For the majority of the 1990s and into the early 2000s, adidas had a promising stake in the basketball world. Through the revolutionary work of John Paul Vaccaro—better known as “Sonny”—adidas embedded its brand into the grassroots level of basketball to become one of the most prominent shoe companies in America. Vaccaro, who is often regarded as the “Godfather of Basketball Sneaker Culture,” pioneered the phenomenon of sneaker sponsorships for high school teams to introduce their product to the nation’s elite talent at an early age. This strategy, accompanied by Vaccaro’s reputation, and his annual ABCD camp, gave the brand with the 3 stripes the proverbial jump on recruiting the next bright star.
Sonny Vaccaro’s formula for success was proven effective early in his tenure with adidas. His first client was high school standout and now Los Angeles Lakers shooting guard Kobe Bryant. In 1996, Vaccaro orchestrated an endorsement deal that would pay the McDonald’s All-American $1 million per year, sending shockwaves throughout the industry. A shoe deal of this magnitude was unprecedented during the 1990s, especially considering the fact it was being granted to a high school prospect. However, Vaccaro had an eye for identifying “the next guy,” just as he did in the recruitment of Michael Jordan during his time at Nike. Vaccaro’s approach to signing Bryant was strategic, yet simple. First, he invited Bryant to his annual ABCD camp to get a first-hand look at his potential client. He then moved to New York City in order to establish a relationship with Bryant and his family as he progressed through the high school ranks. By the time Kobe Bryant took off his cap and gown at his high school commencement, he was signed to an adidas contract.
it was the dumbest single mistake anybody ever made in the negotiation of a property. — Sonny Vaccaro
Bryant flourished under adidas, making the All-Star game in just his second year in the NBA. It was a clear victory, as they struck gold on an elite-level client without ever allowing Nike a chance to reach the negotiating table. This sent a pulse of angst throughout Nike’s Beaverton, Ore. offices, as it was affirmation that they had to conform to this new grassroots style of client recruitment. They could no longer wait for potential prospects to make it to the professional ranks before making their sales pitch, because by then it would be too late. Then Tracy McGrady came along. The Central Florida native shot up the high school rankings after a stellar performance at Vaccaro’s ABCD camp. Nike took a more proactive approach with McGrady as they did not want this situation to unfold the same way it did with Kobe Bryant. Nike still ended up losing out on McGrady to adidas, as he felt more comfortable with the direction they were going with the younger athletes.
adidas was now 2-0 in the recruitment wars and all was well, until one sunny day in Malibu, CA in 2003. Sonny Vaccaro was on the verge of reeling in his biggest client yet, LeBron James. “King James” as we know him today was a high school phenom, being featured on covers of major sporting publications and having several games televised on ESPN during his senior year of high school. Upon meeting James and his mother Gloria for the first time, Vaccaro made it known that the Akron, Ohio native would be receiving a $100 million shoe contract over 10 years. Vaccaro then presented his plan to sign James to upper management at adidas, who by his proclamation obliged to the terms of the proposed contract.
However, during the sales presentation to the James camp, Vaccaro realized management had altered the terms of the contract. Instead of $10 million guaranteed over 10 years, adidas only offered $7 million with incentives. Needless to say, James walked away from the negotiations and eventually signed a $90 million endorsement with Nike. This has proven to be a crippling blow as LeBron James has played a significant role in helping Nike amass more than $16 billion in revenue since 2003. In 2014 alone, the 11-time All-Star accumulated upward of $340 million in sneaker sales; and contributed to Nike owning an astounding 92% of the market share in the basketball shoe industry in 2013 according to Forbes.com.
Calling the decision to not give one of the most transcendent athletes of this century three more million dollars in guarantees “detrimental” would be an understatement. In the words of Sonny Vaccaro: “it was the dumbest single mistake anybody ever made in the negotiation of a property.”
On top of missing out on billions of dollars in revenue, adidas let the opportunity to control the entire basketball landscape slip through their fingers. Client recruitment for future stars such as Kevin Durant and Stephen Curry could have been much easier for adidas had they had the best player on the planet recruiting and endorsing their product. Instead, they have had to shift their focus towards signing second-tier NBA stars and heavily relying on their emerging lifestyle brand in order to compete. Decisions are key, and the recent struggles adidas Basketball has faced makes that fact painfully obvious. Better luck next time.