LeBron James' move out of Cleveland is very big news in the sports world, but for Nike Inc. (NKE) , not so much.
"Not a game-changer, because the West Coast is not a big basketball shoe market," Matt Powell said on Monday, July 2, when discussing the NBA superstar and four-time MVP's move to the Los Angeles Lakers from the Cleveland Cavaliers, announced Monday. Powell is vice president and senior industry adviser for NPD Group Inc.
James signed a four-year, $154 million contract with the Lakers, ending months of speculation as to where the league's most valuable player would land in his latest high-profile signing decision.
Many more LeBron jerseys than sneakers will sell on the West Coast, Powell said. The region that generates the most basketball shoe sales, though, is the I-95 corridor between Washington and Boston, he added.
Nike began discounting LeBron James Cavalier jerseys two weeks ago, Powell said, so that is telling about how that clothing will sell in the future. Powell noted that when now-retired superstar shooting guard Kobe Bryant switched his sponsorship from Adidas AG to Nike, midway through his career, Nike sold a good amount of Kobe jerseys.
Still, another expert sees a bigger upside for both Nike and James.
"If I were Nike, I'd be thrilled about the international growth prospects," said Dorothy Crenshaw, a brand specialist and principal of New York's Crenshaw Communications.
"James now has a larger hometown media market, a new team rivalry and a bigger mission, and he'll be playing with a more international team," she added. "There may be disgruntled Cleveland fans, but L.A. offers a larger platform for his branded merchandise and possible Hollywood deals. And the saturation media coverage can't hurt."
Nike may be gaining L.A. exposure and enhancing its newly transplanted player's reputation in a world-class city. In another sport, on another continent, though, it's seeing changes. Roger Federer, considered by many the greatest tennis player of all time, on Monday announced a partnership with Japanese global apparel retailer Uniqlo following the end of his sponsorship with Nike.
Nike did not immediately respond to a request for comment. Its shares on Monday afternoon were down 3.1% to $77.20.