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Friends,
NBA All-Star Trae Young, who plays for the Atlanta Hawks, announced yesterday that he has signed a multi-year extension with Adidas, which will see him become just the 20th current NBA player to release a signature shoe — coming in the Fall of 2021.
The best part?
He’s only 22.
Trae Young @TheTraeYoung
Trae Young 1. Coming in 2021. 🙏🏽👟💯
8:32 PM ∙ Dec 9, 2020
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Outside of Trae Young, who plans to have a very “hands-on” experience designing the shoe, here is the list of current NBA players with signature shoe deals:
Nike
LeBron James
Giannis Antetokounmpo
Kevin Durant
Kyrie Irving
Paul George
Adidas
James Harden
Damian Lillard
Trae Young
Donovan Mitchell
Derrick Rose
Aaron Gordon
Under Armour
Stephen Curry (Curry Brand)
Joel Embiid
Jordan Brand
Russell Westbrook
Chris Paul
New Balance
Kawhi Leonard
Anta
Klay Thompson
Gordon Hayward
K8iros
Spencer Dinwiddie
Peak
Matthew Dellavedova
But the real question becomes, how do these deals actually work?
When it comes to the NBA, there are three types of shoe & apparel deals (Source):
Signature Deals
Cash Deals
Merchandise Deals
Let’s run through them…
Signature Deals
Given only 20 current NBA players have signature shoe deals, these agreements are reserved for superstar players —think LeBron James, Kevin Durant, and James Harden.
Why?
Not only do they require allocated resources for research & development, marketing, and sales—meaning the player must be extremely popular—but the player also receives financial upside through a royalty structure.
Here are the economics (Source):
Typically pay $5 million to $15 million annually
The player receives ~5% royalties
The player is given unlimited merchandise & signature gear
For a comprehensive picture of how much these players are actually making with the royalty included, here’s some data from 2019.
Even more interesting?
Rapper Kanye West takes home more than all of them — a total of ~$140M annually from Adidas.
Cash Deals
Cash shoe and apparel deals sit in between signature deals & merchandise deals.
These deals are reserved for good players that haven’t quite reached signature shoe status yet — think Bradley Beal & DeMar DeRozan.
While they may get a few player exclusives (PE), the athletes on cash deals won’t have their own signature shoe or apparel line.
Economics (Source):
Pay $200k to $3 million annually
Extremely incentive-heavy contracts
Includes marketing appearances
No royalty
In total, around 20% of the NBA has a cash shoe deal.
Merchandise Deals
Beneath signature and cash deals are merchandise deals, which represent about 75% of the NBA.
These players—think bench players and reserves—aren’t paid to wear the shoes, but they receive free merchandise throughout the year — typically $25,000 or higher depending on the player (Source).
In simple terms, they basically get an extremely large gift card.
Still, not bad.
Over the next decade, as new brands emerge and players continue to get educated around their financial ability, we should expect new options to emerge.
After all, with markets meant to be dynamic, why are we siloing players into three distinct categories?
Hope you enjoyed the breakdown, have a great day and we’ll talk tomorrow.
If you want a deeper dive on sneaker free agency, check out this breakdown by Alex Kennedy & Nick DePaula — it’s where most of this info was sourced from.
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