Do you, LeBron? Do you, Nike?
I now pronounce you, partners for life.
The sneaker-giant confirmed on Monday that they had agreed on a 'lifetime relationship' with the Cleveland Cavaliers superstar, an agreement which is believed to be the first of its kind in the company's 44-year history.
"We can confirm that we have agreed to a lifetime relationship with LeBron that provides significant value to our business, brand and shareholders. We have already built a strong LeBron business over the past 12 years, and we see the potential for this to continue to grow throughout his playing career and beyond." (via Bloomberg's Scott Soshnick)
While terms of the deal were not disclosed, high-profile sports agent David Falk, believes that the deal is worth somewhere in between $400 and $500 million.
Not a bad haul for a 30 year old, right?
When LeBron entered the league in 2003, it wasn't a forgone conclusion that we'd get to this point. Adidas had all but signed James to a 10 year, $100 million dollar contract, until a further examination of the contract determined that Adidas was actually offering $7 million a year with incentives. Adidas' ambiguity was Nike's gain as James' camp signed with the Swoosh to the tune of $90 million over 7 years; a deal that was re-upped for another nine years in 2010.
With James still under contract for a number of years, why execute a life time deal now?
Since signing James, Nike has seen his shoe sales bring in upwards of $300 million per year for Nike over the last two years, according to SportsOneSource. Those strong revenues are a major reason why Nike continues to have a stranglehold (approximately 92%) on the basketball shoe market, and has certainly helped the company obtain their 48% market-share on U.S. footwear. The lifetime deal also comes at a time when LeBron James seems to be re-evaluating his endorsement portfolio. James famously decided not to renew his long-standing deal with McDonald's in October. Not that Phil Knight and Co. would have a reason to worry, but maybe Nike wanted to secure James before it was too late?
Those revenues, and the securing of future revenues, combined with James' unblemished brand made Nike decide to take the long term plunge.
For the foreseeable future, we can expect the LeBron James brand to continue long beyond the end of his playing career, much in the same vein as we've seen with Michael Jordan. The Jordan Brand continues to be a dominant revenue-driver for Nike, as the brand's sales reportedly topped $2.6 billion dollars last year, according to Forbes (aside: Nike never officially signed Jordan to a lifetime deal, but all indicators seem to at least point to a psuedo-long term deal with the Charlotte Bobcats owner).
Long(really long) live the King.
