The Best Point Guard-Chapter 76 - 11: Phil Knight’s Super Decision

Nike Company was founded on January 25, 1964, by Bill Bowerman and Phil Knight, originally under the name "Blue Ribbon Sports." On May 30, 1971, it was officially renamed Nike Company. The company’s name was taken from Nike, the Greek goddess of victory.

After years of painstaking management by Phil Knight, Nike had grown into a world-class enterprise, ranking first in the athletic footwear industry. Currently, Nike sells its products through brands like Nike Golf, Nike Pro, Nike+, Air Jordan, Nike Blazers, Air Force 1, Nike Dunk, Air Max, Foamposite, Nike Skateboarding, and Nike CR7. It also owns the Jordan Brand sub-brand and was in the process of acquiring Converse.

This success was inseparable from Phil Knight’s efforts, but a well-known reason for Nike’s takeoff was Michael Jordan. At the time, stars across the league were proud to wear Converse sneakers. The obscure Nike offered Michael Jordan a then-unprecedented price: 2.5 million USD over five years, along with a promise of a cut from sneaker sales.

At the time, the largest endorsement contract in the NBA was a one-year, 150,000 USD deal between Lakers star Worthy and New Balance. Nike’s decision was a bet-the-company move.

And they won the bet.

Now, Phil Knight sat in his luxurious office. He no longer needed to go all-in and bet the company. However, he had to make an important decision. Beside him sat his old friend, Vakaro, and the new general manager, Tosen.

They were discussing the latest endorsement situation.

Nike was currently in a superstar vacuum, especially after the Jordan Brand was spun off. They needed a flagship superstar.

Hardaway’s influence was in steady decline due to chronic injuries. Adidas, by taking an unconventional route with high school students, had already signed the two strongest guards of the new generation: Kobe Bryant and Tracy McGrady. Reebok had Allen Iverson as its anchor, while Vince Carter was jumping between different shoe brands. Even if he signed with Nike, it would be difficult for him to carry the mantle. By 2003, people were beginning to doubt if the UFO could still take flight.

"Our negotiations with Kobe Bryant are going smoothly. We can get him. With him and LeBron James, victory is already in our grasp."

Vakaro told Phil Knight. 𝓯𝓻𝒆𝙚𝒘𝓮𝙗𝓷𝒐𝓿𝙚𝒍.𝙘𝓸𝙢

As things stood, Nike and Kobe’s team were about to close a five-year, 45 million USD contract. And under extreme pressure from Goodwin, they were set to reach a seven-year, 92 million USD deal with LeBron James. They had originally planned to offer only 90 million USD, but Goodwin had used Little Sheep Su Xi to drive up the price, forcing them to add an extra 2 million USD.

This would become the largest sponsorship contract by total value in sports history. It would undoubtedly shake up the entire market and generate intense media buzz.

This was the effect Nike wanted.

Now, Phil Knight was faced with another problem.

He said to the executives on both sides of the long conference table, "Take a look at the scouting report from Cleveland. We need to make a precise offer for this kid. Right now, Adidas is also actively courting him."

"In Grover’s words, he’s a sleeping super-genius who is constantly growing, with the potential to be on par with someone like LeBron. Gray corroborates this. He told me that the eyes of Adidas’s genius data analyst light up when looking at him. In fact, the data sheets we’ve seen also verify their judgment."

"We already made a mistake with Yao Ming’s contract renewal. We cannot miss out on the massive Chinese market. It will be the key to an explosion in Nike’s market value."

"Our staff in Asia tell us that this media-darling MOP has already created a whirlwind across various Asian countries. And this was achieved without any major promotional campaigns. In China, he has already become a sports idol. More and more young people are proud to imitate him, and his hairstyle has even become the most sought-after trend."

"I predict that as long as he becomes an elite player in the NBA, with our packaging and promotion, he can become the most important representative of the NBA in Asia, surpassing Yao Ming. This would be enough for us to make up for the mistake we made with Yao."

Phil Knight’s inclination was obvious. He wanted to sign Su Xi.

The Yao Ming issue he mentioned was Nike’s failure to renew its contract with him this year. Yao’s team ultimately accepted the olive branch extended by Reebok: 50 million USD for seven years.

