Kevin Durant, the Oklahoma City Thunder superstar, has been offered an endorsement deal with Under Armour valued between $265 and $285 million over 10 years, which puts pressure on Nike to match it, according to ESPN.com.
Superstar rapper Jay Z’s agency, Roc Nation Sports, brokered the deal that would have Under Armour stock and other incentives, including a community center built in his mother’s name.
Durant is signed with Nike, which gained $175 million in business related to Durant last season. The brand leader will have the right to match, which is a condition of Durant’s current contract with it. Durant can still choose Nike if it doesn’t match, but can’t legally choose Under Armour if Nike does.
Nike’s last offer, sources told ESPN.com, would have given Durant a base and a minimum royalty guarantee that would equal no less than $20 million a year.
If Under Armour wins the services of Durant, it would be the largest sponsorship deal the company has ever committed to. The average of $26.5 million to $28.5 million per year means that Under Armour would be devoting nearly 10 percent of its current annual marketing budget on him. Although Under Armour has given investors guidance that it might hit $3 billion in revenues this year, only about 1 percent of that is from basketball shoes.
Because Under Armour has such a small basketball business, 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 percent royalty on the wholesale revenues. Michael Jordan, for example, made more than $100 million last year from Nike largely from royalties on sales of his Jordan brand.
In 2007, before he played in his first NBA game, Durant wanted to sign with Nike badly enough that the $60 million contract he signed with the Swoosh was more than $20 million less than what Adidas had offered.
But Roc Nation was interested in stronger negotiations, including both Under Armour and Adidas, which dropped out last week.