Nike has signed LeBron
James to an unprecedented lifetime contract, the largest single-athlete deal in
the company's history, as first reported by Darren Rovell of ESPN.
While this is a great
deal for James, this contract has the potential to be a game-changer for all
top athletes, starting with how the deal came together.
LeBron James is no
longer just a basketball player.
In some sense, James
stopped being just a basketball player a long time ago, but this is different
and much bigger.
Rather than use his
agent to make this deal with Nike, James brought in his business advisor, Paul
Wachter, whose background is in merger and acquisitions, a source familiar with
the negotiations told Business Insider.
This is significant, as
it means that this deal is going above and beyond the typical athlete endorsement.
This is not Nike signing another athlete to promote shoes and maybe some
apparel. This is a merger between two corporations, Nike and the LeBron James
brand.
In other words, LeBron
just ceased being a basketball player. That side still exists, but it is now
just one department in a much bigger business.
While we will not see a
spin-off brand in the same manner that consumers view Michael Jordan's Jordan
Brand, it shows that James and Nike are taking steps to further build the
LeBron Brand under the umbrella of Nike Basketball, into something similar to
what Jordan was able to accomplish.
It is safe to assume to
that as part of the deal, we are going to see a dramatic increase in the amount
of resources Nike commits to LeBron and his brand, including executives,
products and advertising. It is also safe to assume that James and his team will
have a bigger role in the business side of Nike as it deals with his brand.
The lifetime contract
will also cause other top athletes to rethink their own place in the business
world.
The next question is
how this impacts other athletes down the road.
In 2009, LeBron signed
his second contract with Nike. That 9-year deal was a no-brainer for Nike.
James was 25 and already the best basketball player on the planet.
This deal is different.
Rather than betting on LeBron James the great basketball player on the court,
Nike is betting on LeBron James the business man and LeBron James the brand and
its potential staying power long beyond his playing days are over.
What Nike is betting on
is rare in the sports world. We can talk about Jordan, Arnold Palmer, maybe a
David Beckham. But this is a different era.
A source familiar with
the deal told Business Insider that this is the kind of deal that force other
athletes to re-think their approach to these types of deals.
All of a sudden, just
signing a 10-year deal worth $20-30 million per year to promote a shoe and some
apparel doesn't sound as impressive as a lifetime deal that instead turns the
player into his or her own brand and grows their own business potential for
generations to come.
Whether or not companies
will be willing to make this type of commitment to other athletes is yet to be
seen. But it can be certain that some of the top athletes will try and some
will succeed.
A new era of sports
endorsements.
In the end, what we are
seeing is a paradigm shift. In one giant business decision, Nike and LeBron
James just changed how the world's top athletes will operate outside of their
arenas of competition.
No longer will an agent
negotiate a price for an athlete who will then sign a standard contract. Now it
is financial advisors who will negotiate the merger of two businesses.
Michael Jordan set the
precedent almost inadvertently, with the help of Nike. LeBron James just proved
the move can be replicated and we will see it again.
Cork Gaines
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