Inside the Epic Race to Get Andrew Wiggins' Sneaker Endorsement
Jared Zwerling@JaredZwerling
NBA Senior WriterOctober 15, 2013
In the early part of the fall in 2003, LeBron James was preparing for his NBA debut, having signed a three-year, roughly $13 million contract with the Cleveland Cavaliers—and a seven-year, $93 million footwear and apparel contract with Nike. The latter for James, arguably the most hyped player ever coming into the NBA, was the highest paid to a rookie in league history.
Now, 10 years later, Andrew Wiggins is getting close to LeBron-level hype, even though the 18-year-old can't go pro as James did because of the NBA's higher age-limit rule enacted in 2005. And when Wiggins—an NBA-ready all-around player and freak athlete like James—is eligible for the draft after his freshman year at Kansas, the endorsement market for him could be bigger than it was for James as a rookie.
Not only is there major buzz surrounding Wiggins, but he also has the impact of social media and viral videos—especially surrounding his high-flying dunks—working in his favor, which James didn't experience. Also, the league's entertainment value and global exposure have increased, and players' marketing opportunities have expanded into new, luxurious categories, like high-end fashion and timepieces.
For Wiggins, it all starts with a potentially historic sneaker contract for an NBA rookie.
"Everybody is excited about (Wiggins') talent," a source associated with Under Armour said. "From everything you see or hear, he's the next kid coming into the NBA that's going to demand, on talent alone, a significant amount from a brand. That type of commitment and interest for a rookie has really died down since LeBron and maybe Kevin Durant being the last one."
Overall, next year will present a special class of sneaker free agents, as the Nike contracts of NBA stars Durant, Kyrie Irving and Paul George are expiring, according to Nick DePaula, the editor-in-chief of Sole Collector magazine. And then there's Wiggins, who could steal the thunder from everyone.
Three sources told Bleacher Report that Adidas has pegged Wiggins as their prime target—and they would be willing to open up the bank for him. Of course, no meetings or official offers can be made until Wiggins declares for the 2014 draft after his season at Kansas.
"(Adidas) is easily the front-runner, 100 percent," said Rich Lopez, the publisher of the popular sneaker website KixandtheCity.com.
"From what I'm hearing, (Adidas) is really high on him," an industry source said. "I've heard a range for sure, from like $140 to $180 million for like 10 years. That's a big deal for a kid coming out of school because most rookie deals are probably like four years."
"I'm hearing from people at Kansas that he's got a $180 million offer supposedly coming from Adidas," a source close to Wiggins' inner circle said. "But I also heard that Nike is going to match anything."
There's no question Nike, the world's leader in footwear and apparel, will place a bid for Wiggins, who's unanimously projected to be the top draft pick next June. Wiggins wore Nikes growing up, according to two sources, and his former Ontario-based AAU team, CIA Bounce, was sponsored by the company.
In addition, Nike could eventually have an "in" with Wiggins through Rich Paul, who has been James' agent since last September. Paul is also connected to Mike George, the former director of CIA Bounce, which featured Wiggins' friends and fellow Canadians Anthony Bennett, Cory Joseph and Tristan Thompson, all of whom are now in the NBA. One NBA agent said he'd "be surprised" if Wiggins didn't end up with Paul. In fact, the source close to Wiggins' inner circle said Paul and Wiggins met last summer in Ohio, where James was working out with Durant.
"Wiggins' price tag will be up there for sure, but I don't see Nike missing out on him," DePaula said.
Two NBA agents believe that bigger representation firms, such as Creative Artists Agency and Wasserman Media Group, could compete with Paul for Wiggins' services. CAA, for example, is the world's leading talent and sports agency—with a huge network of CEOs from many global brands—and could utilize the appeal of hip-hop mogul and newly established sports agent Jay Z, whose Roc Nation Sports is a partner of their company.
