The life of a professional athlete is seemingly amazing, but it’s also strange in many ways. In most situations, it’s considered very rude to ask someone how much money they make. This is sensitive information that’s typically kept private, especially among co-workers.
However, if you’re an NBA player, anyone can learn exactly how much you’re being paid. Nowadays, it only takes a few seconds for someone to look up a player’s current salary, total career earnings, the length of their contract and even specifics of their deal (like whether they have a trade kicker or certain incentives).
But while players’ NBA salaries have become common knowledge, how much money they make from endorsement deals is largely a mystery. With some major marketing deals, there will be an announcement – like when LeBron James signed a lifetime deal with Nike that’s worth an estimated $1 billion or when James Harden inked a 13-year, $200 million contract with adidas. However, those are the exceptions. It’s often unclear how much money (or equity) a player receives in these arrangements.
What we do know, based on the estimates from outlets such as Forbes, is that elite NBA players bring in a ton of endorsement money – even relative to other professional athletes.
“The NBA’s 10 biggest endorsement stars will generate a combined $234 million off the court this year,” wrote Kurt Badenhausen of Forbes. By comparison, the NFL’s 10 most marketable superstars will earn a combined $90 million from their endorsements and the earnings are even lower for the top-10 MLB stars ($25 million).
It’s estimated that LeBron earned $52 million in endorsements this year, meaning he single-handedly earned more than double what the 10 most marketable baseball stars combined to make. The NBA has a ton of star power and brands are eager to do business with the league’s top-tier talents.
HoopsHype talked to several prominent agents and NBA executives to discuss how players secure endorsement deals, what different kind of deals typically pay (and how the amounts are determined) and much more. The agents and executives spoke on the condition of anonymity because they were discussing confidential information.
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Once a notable prospect decides to enter the NBA draft and hire an agent, one of the things their representative starts doing is looking for potential endorsement deals. Most prospects don’t have much money to get through the pre-draft process, so many agents give them a line of credit and the money will be repaid once the player starts getting their NBA paychecks. The agent is also paying for pre-draft training, traveling and other major expenses.
Typically, a player’s first endorsement deal isn’t very lucrative (relatively speaking), but it puts some cash in their pocket as they transition to the league. The major deals will come later, as a lot of companies want to see when a player will be drafted and which market they’ll be playing in before committing to them.
Panini, the trading card company, is one of the companies that connect with many prospects during the pre-draft process. According to league sources, they use a sliding scale that determines how much they’ll pay each prospect. The player agrees to sign a certain number of cards and the two sides decide how much the player will make per autographed card. The higher the player is picked, the more money they’ll make per autographed card – although there are some exceptions, since some agents negotiate a higher rate for notable prospects picked late in the first round or in the second round.
For example, the No. 1 overall pick in the draft may get paid $20 per autographed card and have an agreement to sign 7,500 cards (so the player would earn $150,000 for a few hours of signing their name). But for an undrafted player, Panini may only offer $1 per autographed card on a 7,500-card commitment (so the player would earn $7,500). Again, Panini sometimes increases the number of cards they want signed or how much they’ll pay per autographed card, but this is their basic structure. (Every year at NBA Summer League in Las Vegas, there’s a stressed Panini employee running around, trying to track down players and making sure they’re signing their boxes of cards).
Again, it’s not insanely lucrative like NBA-contract money, but it’s better than nothing considering these players haven’t even played a minute of professional basketball yet. Another example of quick cash for prospects could be seen at the 2018 NBA draft. There was a Tissot suite and soon-to-be rookies were paid $1,000 to come by and then make a number of posts on social media.
