An interesting two-on-one is shaping up in the basketball sneaker game: Jay-Z and Kevin Durant vs. Nike (NKE).
Durant, who is represented by Mr. Z’s Roc Nation, has given Nike until Wednesday to match a 10-year sponsorship offer from Under Armour (UA), according to ESPN. The deal is worth between $265 million and $285 million.
Nike, which has been making Durant shoes and apparel since 2007, isn’t accustomed to playing defense. It doesn’t really do talent bidding wars—particularly in basketball, where it doesn’t face a major competitor like it does in soccer with Adidas (ADS:GR). In terms of selling shoes, Jordan is still its star; this new kid, LeBron James, is showing some promise.
The Under Armour deal would more than double Durant’s Nike pay, a seven-year deal worth nearly $70 million. And the offer represents a major splurge for the company, almost 10 percent of its total marketing budget. To date, Under Armour has been more of a value shopper when it comes to sponsorships. It signed Stephen Curry in October 2013, just before he blossomed into an All-Star averaging 24 points per game last season.
Durant, however, did even better, winning the National Basketball Association Most Valuable Player award with an average of 36 points per game. None of this was lost on Nike, which dialed up its Durant production to include both an incessant stream of “KD” sneakers and a full line of apparel, including toddler kicks ($55) and a T-shirt printed with a bespectacled Durant photo and the line “This is not a nerd” ($32).
In February, Nike even made a pink-flowery pair of Durant-branded sneakers in honor of his late aunt, the “Aunt Pearls,” as they became known.
While Durant was shooting lights-out, he hired Jay-Z’s agency. Roc Nation, realizing the value of the breakout season, started negotiating more aggressively with Nike, Under Armour, and Adidas, which reportedly walked away from the negotiating table last week.
Under Armour said part of its rationale in signing Curry was his underdog appeal. Durant is about as established as a player can be. His name carries about 5 percent of the market for basketball shoes and apparel, according to Matt Powell, an analyst at SportsOneSource—five times the share Under Armour has at the moment.
Jay-Z, apparently, has some negotiating game.
