Last December the world’s largest athletic company made an unprecedented move by offering Lebron James a lifetime endorsem*nt contract. It was Nike’s first lifetime contract and the largest, single-athlete guarantee in company’s history. While Nike nor James will disclose the specifics of the contract, it’s estimated that James will make somewhere between $500 million to $1 billion from the deal during his lifetime.
So why is Nike willing to bet so much on one person over a such a long time? What does this “lifetime contract” mean and how does it effect the future of marketing? Here’s a few thoughts:
Nike is Betting on Character
A lifetime deal is an investment not only in the athlete’s profession, but also in their personal life. To put it simply, Nike is betting that Lebron doesn’t end up in a scandal.
That might seem risky in light of Nike’s declining contract with Tiger Woods after his personal scandal in 2009. The once “Billion Dollar Man” has never recovered professionally and his endorsem*nts continue to dwindle.
This also isn’t the first lifetime endorsem*nt deal in the sports world. Reebok signed Allen Iverson to a “lifetime” deal in 2001 right before he was named MVP of the league and took the Sixers to the NBA Finals. After that, things fell apart. It’s estimated Reebok is still paying out as much as $800,000 a year to Iverson until his final lump sum of $35 million when he turns 55. While Reebok continues to make money on the deal with retro releases of Iverson inspired shoes, clearly it didn’t turn out as rosy as everyone intended.
So why is Nike taking the chance of partnering with another potentially risky athlete?
Because they’re betting on Lebron James as a person.
Nike was the first to take a chance on Lebron during the eve of the 2003 NBA Lottery when their first deal was announced for $90 million over seven years — the largest sports endorsem*nt at the time. Ever since then, Lebron has been a beloved member of the Nike family.
I’m just grateful that Nike and [Nike founder] Phil Knight and everyone over there just believed in a skinny-old, skinny 18-year-old kid from Akron, Ohio, and I’m happy to be a part of such a great company.
Since 2003, Nike revenue has tripled and their stock is up over 1000%. The longer they work with Lebron the more they’re willing to continue making bets on the skinny 18-year-old kid from Akron.
Nike is Betting Long-Term
It’s been 17 years since Michael Jordan played for the Chicago Bulls and yet the Air Jordan brand is the biggest basketball shoe brand in the world. It collected $2.6 billion of the $4.2 billion total sales for 2015. The brand today not only sells basketball shoes but encompasses an entire lifestyle.
Nike is betting they can build something similar that continues to grow and expand long after James has left the basketball court.
Don’t forget about Lebron James Jr. either, who at 11 years old is already putting together quite the highlight reel. Ohio State’s head coach Thad Matta is watching closely and hopes to lock down a commitment from James Jr. in the near future. Think of the impact for Nike and the Lebron James brand if Lebron James Jr. should continue in his father’s footsteps.
Nike is Betting on a Platform
To the outsider this may just look like another high-dollar, athletic deal, but this is more than just trendy shoes. This is a brand platform.
In recent years, James has become a more intentional business man. He is an investor and spokesman for Blaze Pizza, a casual, Chipotle-style pizza restaurant which was just named the fastest growing restaurant chain in the country. He launched a new media project in 2015 called Uninterrupted - a social-media style site where athletes share videos from their phones. It generated $15.8 million in investments from Warner Bros. and Turner Sports. He’s also tried his hand at Hollywood, appearing in the Golden Globe-nominated Trainwreck. What’s more, he could easily follow Michael Jordan’s lead and become the owner of a professional basketball team down the road.
All the while Nike is betting on a “halo effect” — everything Lebron touches expands their brand in one way or another. Their partnership is more than basketall or even sports. They’re leveraging a diversified brand that will allow their investment to grow.
In the end, is this a good deal for Lebron? Yes.
Is it a good deal for Nike? Even better.
James could end up making an extra billion dollars over his lifetime. Nike could collect close to $1 trillion in total revenue when all is said and done. This deal easily pays for itself.
FAQs
By giving him a lifelong endorsem*nt contract, Nike is making a wager that his star power will last for many more years. As marketers look to capitalise on the impact and fan devotion that athletes can create. This agreement shows that athlete endorsem*nts are more important than ever.
What is LeBron's lifetime deal with Nike worth? ›
In 2015, their partnership came full circle as James signed a historic lifetime contract with Nike worth approximately $1 billion.
