Nike Secures Projected NBA Top Pick With Massive Endorsement Deal
Nike Inc (NYSE: NKE)'s latest signing shows that the company has no intention of slowing down in one of the company's largest segments. The worlds largest athletic apparel company is looking to the future as it just announced likely the largest rookie endorsement deal ever with projected top pick Ben Simmons. The exact terms of the deal weren't disclosed.
Simmons, a 6-10 forward from Australia, spent just one year at LSU before entering into the upcoming NBA Draft. Simmons, a classic college one and done, reportedly turned down an even larger deal from Adidas to sign with Nike. The size of the deal indicates Nike is feeling some pressure from Under Armour Inc (NYSE: UA), as Under Armour continues to cut into Nike's basketball business.
Under Armour has been performing exceptionally well with the younger generation of basketball fans and shoes sales figures have proven this. While every segment of its business grew in Q1, Under Armour footwear sales were up in the first quarter. Steph Curry's dominance has largely been credited for the increase in everything Under Armour.
It's no doubt the lackluster performance on the floor by key Nike signature athletes has put some pressure on Nike's basketball segment. Foot Locker, Inc. (NYSE: FL) cited in its most recent quarter that despite strong interest in Curry's signature shoe line, "Nike's Lebron James and Kevin Durant lines proved the most challenging." Foot Locker also noted it's likely the high price tag of LeBron and Durant shoe lines will come down to spur sales.
The NBA will undoubtedly experience a significant shakeup this upcoming offseason. With the uncertainty surrounding Oklahoma City and Nike star Durant, LeBron's future in Cleveland, the Lakers rebuilding, and the increase in salary cap, change will be good for Nike. Teams will be aggressively trying to prevent a three peat by the Golden State Warriors, a feat that we last saw with Michael Jordan and the 1996-1998 Chicago Bulls. Until then, the basketball shoe war continues.
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