. They found that endorsements tend to boost both. They also found that the biggest payoffs were for top-ranked brands that teamed up with top-ranked athletes and that sales gains have diminishing returns over time. Blaze was a young, private chain, so the stock part of the study does not apply. But the sales outcome fits the story. A familiar name can help people notice a new brand.
What the numbers can and cannot tell us
The $25 million and $35 million to $40 million figures were estimates from unnamed sources, and part of the larger figure was based on payments that had not yet been triggered. But no study could show that Blaze's growth was solely due to LeBron, as its menu, locations, and timing probably played a part, too. The story does show the order of events. First, James became an owner, then a paid spokesman, so he had a personal stake in the brand he was promoting. It can be a good reminder for young professionals considering side projects: owning a piece can pay out differently than a flat fee, but it can also lose value.