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1 Billion Won Salary Kim Mi-hyun Raked in 10 Billion Won Worth of Advertising Effects

1 Billion Won Salary Kim Mi-hyun Raked in 10 Billion Won Worth of Advertising Effects

Posted November. 06, 2002 23:08,   


How much effect will a golf star bring about in advertising?

The KTF, the main sponsor of "super-shortie" Kim Mi-hyun, announced on Nov. 6th, "Only for this year, Kim has brought about advertising effects amounting to 200 billion won(i.e. approximately $160 million)." If that is true, the KTF hit the jackpot. It has signed up a three-year contract with Kim for 1 billion won.

The contract comes to an end this year. But the KTF is having a difficulty in renewing the contract with Kim. Kim demands a five-year contract under which she gets paid 1 billion won a year. On the other hand, the KTF strongly opposes the terms offered by Kim. It says, "The KTF is a state-run corporation. Therefore, the CEO remains at office at most for three years. Therefore, it is impossible to sign up a long-term contract. In addition, all we can give her is 800 to 900 million won a year."

Also Park Se-ri broke up with Samsung early this year. In October of 1996, Park executed a ten-year agreement with Samsung for a total amount of 800 million won. The reason? Simply because of money. Park wanted a salary living up to her reputation, while Samsung thought differently. The experts in sports marketing estimate at somewhere between $200 million to $500 million the marketing effects brought about by Park`s winning of US Women`s Open in 1998. In fact, Samsung itself publicly acknowledged the estimation.

Nonetheless, Park herself is having a hard time to find a sponsor company, domestic or foreign, which could cough up what she wants. She now demands 8 to 10 billion won for her salary. Thus, without a main sponsor, she now retains Tailor Made as her "minor" sponsor for her endorsement of the company`s products for 3 billion won for three years.

On the contrary, Tiger Woods, the Emperor of Golf, is deemed a moving signboard, and gets the red-carpet treatments from various companies. For the last five years, Woods has received an average of $540 million a year. Nike, whose sale has shot up more than double ever since its 1996 contract with Woods, has happily renewed its contract with Woods for an yearly salary of $20 million by the year of 2005, amounting to a total of $100 million.

Here lies the difference between Woods v. Park and Kim. When negotiating for the renewal, Park and Kim armed themselves just with abstract figures computed from translating their media coverage into advertising costs. On the other hand, Woods came up with hard numbers showing exactly how much the sale of his sponsor had increased.

The problem lies in the computation by the rule of the thumb. The sales increase and other specific data should be used to figure out the advertising effects a player brings about. As long as the hard data are not based in calculation, and the player and the sponsor come up with their own figures, they will have a hard time narrowing the gap between them.

Young-Sik Ahn ysahn@donga.com