"I would think that (Wiggins) would ultimately end up with a CAA or Wasserman if he's smart, because he does have a lot of potential on the sponsorship side and I think they have the most leverage in that area," one agent said. "Some big agencies, like Andy Miller's, are more focused on the basketball aspect. CAA has their tentacles in so many different things, and they're plugged into everything in the world."
As for Nike, what could stand in their way of shelling out big bucks for Wiggins are the hefty contracts of James, Durant and Kobe Bryant, who are the company's main pitchmen and faces of the NBA. All three of them earn between $10 and $20 million per year with Nike, according to Sports Business Daily.
"They have LeBron and KD—they're 28 and 25—so these guys are going to be big and in the league for another decade," Lopez said. "If Nike gives (Wiggins) money and then they try to elevate him, that's going to really piss off LeBron, and it's going to piss off KD, and it's going to piss off Kyrie who thinks he's next, and it's going to piss off Kobe who's on his victory lap and wants to push, too. So you're dealing with the biggest players in the industry."
Lopez said he has heard Nike "would never give a huge deal (like James' or Durant's) out again because it just doesn't pan out financially." But he said Bryant's situation—35 years old, recovering from an Achilles tendon tear and possibly only having a couple years left in the NBA—could make Wiggins more attractive.
"Nike's motivation to bring in Wiggins could be to replace Kobe because he's on his way out," Lopez said. "So I assume if they were to give Wiggins a big deal and his signature sneaker, that's their motivation."
At this point, Adidas has the upper hand because they sponsor Kansas, so the company's reps can be in direct contact with him and outfit him with customized game sneakers during the season. Derrick Rose played college ball at Memphis, which was in partnership with Adidas, and the company "was able to massage him early," Lopez said, before signing him as a rookie in 2008.
Nike and Jordan Brand, on the other hand, have to tread carefully behind the scenes so they don't get in trouble for tampering. The source close to Wiggins' inner circle said a Nike rep was recently on the Kansas campus to take in a scrimmage.
"It's interesting because (Wiggins) has been a Nike guy his whole life, and then he goes to Kansas and they're an Adidas school," the NBA agent said. "That sends a message to Nike that it's not a done deal yet, so now both of these companies are going to have to cut a check. Going to an Adidas school is kind of like a statement to Nike saying, 'Hey, if you want to get me, you don't already have me. You've got to cut the check and make some things happen.'"
Like Nike, Adidas will have some things to think about as well when considering Wiggins. For starters, while the temptation to spend money on him is there, they already have Rose locked into a 13-year deal worth at least $185 million, signed last year. Adidas could be cautious, as it seems unlikely they will see a return on that massive investment in the Chicago Bulls star.
"I don't think (Adidas) is ever going to make that money back through (Rose's) merchandise," Lopez said. "The injury (in April 2012) kind of hurt his big launch sneaker (last fall) because he never rocked it on the court. That kind of put a damper on their plans; they lost some steam. This season's sneaker is kind of iffy just from a looks standpoint.
"He's definitely going to move units because he's back and that's going to get exposure. But at the end of the day, I would be confused if they gave someone another huge deal based on their experience with D-Rose."
Adidas also has to factor in their long-term marketing plan for Dwight Howard, Ricky Rubio and new endorser John Wall, who switched over from Reebok earlier this year. Would Adidas focus on Rose and then possibly Wiggins, while leaving the others in the second unit? That wouldn't be smart business from a relationship-building standpoint, especially for negotiating with other players.
"When you sign these players to these sneaker deals, they expect a certain amount of exposure from you," Lopez said. "And when they see that you're signing other people and elevating them, they get pissed. They expect to be that dude. That's a power play that Adidas is going to have to figure out with (Wiggins)."
Competing with Nike might be more important to Adidas than competition within their own brand, though.
"You have to factor in the competition between the brands," said Matt Powell, the sneakerologist for SportsOneSource, the industry leader in sporting goods research and analysis. "That's why Adidas ended up overpaying Rose—they absolutely made sure he didn't go to Nike."
