Why Odell Beckham Jr.'s new Nike deal could make other NFL stars richer
Sitting inside a swanky upscale eatery this week, a high-powered NFL dealmaker swiped through his phone reading news and text messages. After a few moments he stopped with a smile, before echoing a sentiment that has been buzzing amongst league moneymakers the past few days.
“This Odell Beckham shoe deal is huge,” he said. “Adidas getting involved in that negotiation is big.”
It was a piece of news that resonated briefly this week, fighting for space in a swirl of NFL rule changes and a seemingly never-ending debate over the signability of quarterback Colin Kaepernick. Inside the gristmill of headlines came a financial lightning bolt of sorts: Beckham had reportedly signed a landmark deal with Nike for a reported $25 million over five years. In the pantheon of NFL “brand ambassador” deals, the New York Giants wideout is believed to have landed the biggest ever. And according to a source with inside knowledge of the deal, it was struck in the midst of an old-fashioned shoe-company bidding war.
“Adidas wanted him bad,” said one source with intimate knowledge of the negotiations. “All you need in these situations with a player like Beckham is two suitors, and Adidas was serious about going after him.”
Nike won. Adidas lost. And now the NFL’s most sellable stars could all get richer for it.
At least, that’s how some of the league’s financial powerbrokers are feeling this week after seeing Beckham set a new bar for NFL shoe deals. After watching Reebok collapse in the pro football apparel realm – and seeing the “brand ambassador” appetite of Under Armour grow more limited in recent years – agents and marketing advisers have lamented a seemingly hardened ceiling of “shoe money” for their players.
Now? They’re hoping Adidas’ run at Beckham has created some cracks in that ceiling by showing the willingness to drive up Beckham’s price. Adidas’ involvement with Beckham ultimately pushed the deal from an average of $2 million per year to around $5 million, said the source with knowledge of the negotiations.
Ultimately, Nike was able to meet Adidas’ best offer by virtue of a clause in Beckham’s first endorsement deal that offered the shoe giant the right of first refusal. Essentially Adidas put $25 million on the table and Nike matched it. But the source who spoke with Yahoo Sports said he believed Nike did have a limit in mind.
“If Adidas had gone to $10 million a season for Odell, Nike wouldn’t have matched it,” the source said. “I know that sounds like a lot, but Adidas is paying James Harden $200 million. $50 million over five years for arguably the NFL’s most marketable player isn’t unthinkable. … For different reasons, kids love [Beckham]. The catch, the hair, the way he conducts himself. He’s connecting with a huge portion of a young NFL fan base. I have been around NFL coaches who have kids and I see their own kids wearing Odell Beckham jerseys instead of the stars on their own dad’s team.”
It remains to be seen whether Beckham’s deal signals a new level of spending on NFL stars from shoe companies, but it clearly has created buzz. Multiple agents expressed optimism that the deal will give some momentum toward the monster deals landed by NBA players. By comparison, NBA numbers have grown tremendously. LeBron James has a reported $1 billion lifetime deal with Nike, while the Golden State Warriors’ Kevin Durant is reportedly pulling down $30 million a year.
Those numbers have ballooned in part because of Nike and Adidas slugging it out over a limited talent pool. The NFL, on the other hand, has a far larger pool of less-recognizable players (due to the whole helmet-wearing thing), not to mention a market of mission-specific gear. In short, it’s hard to find a wide array of people who are looking to wear cleats or workout apparel that is often tailored specifically to playing football.
Still, some superstar NFL faces have become far more prominent in advertising – particularly players like the Beckham, J.J. Watt, Tom Brady and Von Miller. Until now, Nike has largely dominated the pool of stars, despite a fraction of them going with Under Armour, Reebok or Adidas. But to some agents, Beckham’s deal represents a philosophical shift suggesting Adidas is willing to raise the stakes for the biggest stars. And that’s what some have been waiting for.
“In these deals, it takes two to tango and eventually take the money to new places,” one NFL marketing source said. “Even though Adidas lost this one and maybe showed their top end [for a single-player endorsement], it’s still good for everyone. … The willingness is there and that can change every negotiation with Nike. And for the top-echelon players, it will.”
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