Megan Carpentier: Three decades after Nike outfoxed its challengers to sign Michael Jordan, the sneaker giant procures itself on the other side of the equation
Its hard to think of another business besides athletic wear in which the economic lucks of a multinational corporation would be so beholden to the personal charisma of an undrafted NBA rookie like Kent Bazemore, who was, at the time he was signed to an endorsement bargain, only playing two minutes in each game.
But that, according to ESPN, was how athletic producer Under Armour managed to convince the far more prolific( and now famous) player Stephen Curry to terminate his contract with Nike for a$ 4m deal with them a pact which is now worth a reported $14 bn to UA, which had a net income of $233 m in 2015 and only 1% of the sneaker marketplace in 2013.
By comparison, the most expensive NBA team the New York Knicks is valued at$ 3bn.
If the NBA is a rather expensive advertising platform for athletic manufacturers, its also a lucrative one for both the athletic wear companies and the players and university squads who wear their clothes and especially their shoes in exchange for fund. Curry reported netted$ 4m from his endorsement bargain; his friend Bazemore, who is much less prominent, makes a reported six-figure haul.
LeBron James lifetime contract with Nike which declined to match UAs offer to Curry is reportedly worth $500 m.
According to The Vertical, Nike has contracts with 68% of NBA players and its subsidiary Jordan( yes, that Jordan) has signed another 6.5% of players; Adidas has signed about 15.6%; and Under Armour has only 3.8 percent( though their portfolio includes Curry ). Those deals include everything from free sneakers and athletic wear( what UA originally dedicated Bazemore, which got them to Curry) to money plus to customized existing shoes( called player exclusives ), of which there are only 50, to the coveted signature shoe contract, of which there are currently merely 10.
Curry has a signature shoe; so does LeBron. Michael Jordan branded shoes are still, by far, the best sellers in the business, netting His Airness a reported $100 m deal from Nike and helping Nike( and Jordan Brand) accrue 90% of the US basketball sneaker market.
In many ways, Nike is the real house that Jordan built( and continues to build) but, like Curry and Under Armour today, Jordan merely signed with Nike in 1984 because Adidas passed on offering him a contract and Converse could only offer him what they were currently dedicating their other star-filled roster( which included Magic Johnson and Larry Bird) $100,000 per season. Nike swooped in with $100,000 per year for five years, customs shoes and contract options that, if Jordan performed well in the NBA, would allow him to earn$ 7m over five years.( Spoiler alert: He did .)
The rest is basketball and retail history even if many of the kids today sporting his shoes werent alive to see him in his heyday with the Chicago Bulls, let alone before his second retirement( after two seasons with the Washington Wizards) in 2003, theyre still buying his shoes and Nike is the dominant force in the basketball sneaker business.
But its that apex market stance, perhaps, that led Nike to flub the presentation to Curry during the 2013 offseason, when his contract was up for renewal. According to ESPN, Nike had already passed on offering Curry the opportunity to coach one of their training camps; at the meeting, the most senior Nike officials didnt show, and the ones there mispronounced Currys first name throughout the presentation and re-used a PowerPoint slide name and all from a presentation to Kevin Durant.
Under Armour, meanwhile, had an advocate in Currys friend Bazemore, reportedly$ 4m to offer and the possibility of a signature shoe to dangle in front of Curry, which was off the table at Nike. They chose not to exert the matching clause in their contract with Curry and he jumped to UA.
UA may not( yet) be the house that Curry constructed, but his sneakers could well be on on track to outsell Lebron James in 2016( which might be part of why Nike just poached the shoes designer from Under Armour ). It doesnt seem likely that Under Armour will unseat Nike as the ultimate fan favorite given the latters market share … but in 1984, it didnt seem likely that Converse sneakers wouldnt be thought of as an athletic shoe any more, either.
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