Michael Jordan King of Nike, whether or not James has a $1 billion contract

LeBron James’ manager Maverick Carter hinted in an interview with GQ published on Tuesday that James’s lifetime contract with Nike is worth more than $1 billion.

James’ compensation was first estimated to be between $400 million and $500 million when the transaction initially emerged in December. However, some sites did speculate as high as $1 billion. As there is a lot of mystery surrounding endorsement deals, especially ones with a never-before-seen “lifetime” tag, this was undoubtedly simply media speculation.

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There is no other way to determine how long the LeBron brand will last, as the payout mostly depends on sales. However, not even Michael Jordan, whose NBA career propelled the business into billion-dollar sales, has a lifetime contract like LeBron’s. But does that imply that King James has supplanted His Airness as the ruler of Nike and, consequently, of all athletes in the endorsement industry?

Let’s analyze it numerically.

 

Lebon James

• An estimated annual income of $30 million, according to Sam Amik of USA Today.

• An estimated value of James’ Nike contract from 2003 through 2010 ($11 million annually).

• Estimated value of James’ Nike contract from 2011 to 2015 ($20 million annually): $100 million+.

• James’ estimated 2014 Nike U.S. retail shoe sales were $340 million, according to SportsOneSource.

• James may have contributed 0.4% of Nike’s $30.6 billion in revenue in 2015.

 

Michael Jordan

• Estimated 2015 earnings of $110 million, including $100 million from Nike, according to Forbes.

• His counsel reported Jordan’s Nike profits from 2002 to 2012, or about $44 million a year, in court records.

• According to SportsOneSource, the estimated US sales of Jordan brand sneakers in 2015 were $3 billion.

• Jordan was responsible for 8% of Nike’s $30.6 billion in 2015 sales.

 

Nike

Revenue for the 2015 fiscal year was $30.6 billion.

The planned revenue for the 2020 fiscal year is $50 billion.

Both NBA legends receive a portion of the proceeds from selling their sneakers, a practice still unheard of in the business, although Jordan leads the pack in terms of overall earnings. With ten times as many domestic sneaker sales, it was evident that Jordan continues to receive more money from Nike than James, in addition to the fact that he is substantially more valuable to the corporation.

Although it’s generally accepted that Jordan has “at least a de facto pact for life,” according to ESPN’s Darren Rovell, James technically edges Michael in Nike’s commitment to creating a lifetime connection with him.

Now, this is where things get interesting: if the international firm is aiming for a two-third increase in annual income over the next five years (from 2015 to 2020), it may be intending to launch an exclusive LeBron brand, similar to Air Jordan, within the next few years.

Why not give James a few years to attempt and win another NBA title to boost his international popularity? Stephen Curry, who is signed with Under Armour, and the Golden State Warriors, currently reign supreme in basketball. With more freedom in free agency in 2016 and beyond, it’s also possible that LeBron will leave Cleveland (again) for a bigger market. Another factor is the upcoming release of Space Jam 2.

Would LeBron be able to compete with the GOAT in the world of sports sponsorships if he had his own brand? LeBron’s performance on and off the court, Nike’s ability to profit from it, and, most crucially, the customers at the checkout counter will determine the outcome.