Adidas (ADS:GR) announced today that it has signed Andrew Wiggins, the Cleveland Cavaliers rookie and first overall pick of the NBA draft in June, to an “unprecedented partnership.” The company did not discuss the deal’s duration or how much it’s worth. According to ESPN (DIS), the multi-year pact comes with a guarantee of $2 million per year.
The price is well below the “$140 to $180 million for, like, 10 years” suggested by an “industry source” to Bleacher Report in October. It is also much smaller than the seven-year, $93 million deal that LeBron James landed with Nike (NKE) before he became the No. 1 pick in 2003.
Wiggins is not the once-in-a-generation prospect that James was. He is also coming of age at the wrong time for the mega-sneaker deal. When Nike and Michael Jordan got together in 1984, they created a new model. The player became—literally—a brand. Jordan and Nike’s mutual success raised expectations about what was possible. Jordan became history’s greatest basketball player and his shoes became lifestyle accessories. There followed a frenzy of sneaker hype and gimmickry. There were puppets, pumps, personae, and personal brands galore. Players had to have their own shoes.
Jordan, it turned out, was one of a kind. His brand rode with him to the heights of fame and then transcended its association with the living, breathing man now running the Charlotte Hornets (and watching old Clint Eastwood Westerns) and became an enduring symbol of prestige and nostalgia. It is now a subdivision of Nike that brings in $2.5 billion in annual sales. When I spoke with Jordan’s longtime agent David Falk a couple years ago, he put it this way: “Just having a brand is one thing, but making the brand work is quite another. … There’s no brand that’s been remotely as successful as Jordan. I’m not even sure you’d even call those other guys brands.”
Shoe companies have slowly been coming to the same conclusion. According to some back-of-the-envelope math from shoe market analyst Matt Powell, Nike lost money for years on its endorsement with James. And Adidas’s $185 million man, Derrick Rose, has suffered repeated injuries. John Wall and Reebok (RBK)didn’t make it to the end of a reported 5-year, $25 million deal he signed as s rookie in 2010. After such hard lessons, guaranteed money—especially for rookies—appears to be coming down.