reebok is the enemy
On the basketball front, it is not so much Adidas as it is Reebok that Nike seeks to contain. Reebok signed Allen Iverson to a (perhaps you should sit down for this) lifetime deal. True, much unlike Kobe who supposedly lacks street cred, LeBron comes packed with inner-city appeal, so it should come as no surprise that Nike made a bold bid. How bold? Well, how bold is over $90 million for seven years for a kid who can't drink in all 50 states (that's 50 states, not 50 Cents) and has yet to play a minute of college ball, let alone pro ball?
But Reebok is not even the greater specter haunting Nike's dominance. While Nike competes with the likes of Reebok on shelves, it is key that it has a solid relationship with the owner of those shelves. Unfortunately (or fortunately for anti-Nike aficionados), Nike recently had a rough period with Foot Locker.
Had Reebok signed LeBron, Foot Locker could've added insult to injury by flooding Nike products with Reebok's LeBron garb. Worse even, Foot Locker could snub Nike and relegate it to second-class citizen. Yes, Nike built Foot Locker (and its ilk) to a large extent, but sadly, business is a bitch and with a LeBron-injected Reebok, Foot Locker could've blanketed Nike against consumers -- unless, of course, Nike gets its act together online, but that seems as far-fetched as the Los Angeles Clippers signing their free agents.
you can't label lebron
It is hard to put LeBron's deal in the proper context. After all, if $90 million really is a drop in the "basket" for an entity like Nike, then how could we cast this deal in the proper light?
Once upon a time, there was this other gentleman who hailed not from Ohio but North Carolina. Jordan was his name, Michael Jordan. Back in 1984, freshly drafted third overall, Nike signed MJ to a five-year contract worth $2.5 million. For those who care, MJ was smart enough to secure royalties, had he not, MJ would not be, well, MJ. Say what you will -- and this in no way intends to take anything away from MJ -- but in the larger context, Nike did as much to build MJ as MJ did to build Nike. After all, not all the best players have corporations' marketing muscle to build upon.
How will the critics look at this deal? Who cares? Back in 1984, Fortune magazine mocked Nike.
How will the gods look down upon the LeBron-Nike deal?
Do not take my word for it; take the stock market's two cents. When the deal was announced, Nike's stock price barely moved. That can be explained by many factors, but when the bottom line is tallied, the notes in the annual statement will state that the potential downside of not securing LeBron at the time the deal was consummated far outweighed the costs. But the cost itself was largely immaterial to a going concern like Nike.
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