Roc Nation Sports has reportedly alerted Nike that Under Armour has presented a deal for Kevin Durant worth between $265 million and $285 million over 10 years, sources told ESPN.com.
The deal is not a straight cash out, it includes stock options and other incentives, like a community center built in his mother’s name. Keep in mind, Under Armor is based in Baltimore, KD is from DC and there have been talks of him possibly returning to his hometown to play for the Wizards in two years once he’s a free agent.
For most, it seems like a no brainer for KD to take the offer from UA and keep it moving. But let me give you some additional information. Under Armor got its start as an apparel brand deeply rooted in football, the brand started taking off in 1998 when it was featured in the football based film, “Any Given Sunday.”
In 2003, the company launched their first commercial, and their first warning shot at Nike that they were coming to take over. That was also my first year working for Nike, so I remember that warning shot well, and out seriously the Nike took UA coming for them with the plan to expand into cleats and completely dominate in football. Since then, UA has continued to grow, however only 1% of their biz is derived from the NBA.
Nike on the other hand has reportedly offered KD a deal with a base and a minimum royalty guarantee that would equal no less than $20 million a year. The royalty is a big thing and part of why the UA offer is fluid. In 2013, Nike saw its KD sales rise from $35 million to $175 million, and this was BEFORE KD won the MVP award.
Bottom line, if the move to UA doesn’t produce the product that people want to purchase, those millions are actually a lot less. Nike has the right to match, but then that would place KD’s deal higher than both LeBron’s and Kobe’s.
This will be interesting to watch, compelling business opportunity with a lot of risks. But, you know the old saying, high risk, high reward.
