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LIVE FROM THE HEADLINES

James Gets $90 Million From Nike

Aired May 22, 2003 - 20:42   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

DARYN KAGAN, CNN ANCHOR: We're going to talk some big bucks right now.
High school hoops phenom LeBron James has gotten an early graduation gift from Nike while the Cleveland Cavaliers have gotten a gift of their own.

Nike signed has signed James to a record $90 million endorsement deal. And a short while ago it was announced that the Cavaliers have won the right to select James with the first pick of the draft. It is a big day for a big kid. But we're talking about tons and tons of money.

We're joined right now by Dan Wetzel from Detroit. He is a senior writer for CBS Sportsline and the author of "Sole Influence" to help us put in perspective -- as if we need to put $90 million in perspective -- Dan is joining us from Detroit.

Dan, good evening.

DAN WETZEL, AUTHOR, "SOLE INFLUENCE" Hi, Daryn. How are you?

KAGAN: Ninety million dollars. A lot of money in any body's book. But it in comparison to other big endorsement deals like Tiger or Michael Jordan.

WETZEL: Well, Tiger has a -- this is a seven-year, 90 -- probably a little bit plus endorsement deal. Tiger has a five year, $100 million endorsement contract. So he really has the largest one right now. But that was signed after Tiger Woods had won the Masters, Tiger Woods had become a huge success on the PGA Tour.

LeBron James is signing while he's still a high school student. He has to go to class tomorrow. So...

KAGAN: May be not.

WETZEL: It's a whole different deal. I think we know who's going to win most likely to succeed in the yearbook.

KAGAN: Yes. What are they going to do if he doesn't? You know, I mean, he can pay for his own -- his own note to do that.

How does Nike pay for all -- for all these huge endorsement deals? How many shoes are they going to have to pay -- have to sell in order to make this deal worthwhile? WETZEL: Well, they'll have to sell a lot over the next seven years.

But Nike is a huge company. This is a staggering number. But you have to look at as Nike sold $10 billion in gross sales last year. So, you know, in terms of the size of the company, it's huge. It dominates 40 percent of the U.S. industry. It has 60 percent of the basketball market.

And these are very profitable shoes and gear they're going to sell. A top basketball shoe will sell for $150 too $200 and they can make it very, very cheap overseas. So they can return the profit, but they're going to need a lot of LeBron James. This is a big gamble by Nike but it has potential for very high returns.

KAGAN: And for the folks who watch our show who aren't huge sports fans and haven't been watching LeBron James' high school games on ESPN and other cable news shows, explain to them just how big LeBron James is expected to be.

WETZEL: Well, just about every NBA scout that's come down the pipe says he's the greatest high school player of all time. He certainly is a tremendous talent, will be the No. 1 pick in the draft and great things are expects of him.

Maybe more than that, in terms of this pitchman deal is he connects with the target consumer that they're looking for. The people that buy shoes like this, the high fashion, high priced basketball sneaker, are about 16, 17-year-olds, usually urban or suburban youth. With that market, he's really the most -- maybe the most upon popular basketball player in the world even though he hasn't played in the NBA yet. His games are on national TV for the first time ever, high school games are on. He's been on the cover of all the magazines, all the newspapers.

So the audience they're looking to reach and target know who LeBron James is and they love LeBron James.

KAGAN: Well, and part of the way this game works -- and we were just talking about the lottery. So Cleveland is going to end up with LeBron James, certainly not the hugest media market. How important will that be in getting him complete exposure?

WETZEL: Well, that hurts. The bigger the market, the better. IF he had gone to the Knicks, Nike would be looking like they may have gotten a deal tonight.

Cleveland will not -- is not a big market and it's already a market that he's saturated because that's where he's from -- from Akron, Ohio. So that's a bit of a loss.

The main thing is if they're successful. It really helps to be on a team that's successful, that plays in the playoffs. And Cleveland really had the worst record in the NBA last year. So there's a lot to go on, and for this to be a deal that's going to -- you know, he can be successful and sell shoes, but for this to pan out for the 90 something million, he needs to be a guy winning championships in his fifth, sixth, seventh year, at least playing for them.

KAGAN: And just to put you on the spot, is LeBron James going to be that player, do you think, in your opinion?

WETZEL: It's a tremendous talent. I've really only watched the high school guys for about eight years. He's the best that that I've seen. He's better at this age than Kobe Bryant was at this age. But Kobe got to a great team in Los Angeles so that was really a big help for him.

KAGAN: Yes, Kobe has kind of done OK. He's done for the season, but not the last for Kobe Bryant and apparently not of LeBron James.

Dan Wetzel, thanks for joining us this evening and putting $90 million in perspective.

WETZEL: Thank you, Daryn.

KAGAN: We appreciate it.

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