After reports surfaced Under Armour had made Kevin Durant a grand-daddy offer of $325 million spread out over a decade, a report from Darren Rovell at ESPN today lowers that figure, but not so much as to fall under a quarter of a million dollars. Durant’s reps at Roc Nation, by letting Nike know the extent of UA’s offer — alleged to be between $265 and $285 million spread out over 10 years — allows them their contracturally obligated right to match the deal, Rovell adds.
Here’s the skinny via ESPN.com:
Kevin Durant’s representation Roc Nation Sports informed Nike on Wednesday that he has a deal on the table with Under Armour worth between $265 million and $285 million over 10 years, sources told ESPN.com.
The deal includes Under Armour stock and other incentives, such a community center built in his mother’s name, whose exact worth will not be known for some time.
Nike, which saw its signature business related to the Oklahoma City Thunder forward grow to roughly $175 million at retail last season, will have the right to match, which is a condition of Durant’s current contract with the brand. Durant can still choose Nike if it doesn’t match but can’t legally choose Under Armour if Nike does.
Sources also tell Rovell Nike’s latest offer would have given KD a base and a minimum royalty guarantee that would not fall under $20 million a year.
It seems adidas, the only other shoe brand with a stock of NBA basketball players that could rival Nike, briefly came into the fray for Durant’s services, bowed out when the negotiations hit $20 million.
Adidas did make a run at Kevin Durant, told they dropped out around $20M a year.
— darren rovell (@darrenrovell) August 21, 2014
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Then there’s the infancy of Under Armour’s position in the basketball marketing world. As Rovell notes in his piece, $26.5 to $28.5 million a year represents around 10 percent of UA’s current annual marketing budget in a sport that represents only around 1 percent of its annual revenues.
If Under Armour deal with Durant goes through, UA will be spending 10% of its marketing budget on biz that is currently 1% of its revenues
— darren rovell (@darrenrovell) August 20, 2014
Under Armour has told investors it could reach $3 billion in revenue next fiscal year, but a deal this size for one player over an extended period, represents a dramatic shift away from the way they’ve done business in the past.
Since basketball is such a small slice of the Under Armour pie, they can’t do a shoe contract in the traditional way, where a player is offered a minimum guarantee with up to a five-percent royalty on the wholesale revenues.
Michael Jordan, still Nike’s biggest endorser despite retiring more than a decade ago, reportedly took in north of $100 million last year in revenues from Jordan Brand.
Nike's biggest endorser is still Michael Jordan of course. Believed to be clearing $100M a year on royalties from Jordan brand.
— darren rovell (@darrenrovell) August 20, 2014
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Durant’s love for Nike might be the biggest obstacle in Under Armour’s apparent coup with this monster offer. Rovell notes that adidas offered Durant more than $20 million more than his offer from Nike after KD was drafted in 2007, but before he ever played a game. Durant wanted Nike so bad, he signed with them for less before ever playing in an NBA game.
Durant took $22M less to sign with Nike over adidas in his rookie year. If Nike doesn't match UA, he can still chose them.
— darren rovell (@darrenrovell) August 20, 2014
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Despite the fact KD would be making more with Under Armour than he pulls in under the NBA’s maximum allowable salary structure with the Thunder, he wouldn’t be the only one making his biggest coin endorsing a product. LeBron James reportedly made more than $30 million from Nike last year, more than $10 million more than he earned with the Heat:
Durant wouldn't be the only NBA player to make more on shoe deal than on court. LeBron will likely make around $30M from Nike this season.
— darren rovell (@darrenrovell) August 20, 2014
While the Under Armour numbers bandied about by Rovell seem astronomical, the money has weighed heavily on Durant, according to Rovell’s sources.
Yes, there is a huge amount of $ on the table for KD's new shoe deal, but people close to him say it has weighed heavily on him.
— darren rovell (@darrenrovell) August 21, 2014
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Perhaps that’s why Chris Sheridan’s report last week about a growing discord between Roc Nation and Durant’s friends and family feels so portentous in lieu of these recent reports.
No wonder Durant wants to take some time off from USA Basketball and have some space to himself and his family. It’s hard to avoid the ever-present spotlight that comes with being the NBA MVP and likely to become one of the highest paid athletes in the world, and with this shoe deal on the table, things are still amping up in Kevin Durant’s increasingly cluttered off-the-court career.
Will Durant sign with Under Armour?
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