A Look into Adidas James Harden Deal

Earlier in the year Indihoops covered the massive James Harden deal with Adidas before the start of the NBA season.  We take a look at how the deal has gone so far.

Adidas in an attempt to regain traction in the basketball shoe marketplace signed NBA superstar James Harden to a 13-year, $200 million endorsement contract just before 2015-16 NBA season. Adidas lured the Houston Rockets star away from Nike with the massive contract, when Nike decided that it would not be matching the offer made by Adidas. Adidas shifted its basketball strategy by letting its NBA jersey deal lapse in favor for individual player endorsements.  Nike has picked up the NBA jersey deal for $1B, which will go into effect in the 2017 season and it will feature a Nike logo on all the new jerseys.  This means that even Steph Curry will be sporting a Nike logo on his jersey, a big win for the company.

Basketball has played a key role in apparel companies growth with flagship athletes LeBron James and Steph Curry leading the way. A big reason for Adidas’ slump was that the company did not possess an elite NBA star that can compete with the likes of James and Curry. Athlete endorsements have been essential to the success Under Armour and Nike has experienced in 2015. Adidas has been lacking particularly in the basketball, a highly profitable segment where Nike pulled in $3.7 billion in sales in 2015. Basketball is arguably the most key segment for these three companies, and has translated to an increase in sales for both Nike and Under Armour.

Adidas has made it clear that it is committed to regaining its status as one of the elite athletic apparel brands and wants to do this by focusing on footwear. Harden is a brand ambassador moving forward. The basketball shoe industry continues to grow as a whole, and Adidas aims to be positioned to compete for a substantial market share if Harden can develop a successful signature shoe line. Harden also provides a boost in China, with the Houston Rockets having several connections to the country as former Rocket and Chinese basketball star Yao Ming helped build a massive following for the team.

Just recently, Adidas retook the 2nd place spot behind Nike surpassing UA.  This is more than likely not because of Harden (we are yet to see a signature Harden shoe line), but due to Kanye West Adidas signature shoe line, the Yeezy Boosts. Kanye is creating a lot of buzz for Adidas and reinventing the brands image, a company with a long history in rap culture. It is likely that we see a James Harden signature shoe line soon. A successful shoe line can add hundreds of millions of dollars for Adidas’. Harden’s former teammate Kevin Durant’s shoe line brought in $195 million in revenue for Nike during 2014.

Signature Shoe Sales 2014

LeBron James: $340 million (Nike)

Kevin Durant: $195 million (Nike)

Kobe Bryant: $105 million (Nike)

Chris Paul: $32 million (Nike/Jordan)

Derrick Rose: $32 million (Adidas)

Carmelo Anthony: $30 million (Nike/Jordan)

John Wall: $8 million (Adidas)

Dwight Howard: $1.5 million (Adidas)

Up and Comers

Kyrie Irving: $7 million (Nike)

Shoe released in December

Damian Lillard: $1.8 million (Adidas).

Shoe released in January

Source: SportScanInfo

Nike possessed the top selling basketball shoe lines with LeBron James, Kobe Bryant, Kevin Durant, and the Jordan brand in 2014. Much has changed in the NBA since then, and while we wait the 2015 figures, it is likely to see Steph Curry towards the top of the list. Currently 16% of NBA players wear Adidas, compared to 64% that wear Nike. Nike controls over 95.5% of the basketball shoe market as of 2014. Adidas had just a 2.6% market share in 2014 in basketball, down from 5.5% in 2013. With Harden these figures should certainly receive a boost.

Adidas’ basketball portfolio does offer several bright spots; the company signed the Rookie of the Year winner Andrew Wiggins in 2014. Adidas also has Damian Lillard who has released his own signature shoe line and John Wall of the Washington Wizards.

Adidas is committing to reversing a downward trend the company has been facing with its endorsement contracts. Adidas has made it clear that basketball is a market that Adidas wants to remain competitive in. The company has a strong grassroots presence, but often loses top players to Nike in the long term.

It remains to be seen if Harden is the signature athlete Adidas is looking for; the Rockets have struggled significantly this year and could miss the playoffs. Individually Harden has performed quite well, and is just 8 points behind Curry in overall points scored for this season. For this deal to truly pay off Harden will have to win a championship under this deal. Until the company finds a clear-cut athlete to help unite the brand and lead the push to regain traction in the basketball shoe market, Adidas will struggle to compete against Nike and UA.