What you can get for $90 million these days
Thursday, May 29, 2003
LeBron James' sneaker deal isn't the end of sports as we know them.
Not even close. It isn't a cautionary tale about greed or how out of whack our priorities are -- though it does make you wonder how a kid who has yet to bounce a ball in an NBA game inks a $90 million deal to wear sneakers while cops, firefighters and teachers are paid like clubhouse attendants.
And it sure isn't about pressure.
After all, what's the worst thing that can happen? He turns out more like Mark Bryant than Kobe Bryant? More Trace Armstrong than Tracy McGrady?
No problem. Even if James turns out to be a total bust, or blows out a knee, he's still set for life. Unless he pulls a Tyson and outfits his home(s) with exotic zoos and bedspreads, he'll have enough endorsement money left to pay off the Hummer and buy a different throwback jersey for every day of the year -- for the next 10 years or so.
And that's on top of the $13 million, three-year deal he's already guaranteed as the No. 1 pick of the Cleveland Cavaliers.
Nobody seems to lose
So no feeling sorry for James, no matter how this thing turns out. And certainly not for Nike, which has found ways to clear warehouses full of sneakers modeled for players you've already forgotten.
When you get right down to it, the sneaker deal is a bet about the cost of labor, and despite all the doom and gloom echoing in the days since the announcement, not a very bad bet at that.
The guys calling the shots at Nike didn't agree to hand over anything near the reported $90 million. Exact figures on endorsement deals are never made public, but the standard version includes a considerable signing bonus for James, a commission for his agent, plenty of conditions and a ton of incentives that have to be met.
If he turns out to be half as good as those clauses set out, the bet becomes an investment. Business school theory questioned Nike's decision early on in agreeing to pay Michael Jordan royalties for each pair of shoes sold. The same people wondered how Tiger Woods would justify the $40 million he pocketed even before venturing out on tour. We know what a bargain it was because Nike renegotiated the figure closer to $100 million while it still had two years to run.
A logical combination
That's why there's no point getting huffy about the numbers thrown at James. All we know for sure is a.) that one company was willing to risk more than any other to find out whether James is that once-in-a-decade athlete who can fire the imagination and move product in droves at the same time; and b.) the guys who run that company didn't get where they are by missing too often, or missing by much.
But just to be sure, the same guys hedged their bet on James with another deal less than a week later, signing soccer prodigy Freddy Adu for $1 million.
That doesn't sound like a lot of money until you consider that Adu is 13 years old. Then again, Inter Milan, one of the world's most storied clubs, offered Freddy's family a six-figure package to oversee his development, and that was when he was 11.
Funny as it sounds sometimes, signings like those are practically cost-saving measures. Overpaying ballplayers -- as performers even more than endorsers -- is a relatively recent phenomenon. For most of the history of pro sports, owners controlled both supply and demand and most ballplayers learned their lessons the hard way.
One of the more famous attempts at wresting away some of that control involved an otherwise soft-spoken catcher named Deacon White. He was playing in Detroit in 1888 when the franchise went out of business and he and pitcher Jack Rowe were sold to Pittsburgh. Instead of reporting to their new team, they bought a team in Buffalo and planned to play for themselves.
When that venture failed, they ended their holdout and as recounted in Bill James' "Baseball Abstract," they finally showed up in Pittsburgh a year late. Both got raises and just as important, what White considered the last laugh.
"We are satisfied with the money, but we ain't worth it," he said. "Rowe's arm is gone. I'm over 40 and my fielding ain't so good, though I can still hit some. But I will say this. No man is going to sell my carcass unless I get half."
Ballplayers aren't getting a 50-50 split of revenues yet, but it's not for a lack of trying.
Jim Litke is the national sports columnist for The Associated Press.