Let the NBA Shoe Wars Begin!




kdThese days, when college basketball players are considering whether to turn pro or not, a big factor when making their decision is how much money they think they can get from a shoe deal. The pay scale for an NBA rookie isn't what it used to be after the most recent NBA CBA was signed, so endorsement deals can often be the deciding factor for some players who are on the fence about coming out early.

Sometimes the shoe companies find bargains - Converse signed Dwyane Wade to a "bargain of the century" shoe deal that paid him a measley $400,000 per year four years ago when Wade entered the NBA. (After Wade led the Heat to the NBA Championship last season, the Converse contract was renegotiated to about $10 million a year.) By comparison, LeBron James signed a deal with Nike worth an estimated $90M (over 7 years) and Carmelo Anthony signed a deal with the JORDAN brand worth an estimated $18M (over 6 years).

(Quick side story - Nike now owns Converse and purchased the brand for about $300M back in 2003. A little known fact is that Converse had trademarked the phrase "King James" while LeBron James was in high school. Nike wanted the rights to that phrase for future marketing purposes with James, and when they purchased Converse, Converse abandoned the trademark to "King James" and Nike trademarked the phrase that they use with James today).

I digress. Now back to my main point. The shoe wars - circa 2007 - are heating up.

True Hoop's Henry Abbott wrote earlier this week that his sources were telling him that Texas freshman Kevin Durant would be announcing that he's turning pro. Check. Durant made his announcement yesterday. Abbott also wrote that Durant would be hiring agent Aaron Goodwin to represent him. I've confirmed that Goodwin will in fact be Durant's agent. If the name Aaron Goodwin sounds familiar, its because Goodwin was LeBron James agent when James turned pro and signed over $120M worth of endorsement deals. James has since left Goodwin for agent Leon Rose. Remember that fact for a point I will make below. Goodwin's top current NBA client is Orlando Magic star Dwight Howard. Remember that too.

So here is the lay of the land with the shoe wars.

First the suitors:

Nike Basketball - Their top basketball athletes include LeBron James, Kobe Bryant, Steve Nash, Amare Stoudemire, Dirk Nowitzski, Paul Pierce, Jermaine O'Neal, Rasheed Wallace and Tony Parker.

Jordan Brand - Obviously MJ still moves a ton of product but their marquee active basketball athletes includes Chris Paul, Carmelo Anthony and Rip Hamilton.

adidas basketball - Their top basketball athletes include Kevin Garnett, Tim Duncan, Tracy McGrady, Chauncey Billups, Gilbert Arenas and Dwight Howard. adidas is in the midst of an 11-year sponsorship deal with the NBA so their basketball brand is boosted by the league's immense global marketing power.

Chinese shoe and apparel company Li-Ning - Cleveland Cavs guard Damon Jones is their marquee NBA guy - remember that fact later on.

Now for the top players on the market who are shoe "free agents". These players will have shoe executives logging some serious airline miles and cell phone minutes over the next few weeks.

Kevin Durant - One of the main reasons Durant announced he was turing pro and entering the NBA is because of the numbers being thrown around for Durant's shoe deal. These numbers range from $20 - $50M. Nike has made the best inroads with Durant and has been close with him since his freshman year of high school. Several of Nike's reps are like family to him. With that being said, Nike is not willing to pay more than $5-7M per year for Durant.

The door is wide open for adidas to come in and steal Durant based solely on money. adidas doesn't have nearly the personal relationship with Durant that Nike does, but if adidas is willing to pay Durant $10M a year for 5 years ($50M), they'll likely land him. The other huge factor here is that Durant's agent Aaron Goodwin is not at all fond of Nike. My sources tell me that Goodwin feels like Nike executives were behind LeBron James' decision to drop Goodwin as his agent. Goodwin will represent Durant professionally when negotiating a shoe deal for his client, but you had better believe there won't be any kind of a discount given to Nike. In fact, Nike may have to pony up even more money because Goodwin will want to drive up adidas' price and stick it to the Nike executives who he feels betrayed him. I'd love to be a fly on the wall during those phone conversations.

Which shoe company Durant signs with and how much that company pays Durant will have a huge impact on the business for both Nike and adidas because...........

