Basketball: LeBron James signs US$90 million Nike deal

By GRAHAM REID

What can you get for US$90 million? It's about $155 million in local currency and would put you higher than Sir Ron Brierley in the rich list. So you could buy some islands in the Hauraki Gulf. Or maybe the 40-storey Royal and Sun Alliance building on Shortland St. Or you could buy a gangly, 18-year-old high school kid called LeBron James from unglamorous Akron in Ohio.

That's what Nike has done.

James' particular talent is he can drop a basketball through a hoop better than most which, when you stand 2.03m/6ft 8in high, is probably easier for him than it is you. But now consider this: James has yet to play a professional game and first took to the court for his high-school team in December 1999.

In truth Nike hasn't bought him outright, but it has stumped up the reputed US$90 million in a sponsorship deal, the second-biggest, and only outstripped by its US$125 million ($215 million) deal with Tiger Woods.

So what does James have to do for Nike's millions?

Tall Blacks coach Tab Baldwin: "A lot of people would think there would be an awful lot of responsibilities this kid would have to fulfil when in reality there's probably not. He's got to wear the shoes."

He also has to be as good, and be good for quite a while, not just one magic season. Seasoned observers and NBA stars already think James can fulfil the courtside promise and company expectation.

"I think he is going to be a great player," says Toronto Raptors star Vince Carter. "I think everybody thinks it, but I think that's what this is all about, his potential."

What Carter means by potential might be different to what Nike means, however. It is investing in his market potential as much as his hoop skills and, in the best of all possible worlds for Nike, the lanky, articulate, straight-A student will have a 20-year career.

That's a lot of sneakers he can sell through advertising, product placement and front-of-mind association. It's already impossible to look at the telegenic James without thinking of him as "that Nike kid".

"It's like the stock market," says Baldwin. "It's buying the future. They expect this kid to be the next Michael Jordan and to have the sort of across-the-board appeal with young people to continue to cement their hold on the marketplace."

James may be a business investment but what appeals to the lay media about him isn't just the telephone number dollars but the back-story.

He was raised in poverty, with an absent father, and a mouthy mother who yelled recently "We going to the bank!" There were the 100 out of 162 days he missed at school as an 8-year-old, the benevolent father-figure who took him in when his mother couldn't cope and introduced him to basketball, the Sports Illustrated cover which trumpeted "The Chosen One", the training sessions with Jordan ...

"I saw drugs, guns, killings. It was crazy," says James of his embattled childhood.

"When I was younger I didn't have much, and now that I've got a little something I'm gonna take it."

A little something? With admirable understatement and the vacuousness of a seasoned, media-savvy huckster he can add, "Nike is the right fit and has the right product for me at the right time."

James is the American Dream made flesh, a Horatio Alger story of triumph over adversity soon to be acted out on cable television in front of millions. But that will come after his line of Nike shoes will hit stores.

Because the rules of the Ohio High School Athletic Association don't allow him to accept gifts valued at over US$100 ($172) or play for pay just yet, his mother Gloria - who had him to a casual boyfriend when she was 16 - was the one who went to the bank and traded on his reputation. The bank happily lent her the US$80,000 ($138,000) so she could buy him a "sports utility vehicle". It's a Humvee military truck of the kind Arnold Schwarzenegger favours.

James will finish high school next month and will start playing in the NBA after being drafted for the Cleveland Cavaliers. At that time America will see what some have paid up to US$2000 ($3453) to witness at high-school games, a gifted young man acting out his genius on the hardwood.

James is good, of that there is no doubt. His high-school record is impressive and Eddie Oliver, who runs the website HoopsUSA, says, "The kid is the greatest I've ever seen".

Hyperbole like that is the air around James right now. When Sports Illustrated ran an article about the young pretender meeting the old king Jordan, it said, "The moment feels charged, even a little historic. Remember that photograph of a teenaged Bill Clinton meeting JFK?"

James also has a neat presidential analogy involving Jordan: "If you have a chance to talk to Michael you listen to his advice. More people listen to him than listen to the president of the United States."

He said that a year ago, around the time Nike and adidas starting making their pitches.

"For me, I think it's great to have two companies chasing after a player like me. I'm liking it and it's going to be a race to the finish line, and whatever the best decision for me and my family I'll make the best decision that it has to be.

"Right now, it's not just Nike and adidas ... everybody has a chance and I'm not playing any favouritism. It's business, but it's relationship, too. I'm a smart guy and I know what's good for me and my family."

James is undeniably smart - and enjoyed the hoopla as any ghetto teenager might. Earlier this year he was met at LAX by a white Cadillac which had satellite television, two bars, an eight-speaker stereo system and lounging space for 16 passengers. When James climbed in with his security guard, mother and some team mates he was wearing a Nike top and an adidas backpack. We can guess the backpack is now in the trash - or on e-bay where a couple of thousand James memorabilia items are up for auction. His autograph goes for US$100, and rising.

