We’ve all undervalued employees–or just people in general–but the cost was nowhere near as high as when Nike let Stephen Curry slip through its clutches and sign with Under Armour.
Curry earned an endorsement deal with Nike shortly after entering the NBA. That’s not unusual; roughly three-quarters of NBA players have contracts with the corporation. Curry’s contract with Nike was up for renewal at the end of the 2013 season.
According to an excellent ESPN article by Ethan Sherwood Strauss, here’s what happened when Nike tried to persuade Curry to re-up:
“According to Steph’s father, Dell, who was present, the pitch meeting began with one Nike official mistakenly addressing Stephen as ‘Steph-on,’ the moniker, of course, of Steve Urkel’s alter ego in (the TV show) Family Matters.” ‘I’ve heard some people pronounce his name incorrectly before,’ Dell Curry says. ‘I’m not surprised. I was astonished I didn’t receive a correction.’
From there, things just got worse. Kevin Durant’s name appeared on a PowerPoint slide by accident, presumably as residue from recycled materials. ‘After that, I stopped paying attention,’ Dell admits. Though Dell intended to “keep a poker face throughout the pitch, the decision to leave Nike was in the works.”
Remember, this is Steph Curry. (Watch the video for a few minutes. I’ll be patient.)Think again if you think one athlete endorsement contract doesn’t matter to a large brand like Nike. Curry’s signature basketball shoe has sold 350 per cent more than any other Nike signature shoe except Jordan’s since the beginning of the year.
As if that wasn’t enough, Morgan Stanley analyst Jay Sole remarked on Under Armour’s future prospects:
“UA’s total basketball business is likely to be double (in terms of retail sales), and even its non-Curry styles have grown at a rapid pace.” The increase could be attributed to UA gaining market share by underpricing its sneakers. It could also be a watershed moment, signifying the end of Nike’s basketball domination.
“If the latter is true, or if Curry becomes the next Michael Jordan, our prediction may be incorrect, regardless of what UA does in women’s apparel or running footwear.” This is especially true if the Curry effect is so powerful that he casts a halo over the entire brand, benefiting its apparel and running footwear businesses.”
What exactly was Jay’s “call”? He believes Under Armour’s market capitalization might be about $14 billion if Curry does not have a significant impact on sales; if Curry does, Sole believes Under Armour’s value would be around $28.2 billion.
That’s a $14 billion difference, much of which may be attributed to Curry’s fame and the overall Under Armour brand.