Kobe Bryant - As I've written several times, Kobe Bryant's deal with Nike expires in June. Nike wants to re-sign Bryant, but they'll have stiff competition from Chinese shoe and apparel company Li-Ning (who really needs a marquee NBA player as the 2008 Bejing Games approach - Damon Jones isn't going to cut it). Nike is not willing to go higher than $7M per year with Durant, because they want to save money to re-sign Bryant. Bryant makes about $8M per year as part of his current Nike deal, but he will certainly command $10M or more when he hits the open market in June. Bryant is a proven commodity and because of the inroads Bryant has already made in the fertile Chinese market, he'll sell more product than Durant....at least in the short term.

Dwight Howard - Howard is one of the up and coming superstars in the NBA. His deal with adidas expires at the end of the season and he will be a shoe free agent. adidas won't deal with Howard until they see how things play out with Durant. My sources tell me that adidas would choose Durant over Howard if they decide they don't have money to sign both. adidas has built some brand equity in Howard though - he's been a big part of adidas' marketing campaign of late and his face graced the side of Vegas hotels during NBA All-Star weekend as adidas is a league sponsor and had a huge presence for the NBA All-Star game. Because Howard is represented by Aaron Goodwin, things could get a bit awkward. Goodwin will likely be trying to get adidas to drive up their price on Durant to try to get Nike to follow suit, but by doing that, he could price adidas out of being able to re-sign his other client Dwight Howard if they spend all of their money on Durant.

Greg Oden - I'm not an NBA executive so I can mention Oden's name as it relates to the NBA without getting fined. Durant is definitely preferred over Oden by the shoe companies. Oden has not officially declared that he's turning pro yet, but even if he does, he likely won't make what Durant will make from a shoe deal. Big men (except for Yao Ming) rarely move product very well because their game just isn't flashy enough. Oden would likely command $2-3M annually if he's lucky. If he doesn't declare soon, hire an agent and start negotiating a shoe deal, Nike, adidas and Li-Ning may have already spent their money, leaving very little shoe money for him. Oden was a big adidas guy in high school but his Ohio State team wore Nike/LeBron James product during his freshman season. My sources tell me Oden will announce he is turning pro in the near future and he will hire Mike Conley Sr. as his agent. Oden and Conley's son Mike Conley Jr. have played basketball together in high school, on the AAU circuit and at Ohio State.

How these signings play out will be interesting to watch. The days of any of these companies signing athletes to LeBron James type money are over. Remember, the majority of NBA players get free shoes and apparel and maybe a few hundred thousand bucks and that's it. Only the elite players, who the shoe companies feel will help them make inroads with their consumers and ultimately move product, sign deals that are in the 7-figure range and beyond.

Of the four players listed above, I would rank Bryant first, Durant second, Howard third and Oden fourth as far as marketing appeal. Kobe is first by a wide margin too in my opinion. He, like Jordan, is one of those rare athletes that could change history every time he steps on the court. And I think he will be one of the marquee U.S. athletes in China for the 2008 Summer Olympics. If I were Nike, I'd make him my priority and if I lose Durant in the process, so be it.

Then we'll see how much money these companies will put behind their marketing campaigns to "activate" their endorsement deals with these athletes that they signed to lucrative deals. Remember, signing the marquee athletes is just the first step. How you market them and ultimately move product is the real test. 

Should be fun to watch.

 

 

adidas Kobe IIIs

The fact that adidas never released the Kobe IIIs might suggest that adidas is going to make a conscious effort to get Kobe back.

Image Changing

Man Kobe has done a good job of changing his entire image over the last few years, at one point, wasn't Nike thinking about dropping him after the whole Colorado incident?

Liked the article Berger,

Liked the article Berger, keep up the good work.

shaq is signed to li ning

shaq is signed to li ning too, so i don't see kobe signing with li ning

Li-Ning's marquee player is not Damon Jones

I believe Shaq signed a deal with Li-Ning last year. So Li-Ning's marquee nba player is Shaq. Not Damon. As a side note, Shaq is very popular and well known in China.

this article

Is there really many suitors for players these days.
Im no expert but if you look at:
Nike owns Converse and Jordan brands
and Adidas just merged with Reebok
so really theres two plus Li-Ning.
Another item to point out is that alot of shoes are sold solely (no pun intended) on fashion stand point especially the Jordan brand.

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