News Column

Durant Spurns Under Armour to Return to Nike

September 2, 2014

By Matthew Hay Brown, The Baltimore Sun

Oklahoma City Thunder superstar Kevin Durant will sign a massive shoe contract with Nike. (file photo)
Oklahoma City Thunder superstar Kevin Durant will sign a massive shoe contract with Nike. (file photo)

Oklahoma City Thunder superstar Kevin Durant spurned overtures from Under Armour and will sign a new shoe deal with basketball giant Nike.

"Excited and humbled to sign back with the swoosh!" Durant tweeted late Sunday, referring to the Nike logo.

"We are pleased to extend our relationship with Kevin Durant, one of the most exciting players in the game," said Heter Myers, a spokesman for Nike.

A spokeswoman for Under Armour did not respond to a request for comment Monday.

The decision ends the possibility, for now, of an all-Maryland marriage between the reigning NBA MVP, who grew up in Prince George's County and played high school basketball in Rockville, and Baltimore-based Under Armour.

Under Armour, looking to expand in footwear, is hoping to make inroads into the lucrative basketball market, now dominated by Nike. The clothing and accessories maker scored an early success against its rival this year when it lured All-Star Golden State Warriors guard Stephen Curry from Nike.

But Nike pulled out all the stops to hang onto Durant, one of the most popular -- and marketable -- players in the world.

With Durant's seven-year contract with Nike expiring, Under Armour offered him a 10-year deal worth $265 million to $285 million. According to ESPN, Nike exercised its right to match any rival shoe company's offer to the All-Star guard.

Nike officials told Durant and his representatives at Jay Z's Roc Nation Sports on Saturday that they would match Under Armour's offer.

Nike also has deals with Cleveland Cavaliers forward LeBron James and Los Angeles Lakers guard Kobe Bryant.

Based on the ESPN report, Durant stands to make more money from Nike over the next two years than the $41.2 million the Thunder will owe him during that span.

"For Nike, this was nothing to them," said analyst Omar Saad, senior managing director of International Strategy and Investment Group's luxury, apparel and footwear team. "They could easily build Durant's business enough, assuming normal margins, where they could generate a cash flow of $60 million a year. And Nike is really good at monetizing its marketing assets, way better than anyone else."

Durant has been one of Nike's later-generation success stories, following the extraordinary and continuing appeal of the now-retired Michael Jordan.

While Nike bills Durant's KD7 basketball shoe as "the baddest," the All-Star guard appears friendly and accessible to his fans. In an emotional speech after he won the MVP award in May, he called his mother "the real MVP."

Wanda Pratt raised Durant as a single parent in Seat Pleasant. There has been speculation that Durant could return home to play for the Washington Wizards after he becomes a free agent in 2016.

Durant's shoes generated $175 million at retail in the past year, according to SportsOneSource, a market retail tracking firm. And that was at $125 a pair and fairly limited distribution to stores.

Raising the price of the shoes and distributing them more widely could increase revenues and profits.

It is not clear if Nike simply matched Under Armour's deal or offered more. Under Armour's offer included 10 percent stock.

Under Armour, which became known for athletic performance apparel, is a relatively new player in footwear. It got its start in the category with football and baseball cleats.

But basketball is a much larger market, second only to running, with $4.5 billion in retail sales in the United States last year.

Under Armour CEO Kevin Plank believed that signing Durant would be crucial to competing in the basketball shoe business and internationally.

While Under Armour was able to sign Curry away from Nike, the company lost out on All-Star Los Angeles Clippers forward Blake Griffin, who returned to the shoe giant.

Reuters contributed to this article.

matthew.brown@baltsun.com

twitter.com/matthewhaybrown



Source: (c)2014 The Baltimore Sun Visit The Baltimore Sun at www.baltimoresun.com Distributed by MCT Information Services


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