While NBA fans are eager to find out what top prospects will don on draft day, sneakerheads are more so concerned about the footwear company that these future stars sign with. It's been reported that Nike's trying to make a run at top pick Andrew Wiggins, while Jabari Parker already inked a deal with Jordan Brand before even being selected No. 2 overall by the Milwaukee Bucks.
Not only do top picks have to perform well for their teams, but they must also live up to their shoe contracts, which in some cases are massive multi-million dollar deals. Forbes contributor and SportsOneSource sneaker analyst Matt Powell doesn't believe NBA rookies deserve these huge shoe contracts.
The reason? It's essentially because he doesn't believe the athletes can make the companies any significant return. "One of the key reasons I think we have not seen huge rookie shoe contracts is because the cost cannot be justified," Powell said.
By using a simple analysis that breaks down endorsement costs vs. wholesale sales to find out profitability, Powell took a look at two of the biggest names when it comes to sneaker endorsements—LeBron James and Kevin Durant.
Based on his analysis, he determined that it wasn't until 2012 that Nike had a profitable year with LeBron's signature line. For Durant, Nike has yet to have a profitable year and has "lost money" on the deal so far.
He believes this downward trend has caused many rookies to settle for sneaker deals in the $1-2 million range and even states that no rookie has signed a deal greater than $10 million since John Wall's 2010 Reebok deal worth $15 million.
"If a brand chooses to spend millions to have a rookie wear their shoes, I do not expect that brand to make back their investment in shoe sales," Powell said. "That investment will be a huge waste of marketing dollars."
[via Forbes]