Many companies try to connect with players when they’re young and full of potential for several reasons. First, this is when their team’s fan base is extremely supportive of the player because they’re optimistic and hopeful he can become a star. This is also typically when the player is way cheaper to land as an endorser. After the NBA paychecks start coming in, players are much less desperate for a small brand deal. Once a player turns into a superstar, it’s very expensive to land them. Remember, it took $200 million for adidas to steal Harden away from Nike. Much like NBA franchises on draft night, companies go after high-upside prospects and hope to secure a superstar-to-be because it’s much cheaper to develop a star than try to get into business with one later in their career.
PUMA Basketball took that approach this summer. After a 20-year hiatus, PUMA decided to re-enter the basketball space and they pursued lottery talent with a lot of potential. Typically, Nike, adidas and Under Armour are the main brands fighting over top draft prospects. This year, PUMA signed Terry Rozier and Rudy Gay as well as five players who were selected in the first 16 picks: DeAndre Ayton (No. 1), Marvin Bagley III (No. 2), Kevin Knox (No. 9), Michael Porter Jr. (No. 14) and Zhaire Smith (No. 16).
However, not all players cash in when they’re making the leap from college to the NBA. Sometimes, it can take years for them land on the radar of companies.
“It really depends on the player,” one agent said. “For some players, they’re most attractive to companies when they’re coming out of college and just entering the NBA. If you come from a program like Duke or Kentucky, if you led your team to a national championship, if you’re the No. 1 pick, you’re going to have a lot of endorsement opportunities right away. But sometimes, players don’t have that hype and it takes a few years to build up your brand and then that’s when you can start landing deals. Sometimes, it’s all about a player’s backstory. There’s one company that did an endorsement deal with one of my players solely because they loved his backstory and felt it matched the backstory of the company. The market you play in matters too. Maybe you started your career in a small market, so companies weren’t that interested. Then, you get traded to Los Angeles and you’re a pretty approachable guy and companies think you have that cool factor and you’re always on nationally televised games. Nine times out of 10, you’re going to start landing national deals.”
A player’s market is important, as the agent mentioned. This is why shoe deals typically take longer to finalize than, say, a trading card commitment. Oftentimes, shoe companies want to see when a guy gets drafted and what city he’ll be in before making a huge financial commitment.
“From my understanding, shoe companies look at a number of different variables when deciding who’s deserving of a lucrative deal,” former agent Matt Babcock explained. “They consider the player’s production, their style of play, how much media attention he generates, what school he attended, which NBA city he plays in and what team he’s on. Those factors, to name a few, affect their offer. Also, it is commonly discussed that guards and perimeter players are generally more valuable to shoe companies than big men.”
A player’s social-media presence may also help or hinder them during negotiations. One agent mentioned that many companies check how many followers a player has on Twitter, Instagram and Facebook when contemplating how much to offer. A star player who doesn’t use social media may not be as appealing as a slightly less talented player who is really engaging and popular online. But that’s not the only way that social media is impacting endorsements. Another change is that some companies will now just pay for sponsored posts rather than do a long-term deal with athletes.
“You’re seeing fewer three-year endorsement deals with companies and that may even become a thing of the past at some point,” one agent said. “Today, companies want six tweets from the player’s account. They want two Instagram story posts. Times are changing. With some of these players, it may look like they have an endorsement deal with a company, but it’s really just a couple of paid ads. It’s all short-term stuff, so neither side is locked in.”
Shoe deals aren’t going anywhere, though. “You’ll always need sneakers to play basketball, and the two cultures are intertwined,” one agent said. Most of the agents said that negotiating a shoe endorsement is relatively easy. It’s a lot like free agency negotiations, where agents look at the contracts comparable players have gotten in recent years and go from there when negotiating their client’s deal.
“Negotiating a shoe deal is a bit easier than other endorsement deals because, as an agent, I know all of the companies out there and I have a good idea of what they’ve paid certain guys in the past,” one agent said. “It’s all about knowing what deals they’ve done in the last year or two. Then, you know what the possibilities are and you’re pitting the different companies against each other. A shoe deal is a little more contained than other endorsements.”
