Think big-time sports endorsements and LeBron James is sure to come to mind.
James last year signed a contract with Nike that industry insiders say is worth $1 billion, making it the single largest athlete guarantee in the company’s history. Or so we thought. A new documentary sheds light on a decades-old deal Nike made with NBA Hall-of-Famer Spencer Haywood that could have been worth billions — yes, billions — more.
“Full Court: The Spencer Haywood Story,” chronicles the Seattle Super Sonic star’s rise from poverty into the world of professional athletics. Haywood grew up in rural Mississippi, where he practiced hoops with a homemade ball that didn’t bounce and a goal fashioned from a box on a pole. He won a gold medal in the 1968 Olympics as the leading scorer on the USA’s gold medal-winning basketball team.
Two years later, Haywood challenged the NBA’s eligibility rules, bringing a case before the Supreme Court. The case settled and Haywood was granted early eligibility into the league at age 21. Haywood was active in the NBA from 1969 to 1983, becoming one of the greatest forwards in NBA history.
In 1973, the all-star athlete became the subject of Nike’s first advertisement, paving the way for future athlete endorsements. According to Haywood, Nike (then a relatively unknown company) approached the NBA star with an offer: promote their shoes and receive either $100,000 cash or a ten percent interest in the company. Haywood’s agent saw an immediate commission payout and advised Haywood to take the cash – which he did. Today, a ten percent ownership interest in Nike translates into roughly $8.62 billion, making it eight times the contract LeBron currently has.
The documentary is tinged with regret, and it’s clear that taking the cash deal is one of the biggest career regrets Haywood has. Understandably so, but it’s important to look at the deal in context. Nike only became Nike Inc. in 1971, and before that was the relatively unknown Blue Ribbon Sports. The company’s growth to the sports gear Goliath that it is today was unforeseeable, and to a rising star in 1973, $100,000 cash was a lot of money.
Yes, Haywood and his agent may have played it too safe. But in fairness hindsight is 20/20. They made the best decision based on the information they had at the time, just like we all do.