James is a valuable property which requires nurturing and care: when he broke his wrist last year he was treated by Jordan's personal doctor and his rehabilitation was supervised by Jordan's personal trainer. James will have his own "people" soon enough.

The boy with diamond earrings has already got the trappings of stardom: a manager, agent, bodyguard, a posse, a mother who acts as if she's won the lottery and yelled "I'm a celebrity" when flashbulbs popped at one of his press conferences last year, and an absent father who has returned and is circling the money pile.

He is surrounded by hangers-on, now issues media statements, and thanks Jesus Christ and his team mates for making him who he is today.

To some James may be just a basketball player - albeit the best 18-year-old there is who averages almost 30 points a game - but he is emblematic of something else: the hiking of sponsorship money and the advertising value such stars have.

When Jordan signed his first deal with Nike in 1984 it was US2.4 million, a sum which seems paltry even when you take inflation into account.

But Nike needs to up its market share which has taken a hammering in the past decade, not the least for accusations it runs Asian sweatshops making expensive sports shoes for wealthy Americans.

Already consumer watchdog Ralph Nader is on James' case, saying he could use his clout to press for better conditions for Third World workers.

For the company, James is already popular with a target market and Nike concedes it was looking for someone who would resonate with it like Jordan did.

"Lebron is an untested commodity, but he's a schoolboy legend and he's cool with the kids that are the big growth market," says David Martin, president of consulting firm Interbrands

Baldwin: "This is just a personal opinion, but I think possibly Nike's strategy is as much to keep him away from another shoe company as it is to enhance anything Nike is doing. Nike sells $US10 billion worth of shoes and apparel so $US90 million won't break the bank.

"But if this kid fulfils all the promise people say he will and he went to, say Reebok, which has $3 billion in sales, that could significantly cut into Nike's share."

But the three times Mr Basketball in Ohio isn't without considerable risk.

"That's a gigantic gamble," says Jack Trout, president of Trout and Partners, a marketing strategy firm. "It's a dicey deal with a high-school player because you are really buying an immature person."

Branding experts recall the trouble Pepsi had with Michael Jackson and Madonna, and no one wants to mention OJ Simpson's endorsements for Hertz Rental cars. It's also possible that while James might be level-headed now, he could also screw up mightily. It was the famously flaky Dennis Rodman - who took to wearing dresses and nose rings, and hanging out with Madonna - who said, "Fifty per cent of life in the NBA is sex. The other 50 per cent is money."

Baldwin: "Nike would have researched this kid and know him like a book. If they are investing $US90 million they'll have consultants with this kid virtually every time he opens his mouth."

So far James is performing as he should. He seems genuinely modest, speaks well and appears to be able to follow the prepared script. Last week when he inked a multi-year exclusive trading card collectibles and memorabilia agreement with The Upper Deck Company he said, "Every kid who plays sports aspires to be the best and be part of a winning team. Today's deal with The Upper Deck Company not only means that I've joined a team that is the leader in the collectibles industry, but also allows me to be part of a team of world-class athletes representing their products."

Upper Deck spokesman include Jordan, Tiger Woods and David Beckham. Like them, James will become a household name, even in places where basketball isn't the first language. That's what saturation advertising campaigns can do.

"It isn't enough to just advertise on television," says Carol Herman, senior vice-president of Grey Advertising. "You've got to reach kids throughout their day - in school, as they're shopping in the mall, or at the movies. You've got to become part of the fabric of their lives."

For many James is there already. They can identify with him more than with 40-year-old Jordan.

Some worry that so much success so young will have a negative effect on ghetto kids, that they will pin their hopes on hoop dreams rather than studying. A ballpark figure suggests their chances of NBA placement let alone lucrative product endorsements are almost nil: there are approximately 375,000 kids slam dunking in schools across America, and you can bet they will be eyeing James' earnings as much as his team's points spread.

James' income may seem inflated to many, but it is in line with the world where professional sport, corporate sponsorship and television ratings intersect.

"A lot of people talk of money and sport, and athletes or coaches getting too much money," says Baldwin.

"But the point is: if they are not getting it, who is? The money is being generated, so should it all go in the pocket of the administrators?

"The athletes are the performers, they are the product. People should forget this nonsense about, 'No athlete should be paid that'. It's a business and if it generates that sort of revenue then who better to get it than the person responsible for it?

"We'd all love to be doing that. But we can't. We're not good enough."

While Woods and James are clearly good enough, their skills have undeniably lifted the benchmark for sponsorship deals. Baldwin's point is valid, but some do wonder when it will end.

Not any time soon if Nike is involved.

This week they agreed to a $US1 million per annum, multi-year deal with Freddy Adu, a Ghanaian-born soccer player living in Florida.

Freddy turns 14 on Monday.