Big name endorsements can hinder brands as well as help

Overseas, some businesses are beyond saving, no matter how big the names are plugging it.

London's Fashion Cafe, fronted by supermodels Claudia Schiffer, Naomi Campbell and Elle McPherson at the height of their fame in the late 1990s, collapsed a year after opening when its founders spent too much money on refurbishing the Piccadilly Circus building and not enough on the cafe's day-to-day running expenses.

The opposite can also happen. The Tiger Woods effect went negative last year for sales of his apparel line through Nike. While other golfwear is booming, sales of Tiger's range have slipped in the wake of his marriage breakup and slump in form.

And to cap a bad year for the golfer, Procter & Gamble said just before Christmas it would not renew its endorsement deal with him.

The company used Woods and dozens of other athletes as part of its three-year Gillette Champions marketing programme. Gillette says it is phasing out that programme and not renewing the contract with Woods and several other athletes as a result.

Gillette stopped using Woods in its ads after details of his infidelities became public last year. A company spokesman says Woods won't be associated with Gillette as of the end of this programme.

Endorsements by celebs can go even worse. Paris Hilton is the centre of a messy US$35 million ($45.4 million) scrap with a company that claimed she didn't properly endorse its line of hair extensions.

Hairtech sued Hilton and she has counter-sued, claiming the company owes her US$1.7 million. A breach of contract claim that Hilton missed a launch party for Hairtech's extensions remains part of the case.

With just a shallow pool of appropriate celebrities in New Zealand, their appointment to boards is unusual, apart from a few ex-politicians. But in the United States the practice is far more common and - according to a study quoted by the Economist - pays off. Reaching for the Stars: The Appointment of Celebrities to Corporate Boards, a new study by four American-based economists, says simply announcing that a celebrity is joining a board gives the company's share price a boost.

Disney's share price jumped by 4.2 per cent on the day it appointed actor Sidney Poitier to its board in 1994.

And for the more than 700 celebrity director appointments (out of more than 70,000 board appointments) from 1985 to 2006 the study examined, the firms' shares continued to outperform significantly over the subsequent three years.

Gerald Ford - once described by an opponent as having played too much football with his helmet off - was a particularly enthusiastic collector of boardroom seats after he left the White House.

On the board of American Express, he stunned his fellow directors by asking what the difference was between equity and revenue.