Recession aside, some celebrities made bonanza business deals in the past year.
Jessica Simpson's foray into country music may not be an unqualified success--but the millions she's pocketed shilling shoes and handbags certainly is. Talk show favorite Ellen DeGeneres, at 50 years old, became a CoverGirl, adding millions to her already bountiful coffers. Meanwhile, Colombian crooner Shakira scored the biggest deal of her career.
The soured economy has been a double-edged sword when it comes to celebrity business deals. On one hand, the credit crunch pinched manufacturing to the point where licensing deals overall took a dive. "In the fourth quarter, there was sage blowing up and down the hallways, and this year will be tough too," says Ramez Toubassy, president of Brand Sense Partners, who negotiated Britney Spears' and Halle Berry's fragrances and Sheryl Crow's new denim line, Bootheel Trading Co.
But because of the downturn, it's become even more important to launch with an already well-known name, which is why well-established celebrities like Simpson and DeGeneres have seen an uptick in their business careers.
With companies spending less to launch new initiatives, "the reality is that the right celebrity is still the best way to stand out," explains Ryan Schinman, chief executive of Platinum Rye, which has negotiated corporate deals with hundreds of celebrities, including Madonna's campaign for Motorola's iTunes-enabled cellphone.
While a celebrity may come up with his or her own ideas about a business, there are many people working behind the scenes to ensure that star and product are a good fit.
Toubassy, for instance, does market research to find out what qualities the public most associates with a celebrity, and what type of product it might buy from that star.
Last year, when research showed that the public associated singer Sheryl Crow with fashion and Americana, Ramez brokered a partnership with apparel manufacturer Western Glove Works to create a line of Crow-branded denim, now sold at Dillard's. "We treat the celebrity [brand] like any other consumer brand," says Toubassy.
These days, female stars are the biggest moneymakers because they are more likely than men to get coverage in tabloids, blogs and fashion magazines.
"More than ever, pop culture is about women," says Michael Heller, president of celebrity marketing firm Talent Resources, which has negotiated deals for Mariah Carey and Lindsay Lohan, among others. Female celebs have an even easier time selling to both sexes: "Women want to be like them, and these women attract men, as well," says Heller.
Perfumes remain a powerhouse revenue generator for celebrities. "The margins are high, the price point is good, you can do a bunch of different types of perfumes and sell them everywhere from Barneys to Target," says Heller.
In January 2008, Oscar nominee Anne Hathaway took the old-fashioned route and signed on as spokeswoman for Lancôme's Magnifique fragrance, a deal that will most likely bring in $2 million a year. (Lancôme confirms the deal is for multiple years, but will not say how many.)
Other celebrities hope a lower upfront fee--usually in the low six figures--will net them more in the end, as they also get a percentage (usually 5 percent to 10 percent) of royalties on wholesale earnings.