Banking on KD: Why Nike Needed to Match Under Armour’s Offer

By: Kevin Saad (@KevinSaad93)

It’s the story that has been hanging over the basketball world for the past month. Reigning NBA MVP Kevin Durant was on the verge of a groundbreaking deal with the Baltimore based Under Armour brand, with UA offering a reported 10 year, 285 million dollar deal for the endorsement rights of the OKC star. This astronomical offer would consume around 10% of UA’s marketing budget. All just for one man. Granted, this man is the reigning NBA MVP and arguably the most marketable man in sports at the moment.

Many believed that this was a dumb move for Under Armour. It wasn’t. In order to sway basketball consumers toward their brand, you need a guy like Durant in your camp. Nike and Jordan Brand still own 95% of the basketball shoe market share and Adidas has flopped so far with Derrick Rose’s constantly ailing knees. John Wall, Damien Lillard, and Andrew Wiggins could be a great lineup, but they need a few years to reach that elite level where they can sell sneakers with their influence.

Under Armour made an absolute power move with their offer and a player like KD entering his prime would have been an executive’s dream. It was necessary if they wanted to get their foot in the door and impact the culture. Besides the absurd amount of cash, the option of stock is huge considering how NFL owners have cashed out on their stock options when a deal was signed with the league. UA also threw in a community center in his mother’s name, which is significant because we all know how important family is to KD. His famous MVP speech and Aunt Pearl signature sneaker are just a couple gestures that Durant has used to show love to his family, who helped launch him onto the national stage.

As convincing as Under Armour’s offer was, Nike had to match (or in this case exceed with a reported $300 million dollars) UA’s offer. Here’s why:

1.)    The Future: Right now, KD has the third most popular sneaker in the Nike signature camp, trailing LeBron and Kobe. But look ahead. Kobe has 2 years of basketball left in him at best and LeBron is in his late prime at age 29. In 5 years, Kobe has faded into the sunset and LeBron is in the twilight of his career. KD will be 30 and still has five more solid years in the home stretch of his Nike deal. His injury track record is much cleaner than the likes of Derrick Rose or Bryant (who barely has had a chance to play in his last two lines of signature shoes due to injury). If Nike wants to still be on top in the next decade, they needed to pay up in 2014. I highly doubt they’ll regret it.

2.)    The Story: It’s no secret that KD might be headed back home to DC in a couple years. The countless disappointing playoff exits with OKC and newly discovered tension with the media (Remember the Mr. Unreliable headline?) makes it seem like OKC might not be home for long. Add in the Wizard’s talented youth core and the Maryland homecoming love and you have a convincing argument that KD could be returning to his roots. This would have been a dream scenario for Under Armour (being based out of Baltimore), but Nike can still weave a captivating storyline surrounded around KD’s homecoming.

3.)    The Reputation: No matter how you spin it, Kevin Durant is “a good guy”. He has never acquired a group of haters like LeBron and has managed to stay away from controversy like Kobe and D-Rose. Fans seem to love his humble demeanor and ridiculous scoring prowess. The “KD is Not Nice” campaign flopped because the guy was too damn nice. He’s marketable to a wide demographic and his family friendly appearance (no visible tattoos, rarely pictured out partying, drinking, smoking, etc.) makes him a safe player to lock down for a long term deal

When it’s all said and done, Nike overpaid for KD. It’s hard to make an argument that anyone on the planet is worth $300 million dollars. But they had to do it. Under Armour is making a serious push to become a threat to Nike with their surging stock price. However, no one does basketball like Nike and they couldn’t pass up the chance to have Jordan, LeBron, and the current MVP all under one roof for another decade. Hate it or love it, the Swoosh is here to stay and KD is leading their charge into the future.

Be sure to follow Kevin on Twitter (@KevinSaad93) and tune into his radio show, The Beef, on St. Joseph's University Radio in the fall.

The Sports ReKap, hosted by Nick Kapetan and DJ Vogt, will begin airing again in September on MarquetteWire.org.

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