Nike Drafts LeBron, Carmelo

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By LouAnn Lofton (TMF Bling)
May 22, 2003

We won't know until after tonight's NBA draft lottery which team will have first dibs on draft day, though it's likely to be either the Denver Nuggets or the Cleveland Cavaliers. But one thing's already certain. Ohio high school hoops star LeBron James and Syracuse University freshman Carmelo Anthony are two incredibly wealthy 18-year-olds, more than a month before actually being drafted and many months before they ever play their first pro games.

Nike (NYSE: NKE) impressively beat out both Reebok (NYSE: RBK) and Adidas to bank the NBA's likely top two draft choices. It's a big win for Nike, which is looking for another basketball phenom with the charisma and talent of His Airness Michael Jordan. In James and Anthony, Nike may have lucked into two.

Paying for greatness doesn't come cheap, though, and this is where Nike's size and strength allowed it to topple the smaller companies' desire to sign future stars. Anthony's deal is rumored to be worth $21 million over six years. James', on the other hand, is reported to be a whopping $90 million over seven years, plus a $10 million signing bonus.

Many expected James to sign with Reebok following its reported $75 million offer. Adidas plastered signs and billboards across Akron, Ohio, James' hometown, in an attempt to woo him, but in the end, he followed the money. Not that anyone blames him.

Both James and Anthony should give thanks to Jordan. Without No. 23's influence on basketball -- and more importantly, the far more lucrative game of endorsements -- there's simply no way anyone would be shelling out millions of dollars for two untested soon-to-be-NBA players. Tiger Woods, who holds the record on Nike endorsements with his September 2000 five-year $100 million deal, deserves some credit, too, for also demonstrating that the vast amounts of cash thrown at pro athletes by sports companies can be a very smart investment.

For shareholders, the return on Nike's money won't come overnight. Hopefully, both James and Anthony will be drafted to teams in good markets. Then there's the risk inherent in any young player: The transition from amateur to pro can take a while to shake out and is often fraught with frustration, once it's apparent that a so-called star isn't living up to his hype.

Nike's bet a bundle on these two. Let's hope, then, they end up earning the superstar salaries they're already being paid.

LouAnn Lofton owns shares of Nike.

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