SBD/November 27, 2013/Marketing and Sponsorship

Adidas Could Recoup Part Of Rose Deal, But Does Company Need To Find Successor?

adidas turned Rose's return from his previous injury into a marketing opportunity
adidas "did what it had to do by overpaying" Bulls G Derrick Rose when he signed a deal reported to be worth at least $200M early last year, but his latest injury "might lead one to believe that Rose isn't the shoe-selling star adidas thought he was," according to Darren Rovell of ESPN.com. Sales of the D Rose 4 shoe "aren't expected to fall completely flat" during his absence, but they "won't exactly be off the charts with Rose sitting on the sideline." Sources said that adidas' deal with Rose "can't be undone, but the company can start to recover money once Rose misses two-thirds of any given season." If the company can prove that shoe sales have been "hurt, it can deduct some of the money owed to Rose." The injury "figures to push adidas into desperation." adidas has "spent way too much time with big men" like Nets F Kevin Garnett, Spurs F Tim Duncan and Rockets C Dwight Howard, "who don't sell shoes." The company more recently has "put its marketing muscle behind" Wizards G John Wall, T'Wolves G Ricky Rubio and Trail Blazers G Damian Lillard, "all of whom are on teams that aren't moving the needle" (ESPN.com, 11/26). TIME's Victor Luckerson notes adidas was able to turn Rose's initial knee injury "into a marketing opportunity, launching a microsite to chronicle his rehabilitation and helping to boost excitement for his return." adidas will now "have to come up with some new strategy to keep fans interested" in Rose. Former Nike, adidas and Reebok exec Sonny Vaccaro: "Everything was built on him coming back. It was successful. He was on every magazine. The shoe was selling. All those things were positive, and now this. There’s no remake. How do you play that show again?" (TIME.com, 11/27).

HOW NBA INSURANCE WORKS: Rovell reported the Bulls are on the hook for Rose's entire $17.6M salary this season even though he only played in 10 games, but the NBA's insurance policy with MetLife "means the team will get some of that money back." The policy begins "paying out after a player has missed 41 straight games with the same injury." That means insurance will pay 80% of Rose's salary for the final 29 games of the season. Rovell: "In the past two years, the Bulls have paid Rose $34 million and have received $11.5 million dollars back from insurance. If this was not a completely new injury, the insurance policy from last season would have continued to cover the Bulls at 80 percent of Rose’s salary. But because it’s a completely new injury, the clock to reach the 41-game deductible starts over again” (“SportsCenter,” ESPN, 11/26).
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