Nike’s arrogance in the Yao Ming renewal negotiations had made Phil Knight furious with the negotiation team, even though they explained that they had focused all their attention on the talks with Kobe and LeBron James, and that they felt China had only sold a total of 100 million USD in sneakers last year.

But this proved to be extremely shortsighted. China had already entered WTO negotiations. Once it became part of this huge organization, all goods would flow in unimpeded. With the upgrading of consumption, Nike was bound to become a sought-after brand among the general public.

Now, God had given them a chance to make amends.

The Goodwin Brothers were a pair of ferocious negotiators. The contract they put on the table was much more aggressive than Yao Ming’s: 55 million USD for five years. Yao’s team had only asked for an annual salary of around 5 million USD at the time, but Nike had only been willing to offer 1.6 million USD a year.

Due to the mistake with Yao Ming and Su Xi’s visibly growing influence, they were extremely cautious. They sent their most professional trainer, Gray, and collected all of Su Xi’s information, which included sending a dedicated team to Syracuse University to do a background check. They even went to Cosworth.

The news they got back was thrilling. Su Xi was a superstar who had risen out of nowhere. He was a nobody in high school, and he only got into college thanks to the support of Reggie Williams.

Moreover, he was humble, low-key, hardworking, and improved by leaps and bounds.

The words of the Syracuse University head coach left a deep impression on them: "Honestly, I never thought he could play in the NBA. My plan was to develop him into a starter for Syracuse University for the next three years. But in the end, he even took the MOP from Cameron Anthony. I don’t mean to stir up trouble, but before the national championship, Jack’s reputation was much smaller than Cameron’s. But now, all anyone on campus talks about are the legendary stories of Little Sheep Su Xi."

This incident sent a huge shock through Nike.

A chosen one like Cameron Anthony, ranked as the nation’s top college player alongside LeBron James, couldn’t even compare to Su Xi when it came to generating media hype.

Recently, even though this guy had been holed up training in Cleveland, he was actually one of the most-watched rookies. Their senior media data analyst said: despite LeBron constantly moving between various events and bearing the title of the NBA’s "Chosen One," Little Sheep Su Xi’s search popularity on Google was actually higher than his. People were intensely curious about this suddenly-emerged genius. And the other young players participating in the draft were always trying to get attention by associating with Su Xi, which in turn only boosted his popularity even more.

Most importantly, this handsome guy had also captured the hearts of many female fans.

This led to Beckham’s name being mentioned more than once in Nike’s executive meetings.

This was also a key point the Goodwin Brothers emphasized: No one can say no to a beautiful pair of basketball shoes on a handsome boy’s feet.

The negotiation expert and trusted advisor, Vakaro, took two deep breaths before making up his mind. "We can give him 40 million USD for five years. That’s our limit."

Vakaro was a man of great decisiveness. He was the one who had made the final call back in the day, offering Jordan that five-year, 2.5 million USD contract. Furthermore, he had even gifted Jordan a sports car on the spot on the day of the signing.

"We can’t have James and Kobe feeling like they’ve been surpassed," Vakaro said. "Besides, there really is a lot of uncertainty with him. Although I’m sure he can become an important defensive player in the NBA, and even become an All-Star on his immense popularity alone."

Phil Knight took Vakaro’s words very seriously. He took a deep breath.

Then, he had his assistant call Goodwin. "Get those two cunning foxes up here. Tell them we’ve made a decision."

"My bottom line is 45 million USD for five years. On par with Kobe," Phil Knight said. "After all, Kobe used to be the face of Adidas."

For a sneaker brand, what’s most important is loyalty from start to finish. Switching allegiances causes an athlete’s own market value to plummet.

Just like Vince Carter. He jumped around so much he jumped his own market influence away, because people could hardly associate him with any single, fixed brand.

When Phil Knight made this decision, the room filled with gasps of astonishment.

No one knew if this contract was the right move.

But it would definitely shake the entire draft market.

Meanwhile, the NBA Draft Lottery had begun.

It would soon decide the allocation of this year’s draft picks.

Would the Cavaliers get the first pick?

Or Denver?

Everyone in the conference room was concerned, except for Phil Knight, who remained calm.

He knew David Stern wouldn’t let LeBron James go to Denver.

He was a sharp and shrewd businessman.

But Su Xi... would he end up in no-man’s-land?

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