Other endorsements are more difficult because, in some cases, the brand hasn’t done a deal with an NBA player before. Or, if they have, the agent doesn’t know the terms of the agreement. Unfortunately for the agent who’s in the dark entering the talks, sometimes these deals that have nothing to do with basketball are the ones that their client is most interested in inking.
“All basketball players want to show that they’re not just basketball players,” one agent said. “A lot of times, players will do things just so people view them in a different light.”
“It can be difficult if you’re negotiating a deal with a company where there isn’t much information about deals they’ve done with players in the past. That’s a different kind of negotiation,” another agent added. “On the frontend, if the company expresses interest, you’re assessing whether it’s a good fit for your client, what they’ve done in the past, what their advertising looks like, how they’re planning on using your client and whether it’s a good fit with the player’s brand (because you want to make it authentic). Then, if it seems like a deal makes sense, you start negotiating the deal and find out how much you can get from them, what kind of product you can get, whether you can get equity and whether you can get royalties. At that point, there’s a whole host of things you’re looking at and considering.”
Players have quite a bit of input into what brands they end up endorsing. After all, it’s their name that’s being associated with the company and product, and it’s their reputation is the one on the line.
“A player has as much input as they choose,” Babcock said. “You will have some players who will be locked in on a certain brand, like wearing Nike, regardless of other [higher-paying] opportunities. Then, you will have some players who will focus on maximizing their earning potential. You will also have some players who don’t want to be involved and will just follow the lead of their agent. It really varies from player to player. For a top player, it’s much more about picking and choosing the best deals to strategically build that player’s brand properly.”
“Most players want significant input since it’s something they’re going to be associated with,” a third agent said. “Sometimes they love the company, sometimes they hate it. But with most of the companies, they’ll be somewhere in the middle where they don’t have a strong feeling about it one way or the other. In that case, it comes down to what kind of deal can be negotiated and that will determine whether they’re on board. There are times where guys have really strong opinion against something and turn it down and times where guys have a really strong preference for something; it just depends.”
For lesser-known players, sometimes it’s really a matter of taking what you can get. Nearly agent interviewed made a point to say that it’s difficult to find any kind of cash deal for non-notable players. Sure, they may be able find a company that will give them free stuff, but that’s typically the most they’ll get (unless, say, the guy is fan favorite and his agent finds him a nice local deal).
One reserve player who has a deal with Nike revealed that he gets free shoes and he’s also given a $20,000 allowance that he can use to shop online. He can buy anything on the website with that money, even shoes and clothes for women and children, so his friends and family can use it too. The deals vary depending on the player.
“It is tougher with lesser-known players,” another agent confirmed. “However, you can find local deals for a lesser-known player, even if they have trouble getting national deals. There are always exceptions too. There are a few factors that can help. For example, what does the guy’s social media look like? Maybe he’ll have a big following from his time in college, which can really help. I think it just depends. You can get endorsement deals for lesser-known players, but I do agree that the national deals are typically reserved for All-Stars and high-profile rookies who are just entering the league.”
Some companies are so beloved that they know they can land prominent players without offering much money and just promising free product. Jordan Brand is by the far best example of this.
“A lot of companies, like Jordan Brand, know that a lot of players grew up loving them and that players want to get a deal done with them, so they have leverage over that player,” one agent said. “Companies like that don’t have to offer much cash or, in some cases, any cash at all to get a deal done. They may just offer product and the player is on board because he loves Jordans. Companies like Jordan Brand and Nike can do things very differently than, say, Li-Ning or Peak, which have to offer cash deals. A lot of times, the player must choose between wearing the brand they grew up wearing and little to no cash versus getting more cash and your own shoe that’s made specifically for you by a company like Li-Ning.”
It’s worth noting that Jimmy Butler reportedly took a 75 percent pay cut to leave adidas for Jordan Brand. And even after winning Finals MVP, Kawhi Leonard was earning less than $500,000 per year to wear Jordans. Everyone loves Jordan Brand, so they don’t need to open the wallet very often. Also, Jordan doesn’t really need help selling shoes, unlike other brands. That’s another reason for this seemingly stingy approach.
