LeBron Lifetime Nike Deal Sign Of The Times As Sport’s Love Affair With Business Gets Deeper
Sport and business have a long and settled relationship, a relationship further consolidated by the landmark deal that LeBron James signed with earlier this month. It is the first ever lifetime contract Nike has sealed with an athlete in a 44-year history.
Although Michael Jordan has a de facto lifetime relationship with Nike, that was never put in writing and formalized as a part of a contract. It just turned out that way – a partnership that became so successful and lucrative there was never any reason to end it. The Air Jordan brand born in 1985 has now exceeded $2.2 billion in annual sales.
Nike has made 13 versions of LeBron James’ signature shoes, with annual sales expected to go past $400 million. The winner of two NBA titles and four-time NBA Most Valuable Player, LeBron James is one of the most marketable athletes in sport although it hasn’t always been that way.
Following James’ actions during the 2010 free agency period, LeBron was polled as one of the world’s most unpopular athletes. By 2013, his public image had recovered and LeBron was ESPN most popular NBA player for a second time in his career. In 2014, LeBron was named the most popular male athlete in America by the Harris Poll and has topped the NBA in jersey sales six times. Such is the fickle nature of public perception.
The lifetime LeBron deal breaks new ground in the world of endorsement and sports marketing, but also part of a wider trend towards an ever stronger and permeable union between athletes and big business. The benefits of sponsorship are are well proven – reinforcing brand recognition and elevating brand status through coupling the success of two entities.
Nike has been at the forefront of saturating professional sport with advertising in novel and innovative ways, to the extent people will associate an athlete with a brand more easily than with their sporting achievements. In 2014, Nike combined the image power of two superstar athletes from different sports, in a cross-marketing ploy.
Nike was launching a limited edition Roger Federer tennis shoe, and executives arranged for Michael Jordan to attend the tennis match where they would be unveiled. The ploy proved to a product placement coup – at the Nike Lab store in Manhattan’s Soho neighborhood, the Zoom Vapor AJ3s sold out within an hour.
Product placement is rampant in the movie industry and has been for decades with script sometimes even write to incorporate products. in 2013 Man of Steel took product placement to an extreme level, partnering with over 100 brands. The promotions totaled $160 million. Sport is yet to see that level of saturation, but non-contextual product placement is increasingly commonplace, especially in tennis.
Rafael Nadal and watchmaker Richard Mille have collaborated since 2010, with the Spaniard wearing Mille’s timepieces during his matches. The first Nadal watch priced at $525,000 sold out, with the company now selling out its entire production of 2,800 to 2,900 watches a year, the cheapest selling for $50,000. In 2014, the Czech Wimbledon Champion Petra Kvitova wore Links of London designed jewelry throughout the entire tournament, during the final and even as she was awarded the trophy.
In 2014, Nike spent $3.031 billion on “demand creation” – marketing, sponsorships, advertising, and endorsements – most of it on contracts with elite athletes. This works out at $100 per second on advertising, a staggering figure but still only 10-12 percent of total revenue.
The lifetime LeBron deal goes beyond anything we’ve seen in modern sport and could set a precedent with other major athletes seeking similar contracts. But this type of contract relies on sales continuing at a high level after retirement, and not every athlete may have that enduring appeal.
LeBron has built a life outside of basketball, cultivated his interests in fashion, business, and entertainment- moves that will help him stay relevant long after he stops shooting hoops. He has a production company, starred in movies with more with more substantive parts than mere cameos roles such as Amy Schumer’s trainwreck. He has separate deals with McDonalds, Coca-Cola and Samsung.
As part of his relationship with Fenway Sports Group, he was granted a minority stake in the English Premier League football club Liverpool FC. LeBron made a profit of more than $30 million as part of Apple’s $3 billion acquisition of Beats Electronics – he had struck a deal to acquire a small stake in the company early on in exchange for promoting its headphones.
Although we may not see lifetime contracts become the norm, the mammoth LeBron deal is a certain step towards deeper entrenchment of the relationship between business and pro sport a world where athletes are as much business stars as they are sports stars.
[Photo by Jason Miller/Getty Images]
