In 2015, LeBron James signed a lifetime deal with Nike — the largest single athlete sponsorship in company history. This is the first time Nike has ever signed a lifetime deal with an athlete, so what does such a long term — and potentially risky — deal offer both parties? For Nike, there is a huge financial upside, but the success of the partnership comes down to their ability to sync on audiences and image, use LeBron’s real life to humanize the brand; and employ prudent risk management.
A Record-Setting Lifetime Deal
James’ lifetime deal with Nike — negotiated by Main Street Advisors’ Paul Watcher — will potentially provide James with $60 million per year in earnings while providing Nike with $400 million per year in revenue from the sale of James’ shoe line alone.
Nike has a twelve year history with this star athlete, dating back to 2003 when LeBron James went pro right out of high school. In 2003 the company signed him for a seven year contract after a $90 million bidding war between Nike, Reebok, and Adidas. James was subsequently signed in 2010 for another nine years before the 2015 lifetime deal. The same year that Nike struck LeBron’s lifetime deal, the brand told investors that it’s aiming for $50 billion in annual sales by 2020 — a tremendous goal that doubtlessly accounts for LeBron’s impact.
In addition, the LeBron lifetime deal may be able to build upon Nike’s existed de-facto lifetime sponsorship with Michael Jordan, who’s Air-Jordans shoe line has generated over $2.2 billion in sales since it’s inception in 1985.Read full article