SBD/September 2, 2014/Marketing and Sponsorship

Under Armour's Play For Durant Fails, As Nike Retains Him With Deal Worth Over $265M

Overall value of Durant's deal with Nike could hit $300M or more
Nike has "countered Under Armour's offer" of between $265-$285M to Thunder F Kevin Durant and "believes it will keep" him as an endorser for the next 10 years, according to sources cited by Rovell & Stein of ESPN.com. Nike, whose seven-year deal that guaranteed Durant $60M is expiring, "made an initial offer" of about $20M a year that "was far from what Durant was looking for." UA's "huge play for Durant had many believing that Nike would even let him go at that price." The "overall value of Durant's deal with Nike" could hit $300M or more "if his business continues to rise." That number "is flexible as he will get a royalty on all sales in his line." Nike officials told Durant and his team at Roc Nation Sports on Saturday that it "would indeed step up enough ... to keep him in its robust stable of basketball endorsers." While the exact Nike offer for Durant is not known, sources said that Durant "should make more -- in base and royalties -- than" the $41.2M that the Thunder "will pay him over the next two seasons." UA's offer included 10% stock, which "one could argue makes that offer worth more than its present day value." Although the money was big, sources said that the decision "weighed on" Durant. They added that going back to Nike "comes with a sense of relief ... because Durant, who has turned into one of the league's most marketable stars, can still make significant money without being associated with the risks of Under Armour's fledgling shoe business" (ESPN.com, 8/31).

RICH GET RICHER: USA TODAY's Nina Mandell wrote "with the exception of a few stars here and there who sign with other companies, Nike deals usually come to any athlete showing even a bit of potential." While Durant "may or may not directly bring in the amount of revenue that Nike spent to keep him, he does represent the continuation of Nike having the best players in the world: Jordan, LeBron and the reigning MVP" (USATODAY.com, 9/1). In Baltimore, Matthew Brown writes Durant has "been one of Nike's later-generation success stories, following the extraordinary and continuing appeal of the now-retired Michael Jordan." Data from SportsOneSource shows that Durant's shoes generated $175M at retail in the past year, and "that was at $125 a pair and fairly limited distribution to stores." Raising the price of the shoes and "distributing them more widely could increase revenues and profits" (Baltimore SUN, 9/2).
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