Nike Has Spent An Incredible Amount On Endorsements Over The Past Decade
ByJoey Heldon October 20, 2016inArticles›Sports News
Part of the benefit of being a professional athlete is the opportunity to sign endorsement deals. Some players have made several times what they actually earn with their on-field play simply by backing a product.
In some cases, the player simply has to appear in a commercial, other times an endorsement deal might encompass a lot more, such as serving on the company’s board of directors, promoting the company on social media, and, in the case of apparel companies, wearing the brand on the field.
For many athletes, being lured by apparel giant Nike is a great sign that they’ve made it. And with good reason: the company has or had sponsorship deals with some of the top names in their respective sports. Michael Jordan , Kobe Bryant and LeBron James rocked the basketball world wearing the swoosh, Serena Williams and Tiger Woods proudly wore Nike gear as they decimated opponents in tennis and golf, respectively, and when Simone Biles captured America’s hearts this summer during the Rio Olympics, Nike had her back (and her shoes).
Chart of how much Nike has spent on endorsements over the last decade (via @MatthewKish ) pic.twitter.com/ATIavIDtY7 — Darren Rovell (@darrenrovell) October 13, 2016
Of course, all of those deals add up. According to Portland Business Journal reporter Matthew Kish, Nike spent $9.42 billion in 2015, which is a 52 percent increase from 2014 alone. In fact, since 2007, Nike has spent a total of $46.79 billion in endorsement deals.
The increase in spending is due to a few different factors. For one, other players in the apparel game, most notably Under Armour, have started biting into Nike’s sales. In some cases, the shoe giant has even lost clients to other brands, like how Steph Curry jumped ship to become the face of Under Armour.
In addition, endorsement contracts are becoming longer and more ambitious. Take LeBron James’ recent Nike deal , for example. It lasts his entire life and might be worth upwards of $1 billion. That’s a far cry from players signing deals for maybe a couple of years and a few million dollars.
Nike currently is endorsing more than 1,000 athletes across the sports industry and provides uniforms for the entire NFL and more than 90 colleges and universities in the United States.
Despite dishing out big money, the company is still making back quite a bit in apparel sales. For the fiscal year 2016 (which ended in June of this year), Nike reported earnings of $32.4 billion, which is 12 percent growth for the company. In the fourth fiscal quarter alone – from April to June – the company had $8.2 billion in revenue, which is nearly what they spent in all of 2015.
Even though other companies making a run at Nike’s status, particularly on the basketball court, it’s a safe bet to assume that Goliath will still be doing just fine for the foreseeable future. For now, the big question is…which promising young athlete will be the next one to put on the Nike swoosh?
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- Billionaire Michael Jordan Has Zero Influence On Which Players Wear His Shoes, And The Reason Why Is Kind Of Strange…
- Next Season Kevin Durant Will Make WAY More Money Wearing Shoes Than Playing Basketball…
Next Season Kevin Durant Will Make WAY More Money Wearing Shoes Than Playing Basketball…
ByBrian Warneron August 20, 2014inArticles›Celebrity News
When Kevin Durant was a rookie, he had two competing companies desperately vying to sign the future super star to a shoe contract. As you might have guessed, those two companies were Nike and Adidas . Amazingly, Kevin opted to go with Nike despite the fact that their contract would pay $22 million LESS than than the one offered by Adidas. He must have been a big Nike fan! Even after you take out $22 million, Kevin’s rookie deal was still very lucrative. Nike paid him $60 million over seven seasons, roughly $8.5 million per year. That Nike deal is about to expire, so Kevin once again finds himself accepting offers as a shoe free agent. So, is Adidas gonna pony up the dough to finally get their man? Or is Nike gonna cough up a truck-load of cash to keep one of the league’s most popular and talented players? Actually, believe it or not, neither of these sportswear giants are even in the running for Kevin Durant this time around…
Kevin Durant / Ronald Martinez/Getty Images
If the reports are true, Kevin Durant is on the verge of signing an absolutely ginormous shoe deal with… Under Armour . Under Armour will reportedly pay Durant $30 million per year for the entire length of the contract, which is believed to be seven years. That’s $210 million , by the way. As you may have guessed from the title of this article, $30 million is WAY more money than Kevin will earn on the court next season. During the 2014-2015 season, the Oklahoma City Thunder are on track to pay Kevin $19 million . During the 2015-2016 season, he will earn $20 million . At that point, Kevin becomes a free agent. Oh, and by the way, Adidas did make a run at trying to sign Kevin this time around, but once the bidding got up to $20 million per year, they bowed out.
Under Armour may seem like an odd choice considering the fact that the company isn’t really known at all for their basketball shoes. In fact, out of Under Armour’s $683 million total 2013 revenues, only around $6 million came from selling basketball shoes. That’s a little bit less than 1% . It may also interest you to know that Under Armour’s annual marketing budget is roughly $300 million , so by the power of math, if this deal goes through, 10% of their 2014 budget will be spent on this one deal. Kind of a big gamble.
If Lebron’s rookie shoe deal with Nike was worth $90 million and Durant’s was worth $60 million (and could have been $82 million if he had gone with Adidas), surely today’s rookies must be raking in the cash, right? I mean, even John Wall made $25 million over five years with Reebok, when signed with them four years ago. Well, for whatever reason, the value of rookie shoe contracts has plummeted over the last few years. Maybe Nike and Adidas have been burned a few too many times by top heavy contracts with players who don’t end up panning out.
Andrew Wiggins was the #1 draft pick this year. He recently signed a contract with Adidas that will pay him… $2 million per year over five years. That’s $10 million for those of you who are bad at math. LeBron made more off Nike in his first year, when you include his signing bonus.
It’s a trend happening around the league. Many companies just aren’t willing to risk throwing so much money at an unproven rookie nowadays. As a lot of the athletes coming out now only play one year in college, there isn’t even really a lot of collegiate footage to rely on. Also keep in mind that Nike did not earn a profit off their deal with Lebron until 2012, almost a full decade into his NBA career. Nike has reportedly not broken even yet on their deal with Durant, so they probably wont ever at this point.
It’s unclear yet whether or not this deal with Kevin Durant will payoff for Under Armour. Let me remind everyone that back in 2012, Dwyane Wade ditched his $10 million Nike contract to sign with a Chinese shoe company called Li-Ning . No one in the US had ever heard of Li-Ning back then, and I dont think much has changed in the last two years. So this is clearly a very risky move for Under Armour. Only time will tell how this will turn out.
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