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Y! - Inside the sneaker industry: How NBA shoe deals work

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  • Y! - Inside the sneaker industry: How NBA shoe deals work

    A nice insight into shoe deals of NBA players

    http://sports.yahoo.com/news/inside-...032155839.html

    By Nick DePaula of The Vertical
    January 29, 2016 10:05 AM
    Yahoo Sports

    excerpts:
    only 10 players currently have their own signature shoe with a U.S.-based brand, but literally every player in the league has some level of relationship with a footwear brand.
    The “merch” deal
    Players looking to make a training camp roster after going undrafted, or players with a less exciting game who find themselves on small-market teams will often take a “merch” – short for merchandise – deal. In turn, a brand will agree to send an allotment of current sneakers to the player for practices and games.

    ........... a product value of anywhere from $5,000 to $10,000 in sneakers.
    The cash deal
    This is where the majority of the league falls. As you can imagine, there's a wide variety in the range of cash given to players. Typically, a rookie will sign a shoe deal with a brand that'll last three or four years. When that rookie shoe deal is up, the brands will most often hold a “match clause.” Much like the NBA's restricted free agency, brands can match any new offer sheet a player agrees to.

    The current shoe deal range for a marketable lottery pick can be anywhere from $200,000 to $700,000, with exceptions every so often for what brands consider to be “can't-miss” endorsement stars. The most recent star rookie to enter the league, Andrew Wiggins, agreed to a five-year, $11 million deal with adidas

    Within those deals, you'll find an array of clauses and performance bonuses that reward a player's on-court contributions. A player might get a simple $25,000 bonus for making the All-Star Weekend's Rising Stars game, and then another bonus of the same amount for making the All-Rookie team.

    a rotation player with little true marketing potential who plays in a “priority market” like LA, Houston, New York or Chicago could look to earn around $150,000 on a shoe deal. A player might be looking at a third of that with a team such as Orlando or Utah. A more impactful starter could earn between $400,000 and $1 million.

    For all cash-deal players, they're often offered a combination of pure cash and comped product value. Some players might get $50,000 in cash and another $30,000 in credit to spend at a brand's retail store or online. Star-level players might get a $500,000 offer and $100,000 in product. As you can imagine, there are always horror stories of a fledgling player's cousin or friend logging onto his online account and ordering thousands of dollars in gear.
    On top of the cash that's paid out quarterly by sneaker brands to the majority of the league, more than 50 players also receive their own custom “color ways” of a brand's current model, featuring a unique phrase or personal logo on the shoe. Known as “player exclusives,” these PEs can be negotiated into a player’s deal and are awarded to All-Stars like Blake Griffin, DeMarcus Cousins, Jimmy Butler and Kyle Lowry to players such as Randy Foye and O.J. Mayo.
    The signature sneaker
    Signature shoes are so limited that rarely will a player have them for the first game of his rookie year. You'd have to go back to John Wall's Reebok Zig Slash in 2010 and LeBron's Nike Air Zoom Generation in 2003 for the last two occurrences

    there are currently 10 signature athletes across the league: James, Kobe Bryant, Kevin Durant and Kyrie Irving at Nike; Chris Paul, Russell Westbrook and Carmelo Anthony at Jordan Brand; Derrick Rose and Damian Lillard at adidas (Harden’s shoe will launch in 2017); and Curry at Under Armour. Most of them started their careers in PE editions and worked their way into a signature shoe deal.

    Other players like Klay Thompson, Dwyane Wade and Tony Parker have their own namesake sneakers with China-based brands, though their shoes are rarely available in stores stateside because brands like Anta, Li-Ning and Peak have struggled to break through domestically.

    For all signature players, the deals are as complicated as it gets, with various clauses, incentives and guarantees that can also all be rolled back if certain sales or performance thresholds aren't met.

    To start, there are basic rollback clauses for games played. Most guys are expected to play at least 60 of 82 games. Miss too many, and it might cost a couple million. Conversely, some players have MVP bonuses worth a couple million. Across the board, there's also a consistent 5 percent royalty structure for all signature product sold, meaning a player could earn an extra $5 million per year if his overall sales hit $100 million per year. Just last year, James’ overall sales did $340 million.

    For all signature athletes, the brand's top designers make sure the shoe is made to the player’s exact specifications and with his own storytelling and detailing. He’s also guaranteed commitments for photo shoots and a marketing budget for campaigns. Some players even have guaranteed social media budgets, a set number of employees dedicated to their business, and, in the case of James, a post-career plan in place.

  • #2
    Re: Y! - Inside the sneaker industry: How NBA shoe deals work

    This can be of concern - player looking to pad his stats because of his endorsement deal:

    It's also commonplace for all footwear deals to offer bonuses for honors such as Rookie of the Year, making an All-Star team or reaching the playoffs. A wrinkle starting to become more popular lately are combined stat thresholds, which actually can work against players sometimes. A player might have “18” in mind each night out on the floor, meaning he's hoping for a combined point and rebound total of 18 for the game. Not hitting that mark over the course of a season might cost him a percentage of his overall endorsement cash.

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    • #3
      Re: Y! - Inside the sneaker industry: How NBA shoe deals work

      LeBron earned $17M extra as 5% royalty for sales of his signature stuff last year

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      • #4
        Re: Y! - Inside the sneaker industry: How NBA shoe deals work

        Does Hayward have a player exclusive deal?

        Will Gobert someday have a signature sneaker? I could see that happen with an eye towards European sales.

        Anyone remember those awful LA Gear and APEX shoes endorsed by Malone? Wonder if he would have had a better deal playing in a better market.

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        • #5
          Re: Y! - Inside the sneaker industry: How NBA shoe deals work

          Mailman got pretty good publicity despite playing in a small market. He'd definitely get much more and better $$ deals playing in a larger city.

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