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Marketing Over Merchandise? This Shoe Expert Says, 'If I Were Nike, I Would Not Sign Zion Williamson'

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Marketing Over Merchandise? This Shoe Expert Says, 'If I Were Nike, I Would Not Sign Zion Williamson'

Zion Williamson is one of the biggest things to happen to college basketball in recent memory.

The Duke superstar is undoubtedly going to sign the biggest endorsement deal in quite some time, but one sneaker expert said if he were running Nike Inc (NYSE: NKE), he would pass on the opportunity to sign Williamson.

“If I were Nike, I would not sign him,” apparel industry analyst Matt Powell of NPD Group told Benzinga. “I don’t think he will create the kind of merchandise sales in relation to what they are going to have to pay him."

No recent example exists of an athlete that earned out their contract, Powell said.

"Those four or five years up until 2015 were the heyday of performance basketball sales, and even when the basketball sales were good, I wouldn’t give him the type of money they are going to have to give him.”

See Also: What Broken Shoe? Nike Shares Rally, Brand Named Most Valuable After Zion Williamson Incident

'Why Are People Paying Athletes This Kind Of Money?'

Even at the height of Steph Curry’s run with Under Armour Inc (NYSE: UAA), Powell said the Golden State Warrior superstar did not pull his weight when it came to return on investment.

“I know people will argue this is a marketing story over a merchandise one, [but] if basketball is out of fashion, why are people paying athletes this kind of money? The basketball business is really awful."

Powell said brands need athletes performing at a high level wearing their products, as it gives them authenticity and bragging rights — but said the finances of such endorsement deals are lopsided.

As an alternative to the current model, Powell said companies should look at $1-million rookie contracts and search for undervalued Curry-esque players who may come into their own as players.

Where Will Zion Land?

It is highly unlikely any brand will heed Powell’s advice, he said, and the battle for Williamson will likely induce an all-out bidding war.

"We are going to see some really ridiculous money paid to this guy," the NPD Group analyst said. "[The final winner is] going to pay him an extraordinary amount of money, which is going to put pressure on existing contracts."

In Powell's view, Nike is not guaranteed a Williamson endorsement, but he said the company is in the best position to sign a deal.

"If Nike doesn’t get him, they will be embarrassed because people will reference the shoe failure, which is baloney. At the end of the day, everyone will survive and whoever gets [the endorsement will] pay him far more they will get out of him. No player is earning out their contract on merchandise sales.”

Related Link: Nike's 'Tanjun' Was The Bestselling Shoe Of 2018; Mid-Market Footwear Dominates Top 10

Sports attorney Darren Heitner said that if Williamson does not sign with Nike initially, that doesn't mean he won’t eventually end up there, similar to what may occur with Lonzo Ball.

"It would surprise me if Nike doesn’t throw a lot of money to him, but that’s not to say Zion will definitely sign with Nike," Heitner said.

"The company is ingrained in the sport of basketball, and the mere fact that he wouldn’t sign with Nike doesn’t mean he won’t switch over to a future deal."

The deal is not a must-do for Nike, and anyone who says otherwise is speaking in hyperbole, Heitner said.

Photo credit: Keenan Hairston, Flickr

Latest Ratings for NKE

DateFirmActionFromTo
Jul 2019MaintainsOverweight
Jun 2019MaintainsNeutral
Apr 2019ReinstatesBuy

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