Kamis, 20 Juni 2019

Zion Williamson sneaker deal: Is NBA Draft's top prospect worth $100M price for Nike, Adidas? - Fox Business

Zion Williamson enters the 2019 NBA Draft on Thursday on the verge of signing one of the largest rookie sneaker deals in history, but recent shifts in the U.S. footwear industry suggest that the $100 million likely required to secure his services may be a poor investment.

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The presumptive top pick in this year’s draft, Williamson was expected to field offers from as many as six top sports apparel brands this summer after a dominant season at Duke University established him as the NBA's most-hyped prospect since LeBron James. Legendary sneaker industry executive Sonny Vaccaro predicted in April that Williamson could receive a $100 million deal, an unprecedented sum that would surpass the $87 million James received in his rookie deal with Nike.

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Williamson’s natural charisma, high-flying style of play and massive social media following would provide an immediate boost to any sneaker brand looking for a marketing edge on competitors. However, with more U.S. consumers opting for fashion-forward casual shoe styles over performance footwear, even Williamson’s star power is unlikely to generate enough revenue to justify the price tag on his expected deal.

“The basketball shoe business in the US has been in steep decline for nearly four years,” said NPD Group analyst Matt Powell, who tracks the U.S. footwear industry. “Basketball shoes are out of fashion. Players are not earning out their contracts in terms of merchandise sales.”

Sales of basketball sneakers, considered a form of performance footwear, have declined since 2015 and fell by 20 percent in the first quarter of 2019 compared to the same period one year ago, according to NPD Group data. Performance footwear sales declined 10 percent to $7.4 billion in 2017, the last year NPD released specific sales data.

TickerSecurityLastChange%Chg
NKENIKE INC.83.55-0.75-0.89%
FLFOOT LOCKER41.63-0.31-0.74%

The shift in taste has had a major impact on the retail industry, where venerable chains such as Foot Locker have routinely decried a lack of demand for basketball sneakers in recent quarters. Adidas is foremost among brands that have capitalized on the trend by rolling out retro and classic shoe designs to lure fashion-focused shoppers.

While endorsement deals with top basketball players may not have the revenue-driving impact they once did, they remain crucial to footwear companies searching for ways to connect with younger shoppers – provided that the price is right.

“Brands need athletes playing at a high level wearing their products – that establishes credibility and authenticity,” Powell said. “But costs are out of control.”

Williamson already has a dubious history with Nike, the footwear juggernaut known for its lucrative partnerships with NBA legends like James and Michael Jordan. The company’s stock briefly fell earlier this year after Williamson’s Nike sneaker exploded during Duke’s rivalry game with North Carolina. Williamson left the game with a knee injury.

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Facing a social media outcry, Nike made amends with Williamson by designing a custom sneaker for him to wear for the remainder of his freshman season. Still, the incident generated such negative publicity that some analysts suggested it may have contributed to Nike’s weaker-than-expected sales in North America last quarter.

The New Orleans Pelicans are all but assured to select Williamson as the first overall pick in Thursday night’s draft. Even with the current state of the basketball sneaker marketplace, a top-dollar endorsement deal won’t be far behind.

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https://www.foxbusiness.com/retail/zion-williamson-sneaker-deal-nba-draft

2019-06-20 10:30:13Z
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