Reigning NBA MVP and league scoring champ Kevin Durant is getting paid and Nike and Under Armour will have to decide which one is going to write the hefty check.
According to ESPN, Durant, who is now repped by Roc Nation has a deal on the table with Under Armour worth between $265 million and $285 million over 10 years. ESPN also reports the deal includes stock options and other perks including a community center built in his mother’s name. Remember the boy loves his mom, if the MVP acceptance speech given by the Oklahoma City Thunder forward is anything to go by.
Here’s where it gets complicated. Nike will have the right to match, which is a condition written into Durant’s present contract with the company. Durant can still choose Nike if it doesn’t match but can’t legally choose Under Armour if Nike does match.
If Durant decides to shoot down Nike and embrace Under Armour this would be the largest sponsorship deal the company has ever committed to. ESPN says the average of $26.5 million to $28.5 million means that Under Armour would be devoting nearly 10% of its current annual marketing budget on him.
And if you’re thinking Under Armor can’t compete with a sports merchandising juggernaut like Nike consider this. Shares of Under Armour are up an amazing 62% year-to-date in 2014, and up about 200% since early 2013 accounting for a UA stock split earlier in 2014, according to Business Insider.
Under Armour has given investors notice that it might hit $3 billion in revenues this year. And only about 1% of all that loot is from basketball shoes.
Of course the swoosh has a $68 billion market cap compared with UA’s $15 billion, but investors with an eye to growth in the stock market are paying big premiums for Wall Street winners and Under Armour stock continues to show resilience in both top-line growth and earnings expansion in a very competitive environment.
Forbes also notes, Under Armour stock just posted its 17th consecutive quarter of 20% plus revenue growth. Growth at more than 20% each quarter for the past four years is just incredible. It screams buy, buy, buy!
ESPN also
reports Under Armour shares are up 96% over the past year, compared to those of Nike, which are up only 21.5%. Among public athletic shoe brands, no company has performed better than UA over that time period.RELATED: Kevin Durant Signs With Jay-Z’s Roc Nation
Since only 1% of UA’s revenue is basketball-driven, the company has to guarantee Durant his money up front, instead of the typical shoe deals that offer a minimum guarantee plus up to 5% royalty on the wholesale revenues.
It’s unclear why Durant, a Nike nut, may suddenly have a clamoring to team up with Under Armour, but sources concede his move to Jay Z‘s Roc Nation last summer started to turn the tables and his agents are being aggressive by leveraging negotiations.
It also doesn’t hurt that Under Armour is a Baltimore-based company and Durant grew up in Seat Pleasant, Maryland, 36 miles southwest of Under Armour’s headquarters, and the company has a record of spending marketing dollars in the community. Rumors have been circulating that in LeBron fashion, Durant just might return to his native Maryland to play for the Washington Wizards when his contract with the Thunder expires after the 2015-16 season; especially if he doesn’t win a ring with OKC.
If Nike passes on matching, Durant will be the second high-profile endorser Nike has lost to UA in the past two years. Last year, UA outbid Nike for the endorsement services of Golden State Warriors star guard Steph Curry who will reportedly get his own signature shoe with the company for the first time in February.
Durant also has endorsement deals with Sprint, BBVA Compass, and Talking Rain. ESPN reports, “Moving to Under Armour likely would mean Durant would have to adopt a new logo. Nike had used ‘KD’ as early as 2008 but was actually granted the trademark for it in January. Durant doesn’t own any trademarks, though in February he did file an application with the U.S. Patent & Trademark Office to trademark ‘Sniper Jones,’ his rap name.”
Under Armour’s $90 million 10-year-deal with Notre Dame is the largest shoe and apparel deal in college sports.
On Aug. 13, Durant went to Under Armour’s headquarters and was said to be blown away by the upstart company’s pitch and presentation. Scheduled to be there only a couple hours, Durant reportedly stayed the day and worked out in its shoes.
Forbes reports Durant became the first NBA player to join Roc Nation Sports in 2013. The Jay Z-founded sports agency now handles Durant’s marketing, in conjunction with CAA. He has two years left on the five-year, $85 million contract he signed with the Oklahoma City Thunder in 2010. He is rated No. 20 on Forbes‘ list of highest paid athletes.
It’s unclear why Nike hasn’t made moves to lock down the most prolific scorer in the NBA, but if the company intends to keep the reigning MVP, it will have to move fast. The ball, as they say, is in Nike’s court.