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Thread: LBJ Title could earn Nike $4 Billion

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    Default LBJ Title could earn Nike $4 Billion

    http://www.bloomberg.com/news/2011-0...ion-boost.html


    LeBron Conquers Kobe in China With NBA Title Giving Nike $4 Billion Boost
    By Scott Soshnick - May 19, 2011 12:15 AM ET
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    Business ExchangeBuzz up!DiggPrint Email . NBA superstar LeBron James arrives for a promotional event in Shenyang, northeast China's Liaoning province on August 26, 2009. Li Xin/AFP/Getty Images

    Professional basketball player Lebron James signature sneakers sit on display next to his poster at Nike Inc.'s flagship Niketown store in New York, U.S., on Tuesday, Dec. 21, 2010. Photographer: Jin Lee/Bloomberg
    LeBron James’s first National Basketball Association championship would help add $4 billion in revenue from China for Nike Inc. (NKE), according to the first sports marketing employee in the country for the world’s largest sporting goods maker.

    Adding a championship to a basketball resume that includes an Olympic gold medal in Beijing and two NBA Most Valuable Player awards is imperative for James, the 26-year-old Miami Heat forward, to achieve the marketing might of fellow Nike endorsers Michael Jordan, who won six titles with the Chicago Bulls, and Kobe Bryant, a five-time winner with the Los Angeles Lakers.

    “LeBron is white-hot with the Chinese basketball-loving youth, but his popularity and influence outside of that circle is limited,” said Terry Rhoads, who left as Nike’s China sports marketing director in 2002 after eight years to form Shanghai- based Zou Marketing. “One reason is the lack of titles.”

    Nike posted $1.96 billion in sales from China, the world’s most populous nation, in the 12 months through January. Rhoads said a “solid part” of that stems from basketball, without being more specific. A championship for James would allow him to take over for the 32-year-old Bryant as the company’s face in China, where Rhoads said it’s “easy to see” Nike’s revenue reaching $6 billion by 2020.

    James earns about $30 million annually from endorsements with companies that include Nike, which counts China as its second-largest market behind the U.S.; McDonald’s Corp. (MCD), the world’s largest restaurant chain; and Coca-Cola Co. (KO), the world’s largest soft-drink maker.

    Nike ‘Stronghold’
    “If Kobe isn’t the king with Chinese consumers, LeBron could take over and continue to power Nike’s stronghold on China basketball,” Rhoads said in an e-mail.

    James said a championship is his goal, no matter how it might help sponsorships.

    “It would do everything for me, as far as an individual standpoint,” James told reporters before last night’s Game 2 of the Eastern Conference finals against the Bulls in Chicago. “I don’t care what it does marketing-wise. My marketing statement was in place for me as a professional.”

    The best-of-seven series moves to Miami May 22 after the Heat won 85-75 in Chicago last night to tie the best-of-seven series at one game apiece.

    Beaverton, Oregon-based Nike said in March that revenue was $5.1 billion in the third quarter ended Feb. 28. The company missed analysts’ estimates for the first time in 19 quarters.

    Worldwide Popularity
    “LeBron inspires millions of young athletes and fans, and we’re excited to work with one of the premier players in the world to garner unrivaled insight and develop the most innovative products,” Nike said in an e-mailed statement May 17. “His highly successful collection continues to be popular throughout the world, including China, where he won gold in 2008.”

    James last month became a part-owner with hedge-fund billionaire John Henry of the Fenway Sports Group, which owns Major League Baseball’s Boston Red Sox and England’s Liverpool Football Club.

    Tom Werner, Fenway Sports Group’s chairman, said the deal, which gives James a stake in Liverpool and makes the sports group the basketball player’s exclusive marketing partner, joins two of the most popular brands in sports and provides international marketing opportunities, particularly in Asia.

    Asian Appeal
    Liverpool toured Asia in 2009 and is scheduled to play there again this year. The 18-time English champion has a jersey sponsorship agreement with Standard Chartered Plc, the U.K. bank that makes three-quarters of its profit in Asia.

    Henry in an interview declined to comment when asked about the potential marketing opportunities a championship would bring James.

    David Falk, agent for the 48-year-old Jordan, said James’s overall marketability hinges on securing more “groundbreaking” agreements like the one with Fenway Sports. Winning, he said, matters more outside of the U.S.

    “It gives you legitimacy and credibility,” Falk said, noting that only eight franchises have won NBA championships since 1980.

    Top Seller
    The NBA said last month that James had the league’s best- selling jersey for the first time since 2004, topping Bryant, based on sales on NBAStore.com.

    It isn’t unusual for popular players who change teams to see a surge in jersey sales. James is in his first year with the Heat after seven seasons with the Cleveland Cavaliers. James said he chose the Heat, teaming with fellow All-Stars Dwyane Wade and Chris Bosh, because it gave him the best chance at winning championships.

    Last year, James had the second-best-selling NBA jersey in the U.S., China and Europe behind Bryant.

    Coca-Cola uses James to promote brands including Sprite and Powerade. Beatriz Perez, chief marketing officer for the Atlanta-based company’s North America division, said sports marketers gauge championship athletes by revenue, not rings.

    “We’re focused on LeBron and his relevancy on the consumer market we’re trying to reach, especially teens,” she said in a telephone interview. “Whether he wins or not we have a solid partnership.”

    Image Repair
    John Huizinga, a professor of economics at the University of Chicago’s Booth School of Business and the marketing agent for the Houston Rockets’ Yao Ming, China’s most accomplished NBA player, said winning a championship is imperative for James, who was criticized by league Commissioner David Stern for announcing his free-agent plan during a national television special on July 8, 2010. Huizinga called the ESPN show “a flaming disaster.”

    “He needs something to replace that top-of-mind image from something negative,” Huizinga said.

    For James, simply winning a title isn’t enough, says Phil de Picciotto, president of athletes and personalities at the sports marketing firm Octagon, which represents swimmer Michael Phelps, whose eight gold medals at the Beijing Olympics made him a superstar in China.

    How James goes about winning matters, too, de Picciotto said in a telephone interview.

    It’s imperative for James, who said he was “taking my talents to South Beach” during the ESPN special, to come across as humble and give credit to others.

    “He can use it as a platform to change the public opinion,” de Picciotto said. “It may well be that China will open up much more broadly to him if he wins a championship.”

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