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The Players Technology Newsletter 20.0 — 04/14/19

Here’s A Blank Check Mr. Williamson


Hey <<First Name>>, 

Friday night Duke star Zion Williamson won the Wooden Award as the top college basketball athlete, completing a full sweep of all the postseason college basketball awards. There isn’t a question if he’ll be the first pick of the 2019 NBA Draft or which team he’ll “probably” be playing for next season. The intrigue centers around the biggest shoe bidding war in history during an unsettling time in the footwear industry. 

All the speculation is around the possibility of Williamson signing a multi-year, $100M + deal dwarfing the rookie deals of LeBron James and Kevin Durant. James signed a fully guaranteed $87M over seven years, and now has a lifetime deal with the company. Durant signed his own seven-year deal with Nike for $60M and re-signed with the brand in 2014.

Zion has the assistance of the social platforms that give him the reach unavailable to James and Durant during their times.  He comes with a built-in audience that includes 3.1M Instagram followers and 292K Twitter followers. 

Mr. Williamson’s contract won’t make sense to many, as an unproven NBA player, and as the waning influence of basketball stars in the footwear market persist (see Wake Up Mr. West). This year Nike and Adidas have rigorously scaled back their budgets on rookie contracts, and mandated that they’ll spend primarily on a “chosen” few moving forward. In 2015, James Harden was the centerpiece in the last bidding war, when he left Nike to sign a $200M deal with Adidas, yet I can’t recall one person that knows the name of a Harden shoe model or can recollect what it even looks like. Adidas is still reeling from the 13-year, $185M extension they signed Derrick Rose to in 2012.

So why will Mr. Williamson’s deal dwarf the contracts of most of the NBA’s biggest stars? He has a couple of important factors in his favor. For the larger companies, it’s cheaper to pay Zion than compete against the prospect of losing him. Nike wouldn’t mind having back the $200M/year business they lost when Steph Curry left for Under Armour. Imagine what Adidas would have been if Kobe Bryant hadn’t left after signing his rookie deal with the Company and migrated to Nike? 

Zion will receive offers from as many as six brands, including Nike, Adidas, Under Armour, New Balance, Puma, and Anta. New Balance, Puma, and Anta have made recent efforts to establish their brands in the basketball arena signing Kawhi Leonard, DeMarcus Cousins and Klay Thompson to substantial contracts and looking to spend more. The New York Knicks have the highest probability of drafting the No. 1 Pick in the upcoming NBA Draft. The idea of the next NBA superstar playing in the largest market in the world is an opportunity too good to pass up. 

With all that being said, Mr. Williamson has checked all the boxes when it comes to identifying the next NBA superstar. Competition among the shoe companies to sign Zion will help push “his price” above wherever it should be because there is a scarcity of transcendent talent in the world. Firms will be willing to overpay as they view this as a direct opportunity to steal market share from Nike. 

The footwear executives making these decisions get paid to identify who will move the needle. They also get fired for missing, and at the end of the day, that’s all that matters. So, there is only one way to shoot without missing, and that's to PAY TOO MUCH!

Sincerely,

Rudy

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“There is nothing noble in being superior to your fellow man. True nobility is being superior to your former self.”

- Ernest Hemingway
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