A very interesting article, that appeared on Fortune, talks about Lebron and his vision to building a billion-dollar brand. After Lebron’s stunning and historic performance in Game 5 of the Eastern Conference Finals against the Detroit Pistons, he extended his possibilities thanks to this “one of the all-time performances in NBA history.”. Nike’s executives realized this is the begining to a whole new era for James and Nike and called it “AGF”, “After Game Five”. That game, prompted Nike to reshuffle its basketball division, placing James atop the organization. James is taking a different approach to handle his business. In 2005, he established his own firm, LRMR Marketing named for the initials of the four buddies: Lebron, Randy Mims, Maverick Carter, and Richard Paul. “It was my idea. I wanted to own my own business.” The article is very long, here are some of the most interesting points:
Among the top NBA players, James ranks highest for endorsement potential, ahead of the Miami Heat’s Dwyane Wade and the L.A. Lakers’ Kobe Bryant. Yet he ranks lower when measured by “sophistication” and “accessibility.” During a presentation of the data at the summit, Chris Gebhardt, a consultant who conducted the research, says, “They simply do not have as positive an image of LeBron as they do of sports celebrities who have married on-field performance with off-field personality, such as Tiger, Peyton, or Michael. We need to do a better job of appealing to the consumer side of these fans, to start telling the nonbasketball story.”
LRMR’s future does not rely on research but on James’s winning an NBA championship, and in Cleveland’s current lineup he is getting little support. This is an issue, because the success of the Cavaliers – who at presstime were playing .500 ball in the early season – will dictate the success of LRMR. For better or worse, James is locked into playing for Cleveland until 2010 at least, based on a contract extension he signed in 2006.
“But first he has to win” is how Nike Brand president Charlie Denson sums up the key element in James’s becoming a true superstar. “He can’t get there unless he wins. LeBron knows that.”
“From now until the Olympics we’re very focused on letting the world get to know LeBron,” Carter says in an interview in his Cleveland office, “letting the world know that he’s a very simple human, a regular guy who laughs and likes to have fun and enjoys being with his family and friends. When you’re looking for longevity, the world has to know who you are for real.”
Overall, he has about $170 million in sponsorship deals. In this figure is the $90 million from Nike, $15 million from Coke, $6 million from Upper Deck, $4.5 million from Bubblicious, and $7.5 million from Cub Cadet. His deal with MSN included $3 million upfront, and the partners will soon begin a phase in which Microsoft and LRMR will share advertising revenues sold on MSN’s LeBron site – 60% for LRMR and 40% for MSN.
At 22, the age at which most NBA players are just entering the league, James has a four-year headstart when it comes to generating revenue. He’s already the NBA’s endorsement king, bringing in an estimated $25 million from his various deals this year. That’s in addition to his nearly $13 million salary from the Cavaliers.
The arrangement has worked, not least because LRMR has associated itself with top-shelf accountants and lawyers, not to mention Warren Buffett, who dispenses financial advice when asked. “If LeBron were an IPO, I’d buy it,” he says. “I bought them some milk shakes and hamburgers, and we had a good time,” Buffett says. “I was amazed at how mature he was, not just physically but in financial matters. At 21, I wasn’t remotely as mature as LeBron. Maybe at 51 I wasn’t as mature as him.”
“I first met Maverick after I read that LeBron had fired his agent,” says Adam Silver, the deputy commissioner of the NBA. “I was nervous that LeBron was going to be represented by a group of his childhood friends. But before I had a chance to call Maverick, he called me. Shortly into our first meeting I had a sense of relief that LeBron was in good hands.”
“What I do on the court will drive revenue,” says James. He’s also picky about his partners, always asking himself, “Is it authentic? I know I can go out and sign a lot of endorsements and get checks. Money is not the issue.”
Within the halls of Nike’s basketball division at its headquarters in Beaverton, Oregon, executives began referring to a whole new era for James and Nike. “AGF” is what they called it: “after game five.”
“We measure everyone against Michael Jordan at Nike,” says Lynn Merritt, the company’s senior director of basketball development and the executive who crafted James’s sneaker deal – the size of which irked some within Nike.
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