NBA executives have an interesting relationship with the top shoe companies. On one hand, executives acknowledge that the massive contracts these companies give to star players hurt their leverage in negotiations. For example, one former general manager noted that a player may be more willing to take a lesser max contract from a rival franchise because he’ll make up the difference thanks to his shoe deal. But, at the same time, teams want to stay in the brands’ good graces because they have so much power and influence.
“Having the support of a big shoe company can really help you. Being one of Nike’s ‘chosen teams’ is important,” the former GM said. “Winning the recruiting war with Nike matters a lot. They’re a big interest group that plays a role in negotiations. The shoe companies matter immeasurably. You want Nike and adidas to want their players in your city. You want them to be excited about what you’re building. You hope they connect dots and think, ‘This organization has the right general manager and coach in place, so our guys can thrive there, gain notoriety and potentially win championships.’ You absolutely recruit the shoe companies [as an executive]. And the hope is that, if you run your organization the right way, they’ll push their guys to you.”
Executives realize it’s better to have these brands on their side, but the former GM also admitted that the shoe companies typically have different goals for players than the team’s front office. The shoe company hopes that their endorser becomes a likable superstar who posts monster numbers, makes highlight plays on a nightly basis and becomes extremely popular. The front office would obviously love for the player to become a star too, but their main priority is winning games. Put simply, the brand is typically fine with empty stats and jaw-dropping plays, whereas the team needs to see results in the win column. Front offices need the players to win games; brands need the player to win over consumers.
“With the proliferation of tanking, many players who haven’t proved they can win basketball games are being given max contracts and huge shoe deals,” the former GM said. “We’re rewarding bad habits. When a high-profile rookie joins a bad team, they are given a big salary and a big shoe deal from day one and they’re usually handed a starting role. They never have to earn anything. What’s going to make him suddenly flip that switch and become a team player and start caring about winning? He’s probably going to stick with what’s gotten him a max contract, a huge shoe deal and all of that stuff because we’ve rewarded bad habits. I think it’s a real problem in the NBA.”
When it comes to the toughest part of an agent’s job, several admitted that managing their players’ expectations can be difficult. Many players think that landing a handful of endorsement deals is just what happens once you’re an NBA player, so they’re disappointed when that doesn’t happen.
“I’ve never presented an offer and had a player tell me, ‘Wow, I’m worth way less than that deal!’ Part of our job is balancing expectations,” one agent said with a laugh. “Every player expects a free car; they think a local dealership will loan them a car in exchange for showing up and signing autographs for a few hours. Every player expects a trading card deal where they will sign a couple boxes of cards with Panini or some other brand like that and get paid cash for every signature. Every player expects to be given free athletic gear from some company. Every player expects to get a shoe deal that includes cash and apparel. Almost every single player I’ve had who’s been drafted has expected those things. One misconception that a lot of players have is that there are a bunch of $100,000 deals out there for the taking just because they’re in the NBA. But that’s not the reality for a lot of players, particularly if you aren’t a starter. Superstars like LeBron James and Kevin Durant have the power and leverage to dictate terms. A lot of players don’t have the ability to do that and it’s frustrating for them, especially because that $100,000 would be huge for them compared to the superstar with a max contract.”
“It’s challenging because you want to be completely honest with your players and be able to give them a reality check, but that can cost you your job,” another agent added.
“Players feel they deserve more all the time, but it’s because other agents are constantly in their ear telling them they deserve something different,” a third agent said. “There’s always either a rival agent or someone close to the player – like a friend, a brother or a parent – telling them that they deserve more and the only reason they don’t have more endorsements is because I’m not doing a good job. But the guys who change agents quickly realize the other agent was just telling them what they wanted to hear.”
