Jason Belzer 12/05/13 Forbes.com
Rival hip-hop moguls Kanye West and Drake are at the center of the celebrity endorsement battle between sports brands Nike and Adidas.
The sneaker endorsement arms race has officially reached a new level. Yesterday, after rapper Kanye West revealed he was leaving Nike to sign with Adidas, rival Drake told fans at a concert in Portland he was joining Nike’s famed Jordan brand. The announcements signal an escalation in the continued battle between the two sportswear giants to acquire celebrity co-signs for their most valuable product lines.
Rumors swirled over the last few weeks of Kanye’s imminent departure from Nike due to the brand’s refusal to give the rapper creative control over his Air Yeezy product line and pay him royalties as part of his compensation package. During an appearance on Hot 97 last week, Kanye explained that during negotiations, he told Nike, ”‘I need royalties.’ It’s not even like I have a joint venture. At least give me some royalties. Michael Jordan has 5% and that business is $2 billion. He makes a 100 million dollars a year off of 5% royalties. Nike told me, ‘We can’t give you royalties because you’re not a professional athlete.’ I told them, ‘I go to the Garden and play one-on-no one. I’m a performance athlete.’”
Of course, Nike’s immediate signing of Drake is no coincidence. With Kayne’s negotiations coming to an impasse, the brand almost certainly realized it would have to move quickly to find a replacement in the genre who would be willing to abide by their terms. While Drake, who ranks five spots behind Kanye on Forbes’ ranking of the World’s Highest-Paid Hip-Hop Artists, may not yet come with the same size following, the Toronto star’s meteoric rise to the top of the Hip-Hop charts positions him incredibly well to be a powerful counter-punch to Adidas’ future Kanye line. Moreover, Drake’s recent deal to be the face of the NBA’s Toronto Raptors franchise provides for synergies between the artist’s music brand and sports that West simply could not offer.
The practice of sportswear brands aligning themselves with endorsers out-side the athlete world is nothing new, and can be traced back to Adidas’ deal with Run DMC almost 30 years ago. That partnership allowed Adidas to tap into the growing Hip-Hop counter-culture of the time and mitigate the effects of Nike’s rise to prominence under Michael Jordan. While other consumer brands have attempted to emulate Nike’s success with Jordan over the last three decades by finding their own super-stars to align with, only now have sportswear brands realized that endorsements by cultural icons outside their own industry might provide more bang for the buck than adding just another athlete to their stable. That being said, because it is far easier to judge a professional athletes performance over that of a music star, deals like the ones made with Drake and Kanye will be judged by the industry with far greater scrutiny.
Jason Belzer is Founder of GAME, Inc. and CSA, and a Professor of Organizational Behavior and Sports Law at Rutgers University. Follow him on Twitter @JasonBelzer.