Los Angeles Lakers forward LeBron James might be one of the smartest businessmen in sports. James has made successful deals with Beats by Dre and Blaze Pizza, along with acquiring 2% of English Premier League club Liverpool F.C. Those deals, along with many others, have helped James build an estimated net worth of $450 million. One of these deals was a shoe deal with Nike. While James took millions less when choosing Nike over Reebok, it has turned out to be a great deal for him. Let’s look at why LeBron James picked Nike and how it could net him more than $1 billion.
Why James initially chose Nike
LeBron James was one of the most hyped prospects in NBA history. His high school games aired on ESPN, and he made the cover of Sports Illustrated at 17 years old. Most people expected him to be a generational talent.
Shoe companies saw James as a player that could sell tons of shoes. The two biggest suitors were Reebok and Nike. At the time, Reebok had two of the league’s biggest stars in Shaquille O’Neal and Allen Iverson. However, Nike had Michael Jordan, which would be the difference-maker.
James grew up idolizing Jordan. Earlier this year, James spoke of his love of Jordan, saying:
“I was watching from afar. I wanted to be like MJ. I wanted to shoot fadeaways like MJ. I wanted to stick out my tongue on dunks like MJ, wear my sneakers like MJ. I wanted kids to look up at me someday like MJ.”
That would be the difference for James. Despite being heavily courted by Reebok, James turned down their offer to sign with Nike. James received $28 million less from Nike, but at the time, it didn’t matter because he got the chance to follow his idol.
LeBron James has made tons of money with Nike
Signing with Nike has turned out well for James. He initially signed a seven-year, $90 million contract. In 2010, he signed an extension worth approximately $30 million a year. In 2015, he signed a “lifetime” deal that is expected to pay him more than $1 billion.
The partnership has also been beneficial for Nike, which has dominated the performance basketball market. In 2018, Nike, along with the affiliated Jordan Brand, controlled more than 80% of the performance basketball market, which tops around $1 billion annually. James’s shoes are Nike’s biggest seller.
What happened to Reebok signing NBA players?
Reebok hasn’t had the same success in the NBA as Nike. As of 2019, Reebok doesn’t have any NBA endorsers. That happened due to a strategy shift shortly after missing out on James. Reebok decided that hip-hop artists were much more appealing to consumers than basketball players. Reebok signed superstar rapper Jay-Z to a shoe deal, then followed it up with others stars like Pharrell and 50 Cent. In 2004, a year after those signings, Reebok’s shoe sales in the United States increased by 17%.
In 2005, Adidas bought Reebok for $3.8 billion. While Adidas has done well, the Reebok brand has struggled. Reebok didn’t renew deals with the NFL and NBA for jersey and other merchandise. In 2017, Adidas shareholders called for Reebok to be sold off. Adidas rejected the demands and claimed they are redeveloping Reebok. However, speculation remains that it will be sold off. Even former endorser Shaquille O’Neal is upset. O’Neal, one of Reebok’s major endorsers in the 90s, has criticized Adidas for destroying Reebok.
Would things have been different if James signed with Reebok? Reebok may have been able to avoid getting bought out by Adidas with James on board. James has shown that he is an excellent businessman. However, many of his best deals have been made in the last decade. Back in 2005, he may not have been able to save Reebok. Could James have saved Reebok in the mid-2000s? Or would he have jumped ship to Nike at the first chance?
We may never know the answer, but for James, choosing Nike was one of his best business deals.