NBA Rookie Class Finding Little Shoe Endorsement Money Available

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JohnWallStreet
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The 2020 National Basketball Association Draft will finally be held this evening (it’s typically in June). Anthony Edwards (University of Georgia), James Wiseman (University of Memphis) and LaMelo Ball (Australia’s Illawarra Hawks) are considered to be among the biggest prizes. But of the three, Ball is the only one to have announced a footwear and apparel endorsement deal. The youngest Ball brother will wear Puma sneakers next season. The fact that multiple projected top-five picks remain unaffiliated so late in the draft process is highly unusual. It’s also indicative of how little shoe money has been available for players in the 2020 rookie class.

Our Take: To put the lack of deals signed to date in perspective, Happy Walters (CEO, Catalyst Sports & Media) explained that in a “normal” year “half the guys in the top 10” would have already signed with a footwear and apparel company. “Usually [there are a handful of] rookies with multimillion-dollar shoe deals in place before the draft,” he said. Right now, Ball is believed to be the only one. The lack of household names in the class, the anticipation of a difficult winter for the retail sector and a depressed performance basketball shoe market (NPD Group reports sales are down -20% YoY through October, while the overall U.S. footwear market is down -7% YoY) have all likely contributed to the brand pullback.

Shoe representatives told Walters that Nike wouldn’t be signing any rookies before January—“that they don’t even have a budget [for it right now].” Adidas is rumored to be in a similar boat. It’s certainly logical for a company paring back spending to start with basketball player endorsements. The performance basketball shoe market represents less than 3% of the total sneakers sold year-to-date. “We used to think about performance basketball shoes as a really, really important category. It’s now essentially been relegated to a team [product]. You don’t really see basketball shoes on the street anymore,” Matt Powell (senior industry advisor, NPD Group) said.

Players drafted later in the lottery (or beyond) will often sign footwear and apparel endorsement deals in the weeks following the draft. But with the shoe companies struggling, those opportunities may not present themselves to this year’s class. “Some guys [playing in big markets] may be able to find a deal for less than they would have gotten [in a normalized environment]. For others, it is going to be a lost year [in terms of a shoe deal],” Walters said.

Players that play the 2021 season without a shoe deal aren’t likely to find one next offseason, either. “Most [players] get their marketing [and endorsement] money before they hit the NBA. It’s rare a guy plays a year and then gets a deal,” Walters said. That is because after a year in the league the excitement surrounding most players has diminished, and there is always another class of prospects coming up (think: shiny new toy syndrome). The fact that the ’21 rookie class is perceived to be more talented than the current crop of draft eligible prospects, and that the ’21 class might have the benefit of playing on the NCAA Tournament stage (which the ’20 class missed out on), only makes it less likely a class of ’20 player will find a lucrative deal next summer. “Unfortunately for the [current class], a lot of them are going to miss their opportunity,” Walters said. The agent suggested rookie shoe deals for a mid- to high- lottery pick typically range between “$250,000 a year over five years on the low end to $1.5 million a year for five years on the high end.”

While there has been abnormally little spent on rookie shoe deals this year, NBA prospects had already been finding footwear and apparel money harder to come by over the last few years (Zion Williamson being the lone exception). “The brands have been moving away from giving out big rookie contracts. They’re rather waiting to see if the player can succeed in the league, if they have a marketable personality and a sense of style [before inking the player to a lucrative long-term deal],” Powell said. Longtime sports marketing executive Sonny Vaccaro expects that trend will continue: “The days of wine and roses—the multimillion-dollar deals—are over [for most players]. The only guys that are ever going to get [that kind of] money are the ones that can sell shoes.” Of course, we won’t know if a player can sell shoes until they step on an NBA floor.

It’s should be noted that despite LaMelo’s deal being reportedly worth $100 million, few believe its true value is anywhere close. Puma global director of brand and marketing Adam Petrick recently acknowledged as much in an interview with Esquire (which reported the $100 million figure): “The value of our contracts sometimes comes down to agents inflating dollars.”

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