After a summer when Under Armour and Nike were fighting to sign NBA All Star, Kevin Durant, Nike won after they offered a $300 million deal over the next 10 years. It started when K.D. was in his final months of a 7 year and $60 million contract with Nike. While that went on, Under Armour dropped him with a massive offer worth $265-$285 million, and it included company ownership and a recreational center that would be named after his mother. This put a ton of pressure on Nike to match or exceed the big deal.
Under Armour only had 0.35% of the market share on basketball shoes at the end of 2013 while Nike and Brand Jordan held 93%, so there was very little evidence that big names would go to a smaller corporation, but the probability of that occurring was not 0. They did sign Stephen Curry
in 2013, so the company hoped that would help them jump into the NBA. Signing Durant would have
been a huge profitable gain.
Under Armour sold $30 million in
basketball shoes last season, whereas K.D.generated $85 million alone in 2013. They could have blown up
Durant and generated enough sales to more than make up for
the reported $30 million/year cost of signing him, which would make it a no-brainer to pursue him.
Despite of the failed signing (for Under Armour), it was still a good move. The company had a lot of buzz this summer, so they might have sold more shoes because of that. If U.A. would have been successful in the signing, then they would have been a top name with Nike in the NBA very quickly!
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ReplyDeleteIt's interesting to see how these brand names are perceived. The fact that they are willing to sign a player for 300 MILLION dollars is a bit ridiculous. That's a colossal amount of money.
ReplyDeleteI agree with Connor that these contracts have ridiculous prices. It's hard to believe that it could be worth it to the company to put that much out just to have someone represent the company.
ReplyDeleteI completely understand why Under Armor is offering so much money to Kevin Durant. He sells huge amounts of basketball shoes. Something Under Armor does not.
ReplyDeleteI think it was a smart financial move for Kevin Durant to choose Nike because he will have many more opportunities.
ReplyDeleteA 300 million dollar contract is not that insane to offer someone who can help your company sell $85 million dollars worth of shoes a year.
ReplyDeleteIn recent years Nike has been doing so much better than Under Armour. Both companies offered him a crazy amount of money to wear their products, but I think Nike has more to offer Durant than just money.
ReplyDeleteCrazy to think that just one person can make shoe sells rise so much. But it doesn't make seance to give so much money just for this one person name associated with your brand
ReplyDeleteTo me I found that KD made a very stupid decision on not to leave Nike, yes they get all thehype for almost everything involving sports but KD shouldve switched up the game a bit an went with a company that in 10 years from now will be on top.
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