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The $14 Billion Man: Why Nike Lost NBA Superstar Stephen Curry to Under Armour

We’ve all underestimated employees–or just people in general–but the cost surely wasn’t as high as when Nike let Stephen Curry slip through its fingers to land with Under Armour.

When Curry entered the NBA, he signed an endorsement deal with Nike. That’s far from uncommon; nearly three-fourths of NBA players are signed to deals with the company. At the end of the 2013 season, Curry’s contract with Nike was up for renewal.
According to an outstanding article by Ethan Sherwood Strauss for ESPN, here’s what happened when Nike tried to convince Curry to re-up:


(Right) Stephen Curry of the Golden State Warriors.
IMAGE: Getty Images

“The pitch meeting, according to Steph’s father, Dell, who was present, kicked off with one Nike official accidentally addressing Stephen as ‘Steph-on,’ the moniker, of course, of Steve Urkel’s alter ego in (the TV show) Family Matters. ‘I heard some people pronounce his name wrong before,’ says Dell Curry. ‘I wasn’t surprised. I was surprised that I didn’t get a correction.’
It got worse from there. A PowerPoint slide featured Kevin Durant’s name, presumably left on by accident, presumably residue from repurposed materials. ‘I stopped paying attention after that,’ Dell says. Though Dell resolved to ‘keep a pokerface, throughout the entirety of the pitch, the decision to leave Nike was in the works.'”
If you don’t think one athlete endorsement deal matters to a massive company like Nike, think again. Sales of Curry’s signature basketball shoe are up 350 percent since the start of the year, making them higher than sales of any Nike signature shoe except Jordan’s.
And if that’s not enough, Morgan Stanley analyst Jay Sole, assessing Under Armour’s future prospects, said:
“UA’s total basketball business is probably double (in terms of retail sales), and even its non-Curry styles have grown at a super-high rate. The growth could be a result of UA taking share by underpricing its shoes. Or it could be a tipping point signaling the end of Nike’s basketball dominance.
“If the latter is true or Curry becomes the next Michael Jordan, our call might be wrong no matter what UA does in women’s apparel or running footwear. This will be especially true if the Curry effect is so strong, he puts a halo over the entire brand, which benefits its apparel and running footwear businesses.”
What was Jay’s “call”? He feels the market capitalization of Under Armour could be approximately $14 billion if Curry doesn’t make a major impact on sales; if Curry does, Sole estimates Under Armour’s value will be $28.2 billion.
That’s a difference of $14 billion, much of it attributable to Curry’s popularity and his impact on the overall Under Armour brand.
Even though Curry was less than impressed by Nike’s pitch, the apparel giant still could have kept him. Curry’s existing contract with Nike granted the company matching rights, meaning it could have retained his rights by matching any competing offers–even if Curry did want to leave.
Doing so would have been relatively inexpensive: According to Darren Rovell of ESPN, “Nike failed to match a deal worth less than $4 million a year.” (For comparison purposes, LeBron James has a lifetime contract with Nike worth at least $500 million.)


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