One company who could quietly make a run at Wiggins is Under Armour. They recently signed Stephen Curry, and the source associated with UA said they're "focused on continuing to make an impact in basketball." But the source said Wiggins would only get "serious consideration" from UA based on the season he has at Kansas and how far he leads the Jayhawks in the NCAA tournament.
In addition, the source said "it's fair to say" that Under Armour would not be interested in Wiggins if the financial figures were in the 10-year, $140 million or higher range. An industry source confirmed that UA is more judicious about player spending than Adidas and Nike.
"I would never rule (UA founder) Kevin Plank out, but if I were betting, I don't see them breaking the bank for anyone," the source said. "That has not been their model to date, and history is usually the best benchmark."
The bottom line is that Wiggins would be a game-changing acquisition for Under Armour, whose focus has been apparel and football in their 17-year history.
"Their shoe business is still kind of in its infancy," the NBA agent said. "They just signed Steph Curry. Brandon Jennings was the original face, and he hasn't exactly panned out. Curry is a step in the right direction, but I still don't think he's Wiggins. Wiggins would be big."
According to Powell, Under Armour earned about $15 million in U.S. basketball sneaker sales last year and currently accounts for less than one percent of the U.S. basketball market share. But UA does have the financial resources to sign Wiggins. Their revenues last year were $1.84 billion, marking a 25 percent increase over 2011.
"I could see them going hard for Andrew Wiggins and opening the bank as much as they possibly can," Lopez said.
"Under Armour will make a very strong push, and I can tell you that with 100 percent certainty," the NBA agent added. "Financially, I would expect for them to compete with (Adidas and Nike), and it wouldn't surprise me if they won. Andrew Wiggins is a lot more important for Under Armour, who controls less than one percent of the total market, as opposed to Nike, who has 92 percent. So a guy like that is theoretically more valuable to an upstart company than a giant company."
Still, though, Adidas and Nike will be the leading companies to land Wiggins, especially because of their seasoned and successful marketing and distribution around the world. And the source close to Wiggins' inner circle said, "Andrew has the ability to be his own global brand." With Under Armour, their overseas presence is still emerging.
"Under Armour can try all day long," the source said, "but I think with the international marketing presence that Nike and Adidas have, there's no way in God's world Under Armour could ever compete. Nike has a machine; Adidas has a machine."
A dark horse could emerge in Chinese brand Li-Ning, which has Dwyane Wade for another eight years, or Anta, which recently signed Rajon Rondo to an eight-year deal. Wade recently tried to persuade top rookie Victor Oladipo to sign with Li-Ning, according to Lopez, so the Heat guard is willing to go after youngsters with star potential.
"Li-Ning is like a God in China," Lopez said. "They have the money."
"(The Chinese brands) are a wild card," the source associated with Under Armour added. "They're not shy about giving more years than what people would expect, and more money than what people would expect as they continue to build."
Overall, because of the climate of more lucrative, longer-term sneaker contracts, the industry source envisions Wiggins being in the same ballpark.
"I have to believe if Wiggins and his reps believe he has true brand power, he won't settle for anything less than a seven- to eight-year deal given what those who came before him have received," the source said.
Speaking of money, what should Wiggins' sneaker contract really be worth when you crunch the numbers? According to Powell, who's been analyzing sneaker sales since 2003—when James signed his historic Nike contract—the economics of the individual sneaker deal "just don't make a lot of sense." Powell said it took Nike nine years for their investment in James to pay off.
"Nike spends 12 percent on marketing," Powell said. "So when LeBron sold $150 million worth of shoes at wholesale last year, 12 percent is like $20 million. So it's in the range of what he's being paid now—the first time he's gotten his marketing cost to the sales range after nine years. He's now at an acceptable threshold for the amount of money they're paying him. So you overpay for eight years to make the money back in Year 9? That's not good business."
Powell even said Durant and Bryant's Nike contracts "haven't justified their costs," though Bryant is "closer to his value."
