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NBA Draft Recap: Big Baller Brands Scale Back Endorsement Deals While Basketball Slows

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NBA Draft Recap: Big Baller Brands Scale Back Endorsement Deals While Basketball Slows
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The NBA draft often serves as one of the biggest platforms for major footwear companies. It offers these brands the opportunity to secure the next wave of talent that will be leaders in the basketball segment.

Josh Jackson A Key Move For UA

The most notable signing of the draft could be from Under Armour Inc (NYSE: UAA), which besides Steph Curry, doesn't have many players on its basketball roster.

Under Armour made a splash by signing Josh Jackson, one of the most talented players in the draft. Although Jackson's going to Phoenix does hurt his exposure, the move shows that Under Armour is adept at aligning itself with key endorsers and is committed to basketball for the long term.

“I am thrilled to officially be a part of team Under Armour as I start my professional career,” said Jackson. “Under Armour is a leading force in basketball today, and I’m excited to join Stephen Curry and the team at UA in growing it to the next level. UA knows how to get things done and, over time, has demonstrated passion, drive and a will to be better together. I can’t wait to get started.”

Slowing, But Vital

While basketball footwear sales as a whole have slowed, Nike Inc (NYSE: NKE), Under Armour and adidas AG (ADR) (OTC: ADDYY) remain committed to basketball, knowing that it's arguably one of the most important segments of their business over the long term.

“Every category has a rise up and it flattens," Mark King, North American president at Adidas, told Benzinga. "Basketball is our second biggest category and performance basketball is not going away. Basketball has been a big part of urban culture. While we have a long way to go to get where we want to be, we have James Harden, and we have some really great products. It is still a growth opportunity for us."

Gone may be the days of the massive rookie contracts, however. With performance basketball trending negatively, brands are looking to try out athletes with smaller deals, and if they appear to be a viable option, will then sign them to a longer contract.

“There is a reluctance on the brands part to spend a lot of money on athletes," Matthew Powell of NPD Group told Benzinga. "Every brand needs players that are playing at a high level wearing their products. The real question is how much is that worth, and how do you translate it into sales. Right now, nobody is translating it in sales that are meaningful in relation to the size of their contracts. The basketball shoe is totally out of fashion right now and I don’t think any player can bring that back."

With signature shoe sales failing to make a meaningful impact on companies' bottom lines, it may be in the best interest in the brands to utilize their assets in more creative ways, using endorsers' influence to promote product categories that are performing well, like sportswear.

“With James Harden and Adidas, the opportunity is really sportswear. His personality resonates way beyond the basketball court. Adidas will be smart to move him to sportswear,” said Powell.

Picking The Perfect Endorser (No Big Men)

Adidas may have overextended itself in the weaker 2016 draft class, signing four lottery picks in last year's draft, but has yet to sign a player in 2017 draft, and with 14 freshman drafted in the first round, it could go down as one of the best draft classes in over a decade.

It has been clear over the years that the type of player who gets an endorsement deal and then a signature shoe is a very narrow demographic — dominated by shooting guards and small forwards with engaging, marketable personalities and style.

Centers and power forwards are virtually out of the question because of the long-held notion that big men can’t sell shoes. There has rarely been a point guard who has been able to sell shoes either. Derrick Rose and Chris Paul, two superstars of the league with signature shoes, have failed to gain any meaningful traction.

“Over the years I have followed the industry, we have never seen a big man sell shoes. The average in kid in the driveway thinks he can be Markelle Fultz, but he doesn’t think he can be Dwight Howard. The kind of shoes that a big man needs to play the game are really heavy, ugly clunky shoes,” said Powell.

Big Baller Brand

There is also another notable entrant to the basketball shoe world.

With Lonzo Ball's storyline playing out perfectly thus far after landing in Los Angeles, just like LaVar Ball said he would, the nation’s second biggest TV market is perfect for Ball to get as much exposure as possible for his fledgling footwear brand. If it can execute a Lakers turnaround, you can guarantee the company will gain some traction — at least on the apparel side.

Related Links:

Can Lonzo Ball Make NBA History By Creating An Independent Shoe Brand?

Nike Circumvents Adidas Obstacles By Commandeering Its Strategies, But Is It Enough?

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Image Credit: By TonyTheTiger - Own work, CC BY-SA 4.0, via Wikimedia Commons

Posted-In: Adidas Big Baller Brand Chris PaulSports Top Stories Exclusives Interview General Best of Benzinga

 

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