LeBron James entered the NBA with incredible fanfare, the likes of which we haven’t seen since.
Even before entering the NBA, LeBron James was expected to become a superstar in the league, with Sports Illustrated putting him on the cover of their magazine, and dubbing him ‘The Chosen One’ even before he played a second of NBA basketball.
With such hype behind him, James was highly sought after as a brand ambassador for shoe brands.
Massive shoe companies like Nike, Reebok, and Adidas approached him to sign with them, offering massive amounts of money. But one mistake that Reebok made when trying to sign him was by offering him a lot of money, but with a pretty big catch.
Reebok offered LeBron James $110 million over 10 years to sign with them in 2003. But part of that deal included a $10 million bonus, which if LeBron were to accept, would disallow him from even speaking to other shoe companies like Nike or Adidas and potentially secure a better deal.
As Brian Windhorst explained, the strategy was in use at the time, was to offer a lot of money to young figures who don’t come from a wealthy background. The idea was that a big advance would be enough to tempt LeBron into signing with them.
The idea came from Steve Stoute, a former music industry executive who launched the careers of dozens of artists from Will Smith to 50 Cent to Nas. Soute was working for Reebok and urged (them) to do what he’d done with many talented teenagers who had come from poverty. Show them the money, and it closes the deal.
‘This happened all the time in the music business: Give the guy a big advance and they do the deal,’ Stoute said. ‘This wasn’t short money. We were offering him the deal he wanted… We assumed if we gave him his price he’d take it.’
Nike offered LeBron James less money, offering him $70 million. For LeBron James, who grew up under difficult circumstances, the obvious move would be to take the biggest contract and secure his financial future.
The problem for LeBron was that he was not fully convinced about Reebok. Growing up a fan of Michael Jordan, LeBron dreamt of representing Nike like his idol. While the money Reebok offered made them the smartest option at the time, LeBron and his team didn’t want to give up on that dream.
LeBron’s agent Aaron Goodwin contacted Nike and told them where LeBron’s head was. Nike was presented with an opportunity to fix their mistake and offer him a better contract. But while Reebok thought they had the money to tempt James, LeBron didn’t do that and chose to sign with Nike, for $90 million across 7 years.
LeBron was lukewarm on Reebok as a brand. Unsurprisingly, he never dreamed about being a Reebok athlete the way he dreamed about wearing the Nike swoosh.
Like everyone else, he wanted to be like Mike, and was willing to take less money to make that dream a reality.
Just not $30 million less.
When LeBron’s agent Aaron Goodwin told Nike what was going through James’ head, they excitedly realised they were back in the game and sprung into action.
It wasn’t long before a renewed $90 million offer came through and LeBron signed it straight away with Reebok’s contingent still waiting to greet him in their Akron hotel room.
Brian Windhorst revealed in his book about LeBron that James prioritized signing a good deal for his legacy more than the bottom line implication of all three contracts on the table.
LeBron picked Nike because he believed they would put him in great commercials and design memorable campaigns. He picked them because he thought they could give him the best shoe designs.
But he also picked them because, in that vital moment, he valued legacy over an all-out cash grab. That showed a value system and an instinct that would end up setting the stage for many of the business decisions he made over the rest of his career.
“Signing with Nike,” LeBron said in 2018, “is the best business decision I’ve ever made.”
While many would have considered LeBron’s decision to reject Reebok’s offer a mistake at the time, there is no denying that today, it was the best decision he could have made.
Eventually, LeBron James would receive a lifetime contract with Nike in 2017, one that is currently valued at more than $1 billion. But the relationship between LeBron and Nike has not been one-sided, but mutually beneficial. LeBron’s rise to superstardom played a big role in Nike becoming the most valuable apparel brand in the world.