What is LeBron James' Nike contract? ›
In 2015, James and Nike agreed to a lifetime contract, which was the biggest of its kind in company history, which is reportedly worth an estimated $30 million a year. Make no mistake, this deal is massive and could reach the billions by the time James is in hid mid-60s.
What does a lifetime contract mean? ›
In this case, the contract typically outlines the specifics of the benefits and the conditions under which they may be revoked. In conclusion, a lifetime contract is an agreement between two parties that guarantees the terms and conditions of a service or product for the duration of one`s life.
What does lifetime offer mean? ›
A term that usually refers to subscriptions to SaaS (software as a service) products, a lifetime deal is a special offer for customers. It allows them indefinite access to your product or tool as long as it is still functioning and available.
Who got lifetime deal with Nike? ›
The 13-time All-Star joins Michael Jordan and LeBron James in inking a lifetime contract with Nike.
How much has LeBron made in his lifetime? ›
While some reports say he's earned roughly $400 million from professional basketball, he's reportedly also raked in about $900 million from off-court pursuits.
How much money does LeBron James bring to Nike? ›
Brand Partnerships
He rakes in about $32 million a year from Nike, according to Forbes. 6 Maverick Carter, James' longtime business partner, told GQ that the deal is worth more than $1 billion. 7 His endorsem*nts and businesses earned him over $900 million in 2022, according to Forbes.
How much did LeBron James profit from Nike? ›
In the NBA, LeBron James is currently one of the main stars of the sport that wears Nike. James became the first active NBA player to be worth a billion dollars back in 2022. In terms of Nike earnings, Forbes reported in 2019 that the Los Angeles Lakers star earns $32 million per season with the brand.
Why did Nike choose LeBron? ›
At the time, Lebron James was one of the most hyped-up prospects of all time and was fresh out of high school. There was even a Sports Illustrated article where he was named “The Chosen One”, which reinforces the hype he garnered. As a result, shoe companies like Reebok, Nike, and Adidas wanted him to sign with them.
The top 10 biggest sports sponsorship deals in history
- Michael Jordan and Nike: $1.3 billion. ...
- Cristiano Ronaldo and Nike: $1 billion. ...
- LeBron James and Nike: $1 billion. ...
- Lionel Messi and Adidas: $1 billion. ...
- Roger Federer and Uniqlo: $300 million. ...
- Rory McIlroy and Nike: $250 million. ...
- Steph Curry and Under Armour: $215 million.
The top shareholders of Nike are Phil Knight, Mark Parker, Andrew Campion, Swoosh LLC, Vanguard Group Inc., and BlackRock Inc. (BLK).
What is the meaning of lifetime deal? ›
A lifetime deal (LTD) is an agreement or license offered to users to use the product or service for the product's " lifetime." As long as the product remains available, it will be accessible to you because you have purchased a lifetime license.
What does lifetime payment mean? ›
Key Takeaways. A lifetime payout annuity is a type of retirement investment that pays a portion of the underlying portfolio of assets for the life of the investor. The guaranteed payments associated with lifetime payout annuities eliminate the risk for investors of outliving their retirement funds.
Can a contract last a lifetime? ›
The California Commercial Code states that where a contract provides for successive performances but is indefinite in duration, the agreement is valid for a reasonable time, but unless otherwise agreed, the contract may be terminated at any time by either party.
Are lifetime contracts valid? ›
The California Commercial Code states that where a contract provides for successive performances but is indefinite in duration, the agreement is valid for a reasonable time, but unless otherwise agreed, the contract may be terminated at any time by either party.
How much money has Michael Jordan made from Nike in his lifetime? ›
While estimates vary, he's likely earned a total of at least $1.5 billion since 1986. (Good money if you can get it.)
How do Nike contracts work? ›
The deals usually run for 10 to 15 years and amount to millions of dollars. Most contracts consist of an annual cash payment as well as clothes, shoes, and equipment. Some even include bonus payouts if teams make it to post-season tournaments or win championships.
Who has the highest paid contract with Nike? ›
1. Michael Jordan and Nike: $1.3 billion. The Michael Jordan and Nike partnership is one of the most famous and lucrative sponsorship deals of all time, let alone sports sponsorship deals.
