Nike's lifetime contract with James not without risk

Cleveland Cavaliers forward LeBron James is undeniably one of the best basketball players of our generation. An inevitable first-ballot Hall of Famer, James has proven time and time again that he should be in the conversation as one of the greatest of all time. Billion-dollar sports apparel company Nike seems to agree with the notion that James is the best, given the life-time contract they just signed him to. That is not a typo—Nike will be paying LeBron until the day he dies. The official dollar amount has not been released, but the number is expected to exceed Oklahoma City Thunder small forward Kevin Durant’s Nike deal, which is worth $30 million a year for 10 years.

These dollar amounts are familiar to James. As a high school senior, he signed his first contract with Nike for seven years at $90 million in 2003—before he was even drafted by a National Basketball Association team. It was the largest athlete contract at the time—and now he has signed Nike’s first-ever lifetime contract.

Nike released a statement saying, “We can confirm that we have agreed to a lifetime relationship with LeBron that provides significant value to our business, brand and shareholders. We have already built a strong LeBron business over the past 12 years and we see the potential for this to continue to grow throughout his playing career and beyond.”

We must question why James deserves to earn millions just to wear shoes. His NBA contract earns him an eight-figure salary each year and he receives around $44 million per year in endorsements. With James making upwards of $65 million per year, even if he stopped playing today, he would be set for life.

The other issue is that Nike is taking a huge risk with a lifetime deal. This deal assumes that James will not have a scandal and will not develop an image that Nike does not want its athletes to convey. For example, Tiger Woods lost numerous endorsement deals and Nike was very close to backing out of its contract after Woods’ sex scandal emerged. So far, James has proven to be a solid role model and example athlete, but only time will tell if he can remain out of the negative press for the rest of his life.

For a company worth $86.2 billion, this lifetime deal is a bargain for Nike. But the bigger issue at hand is that all of this money goes into this one athlete when maybe it could go toward a better cause. The money could be donated, or for every pair of James’ sneakers bought, one pair could be given to a child in need.

James will survive even if he only gets a dollar from Nike—he makes income in other ways. Not only should we marvel about how we have never seen a lifetime deal in the history of sports contracts, but we should also be conscious that this deal may not be greener on the other side. There is a lot more that goes into this contract than just basketball for King James.

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