Some players get in their own way, consistently asking for more money and ending up with less deals than they would’ve gotten had t
In talking to various agents, it became clear that there are very different approaches to endorsement deals. Some view them as one of the most important parts of their job because they feel it keeps their players happy and ultimately helps pay their bills. After all, agents work off commission and they can make a lot from marketing deals. While a representative can only take up to four percent of their client’s NBA contract, they can bring home 10-to-20 percent of an endorsement deal they land. The exact percentage they take depends on the agent and the deal. (This is why you’ll sometimes see an agent take on an NBA player who has several years remaining on his NBA contract; even though he can’t make any commission on his team salary, he can make money if he finds him new endorsements.)
However, other agents have stopped focusing on marketing altogether.
“A lot of endorsement deals are BS,” one agent said. “There are only a few guys in the NBA who get the monster endorsement deals. For everyone else, 99 percent of their income is going to come from their NBA contract. I’ve worked with All-Star players and even with those guys, they’d get a $150,000 endorsement deal from a company and get excited, but they were making over $20 million that season so it was a drop in the bucket! That goes for all of the star-level players. And for the players who aren’t stars, they’re getting much smaller deals, so it ends up being one percent of their NBA contract too. The average NBA career lasts about four years. With that in mind, my focus has shifted to helping players buy a franchise for $100,000 because that will be a revenue stream for the rest of their life. The players who are pursuing equity have the right idea too.”
Another agent agreed, saying equity deals are the best option for players.
“I don’t focus on endorsements anymore,” one agent said. “That’s an old way of thinking. I know everyone is talking about ‘their brand’ and ‘their marketing’ and all that, but there are probably five relevant superstars out there and while everyone is chasing deals, there aren’t any deals out there to actually get.
“You can put as much focus as you want into marketing, but the reality is that only three percent of the NBA is highly marketable. That’s it. Three percent. Look at a guy like LeBron James. Nowadays, he doesn’t do endorsements. He gave McDonald’s their money back. The days of a guy like LeBron James just getting paid for an endorsement deal are over. Now, it’s all about equity.”
Players like James, Durant, Carmelo Anthony, Stephen Curry and Andre Iguodala are just some of the players who have turned to equity deals and investing in start-ups.
These days, your favorite player may be involved with a company you love and you may not even know about it because they’re working behind-the-scenes rather than showing up in their commercials. For instance, did you know that Durant is an investor in Postmates and over 30 other companies? Have you heard that ‘Melo launched his own venture capital firm in 2014 and has invested in Lyft, SeatGeek, DraftKings, Hullabalu, Casper and many other companies?
Not all players have the ability to do these deals, as previously mentioned, but these kind of deals are great for the stars who can land them. As a warning to players: some agents may steer you away from an equity deal because they don’t get the commission that they would from a cash deal.
“In a lot of cases, the best thing for your client is to find them a deal where there may not be as much cash involved, but there’s equity for the player. But some agents will push the player to take a cash deal instead of an equity deal – or not even mention the equity deal – just so they can get their 10-to-20 percent cut of the cash deal,” one agent said. “On an equity deal, it’s unlikely that the agent is getting paid anything. Some agents are selfish like that.”
However, this same agent warned that not all equity deals are great, so it is important that a player has their agent evaluate the details and see if it’s in the player’s best interest to get involved.
“When it comes to the equity-only deals, they can be great for players, but you really need to do the proper vetting and screening before finalizing a deal like that,” one agent cautioned. “A lot of companies want to have an NBA player’s name attached to a brand they’re building. Brands love working with NBA players. Because of this, they’re more than happy to offer a player something on the back end without paying on the front end, but those aren’t all necessarily good deals.”
Whether it’s a traditional endorsement contract or a series of sponsored tweets or a large equity deal, players will always find a way to make money off the court. After all, they have influence and a large audience, which is what every company’s marketing team desires.
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