Powell said in addition to the competition among brands, another main reason for overspending is a player's potential brand equity through commercials and other media. That will be a key component behind Adidas' pitch to Wiggins, as the company is the official uniform and apparel provider for the NBA.
"That means more marketing opportunities with the league sponsorship," the industry source said. "Right now, with the exception of D-Rose, the face of the league are all Nike guys, so when you have new uniforms coming out, when you have All-Star Games, it helps for them to have someone who is head to toe in that gear."
Beyond the money and Wiggins' talent, the sneaker companies are also going to explore the value of his personality. Arkell Bruce, one of Wiggins' close mentors and his former assistant coach at Huntington Prep in West Virginia, said Wiggins is a "family guy" and prefers to keep a low profile.
"Andrew is really private. He doesn't like a lot of his business out there," Bruce said. "He has a tight-knit circle, like real tight. He doesn't really mess with a lot of people; he doesn't trust a lot of people."
Could Wiggins' privacy affect how much he earns? Well, in the case of Rose, who has similar character traits to Wiggins and disconnects himself from the celebrity status of the league, it didn't seem to matter. But business reps will still need to work with Wiggins regardless to help him develop a persona the public will admire.
"I think Andrew is going to be a talented athlete, but at the end of day, he's going to have to open up his personality," the source close to Wiggins' inner circle said. "So in order for him to be that quality pitch guy, he's going to have to go through media training. All that shyness and bashfulness that he has in him right now, he's going to have to get that out of him."
Bruce believes Wiggins' experience at Kansas will help him prepare for all of the attention, which he expects to "hit the fan" when the season starts.
"The coaches are great, and I'm pretty sure they're going to do a great job of handling it," Bruce said.
Behind closed doors, the industry source said "most sneaker brands are already planning for the back half of 2014 and are setting direction for 2015, so if Andrew is on their radar, those discussions have already begun." They will include talent evaluation, marketing strategy and, ultimately, budget planning. Then, interested companies will begin mocking up sneaker designs—and even prototypes—to present to Wiggins next spring, if he declares for the draft.
In addition, key companies in the car, sports drink, trading card, mobile phone and headphone space are likely starting to think about plans for Wiggins.
"It will be one of the biggest company wars in recent memory—since probably Kevin Durant (in 2007)," the NBA agent added.
Before anything gets signed—with an agency, sneaker brand or any other—the source close to Wiggins' inner circle said every company will have to go through his older brother, Nick, who is wrapping up his college hoops career at Wichita State this season. Nick's presence in the same state was a major factor in Wiggins deciding on Kansas, and he's expected to be the future star's right-hand business adviser.
"The most influential person in this whole thing is his brother," the source said. "That's why he went to Kansas—to be close to his brother. And his brother is going to be his gatekeeper at the end of the day."
At this point, Bruce said Wiggins and his family aren't talking "anything to the effect of business or the NBA." In fact, the source close to Wiggins' inner circle said his mother, Marita Payne-Wiggins, "has shut all the agents down" from pitching their services.
Agents will also have their hands full with highly touted freshman prospects Jabari Parker (Duke) and Julius Randle (Kentucky), two potential one-and-dones who could round out the top three picks in next year's draft. Their performance could earn them a spot in the sneaker race.
"It's an exciting year with all the guys that have the potential to be great," Bruce said. "It's one of the few years where there are a few marquee guys in college basketball."
But what Parker and Randle don't have is LeBron-level hype, and that goes a long way leading up to any draft. That's how Wiggins landed on the cover of this week's Sports Illustrated. Ring a bell? James was appointed "The Chosen One" on the cover of SI as a high school phenom. His play went on to back it up.
Wiggins is now the newly appointed chosen one, and when all is said and done, he could set a new standard for rookie contract demands off the court.
"If he focuses on basketball, all the other stuff will come," Bruce said. "And when it does come, we're going to make sure we do everything in our power to sustain it."