The Pomp Podcast - #985 Joe Pompliano On How LeBron James Turned $10M Into $100M As A Rookie

Starting point is 00:00:00 what's up everyone this is anthony pompliano most of you know me as pomp you're listening to the pomp podcast simply the best podcast out there now let's kick this thing off joe pompliano is the founder of huddle up one of the most popular fast-growing voices in the sports business world in this conversation we talk about that famous deal between lebron james and nike now is paying lebron over a billion dollars in lifetime earnings it's a fascinating story and learned a lot, both about LeBron James' business acumen, but also the way that Nike approaches these types of deals. I enjoyed this conversation, and I hope that you enjoy it as well. Before we get into this episode, though, I first want to talk about our sponsors. This episode is brought

Starting point is 00:00:41 to you by FTX US. FTX.US is the safe, regulated way to buy and sell Bitcoin and other digital assets. You can trade crypto with up to 85% lower fees than top competitors. There are no fixed minimum fees, no ACH transaction fees, and no withdrawal fees either. FTX.us is also the only leading exchange that supports both Ethereum and Solana NFTs. Download the FTX app today and use referral code POMP to earn these free crypto on every trade over $10. The more you trade, the more you earn. Go download the FTX app today and use referral code POMP. Today's episode is brought to you by Brave. Brave Wallet is the first secure crypto wallet built natively in a Web3 crypto browser. What's Web3? Web3 is freedom from big tech and Wall

Starting point is 00:01:28 Street, more control and better privacy. But there's a weak point in Web3, your crypto wallet. Most wallets are browser extensions, a Web2 technology. That means the same old risks, app spoofing, phishing scams, and theft. BraveWallet is different. BraveWallet is the first secure wallet built natively in a Web3 crypto browser. No extension required. With With Brave Wallet, you can buy, store, send, and swap assets, manage NFTs, even connect other wallets and dApps, all from the security of the best privacy browser on the market. Whether you're new to crypto or a seasoned pro, it's time to ditch those risky extensions. It's time to switch to Brave Wallet. Download Brave at brave.com.pomp and click the wallet icon to get started. Again,

Starting point is 00:02:10 go download Brave at brave.com.pomp and click the wallet icon to get started. Today's episode is brought to you by BetOnline.ag. BetOnline.ag is the top spot for all of your sports betting, casino, and poker needs. It's available on your computer, your tablet, or your mobile device. BetOnline accepts Bitcoin and more than a dozen altcoins to make deposits and withdraw your winnings. There are no crypto fees, processing only takes minutes, and transactions are 100% anonymous and secure. Head over to betonline.ag and sign up today to receive a 100% crypto bonus on your first deposit.

Starting point is 00:02:48 Just use ARK promo code POMP100 to get started. Discover why everyone is saying BetOnline is the fastest and easiest way to wager with crypto for sports, casino games, horse racing, poker, and more. Sign up today at betonline.ag and double your deposit with our exclusive podcast promo code POMP100.

Starting point is 00:03:08 Go check them out at betonline.ag. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion.

Starting point is 00:03:31 This podcast is for informational purposes only. All right, what do you got for us today? All right, we're talking about LeBron James, rookie deal, Nike, turned down a $10 million check into a billion-dollar deal with Nike. He turned down a $10 million check for a billion-dollar Nike deal. Yeah. Okay. So I wrote about it this morning, but the essence of the story is he was obviously an incredible player in high school, probably the most hyped recruit ever, and a bunch of companies wanted to sign him. Really, there was only three companies that could afford him, which were Nike, Adidas, and Reebok.

Starting point is 00:04:02 So he was going to meet with all three of them. His agent, Aaron Goodwin, set up the meetings. And he wanted to get a deal done before the NBA draft. And the reasoning behind that was before the lottery. Sorry, not even the draft. The actual lottery where teams decided where they were going to be picked. Because everyone knew he was going to be the number one pick. But if he went to a super small market, Memphis, whatever, versus a large market, that could alter the terms of the deal.

Starting point is 00:04:24 So he was like, let's just get it done before the lottery. So he meets with Reebok first. He goes to meet with Reebok. Reebok offers him $100 million guaranteed. $100 million guaranteed? Guaranteed, $100 million. And as part of the deal, he tells this story, LeBron has told this personally,

Starting point is 00:04:41 of an executive at Reebok writing, he basically says that he's sitting on one end of a really long conference table, the executive's on the other end, and he's like writing, he's got his head down, he's writing. And LeBron's like, what the fuck is this guy doing? And then all of a sudden he pops up

Starting point is 00:04:55 and he throws something over to LeBron. It's a $10 million check. literally that he just wrote out at the table 10 million dollars gave it to lebron and said you can cash this today it's yours but you can't go talk to nike or adidas oh damn so i'm gonna read you a quote so uh i don't know if you guys remember lebron had that show with uh uninterrupted needing go and he was on there talking about a bunch of his finances stuff and one of the things he talked about was this and this quote is from that episode he goes when reebok slid the check down the table they said listen if you take this right now you just promise me you won't go talk to nike or

Starting point is 00:05:30 adidas you know you can take this right now and i was lost for words at the beginning i mean i flew in from akron ohio out of spring hill from the projects i mean our rent was like 17 a month and i'm looking at a 10 million dollar check and i go back to high school tomorrow morning in the classroom the next day i was going to homeroom i was like holy shit so then he continues and he goes they ask him what happened he's like well then i started thinking if this guy if he's willing to give me a 10 million dollar check right now what's to say nike or adidas isn't willing to give me 20 million or 30 million up front or maybe to say the up front isn't what really matters maybe let's start thinking about the back end damn so he was smart yeah so he essentially was

Starting point is 00:06:09 like damn this guy's about to write me 10 million bucks why is he going to do that right and realize that maybe nike or adidas would offer something even better so uh the story goes on brian windhorst who has followed lebron from his career from his high school career to to now basically he works at ESPN wrote an entire book on LeBron's business oh wow and this is one of the excerpts of it the stories and then he talks about so in part of it he talks about each company right so that was a Reebok's offer next he goes to Adidas Adidas picks up LeBron and his boys in a private jet in Ohio flies him out to LA they go that night on like a Saturday night to uh a Lakers playoff game at the Staples Center courtside seats and they watch Kobe drop 39 points on the Spurs in

Starting point is 00:06:50 2003. Then the next day they go out to Malibu where Adidas rented a, uh, uh, a massive house on the beach overlooking the Pacific ocean. They show them all the mock-ups, they show them this presentation, they show them all this stuff. Now there's this guy, Sonny, Sonny Vaccaro, who used to work at a legend. Yeah. Legend. And, uh, so he worked for Adidas at this point and he had hinted to LeBron and his agent that they were going to give him a hundred million dollar deal, 10 years, a hundred million dollar deal guaranteed 10 million a year. And Sonny, just so the folks don't know, he was basically like the boss of all high school AAU basketball. He was the guy.

Starting point is 00:07:25 Very involved with Jordan's deals with Nike, et cetera. So now he goes – he had hinted at this to them supposedly. So they're expecting $100 million. All of a sudden the paperwork comes down. He had talked to their bosses, everything. Last minute Adidas reneges on the deal they offer him like $60 million. And so way lower than he initially expected, not what he was told, right? so he goes home he's like all right adidas is out and he had liked it he liked adidas but

Starting point is 00:07:50 uh last was nike nike requested to go last out of all three of the companies they pick him up in another private jet the following weekend take him his mom maverick carter a couple other people out to their campus in oregon beaverton oregon damn you know lebron's like hey man adidas y'all renting out uh properties nike got their whole campus that i gotta go to yeah so he goes to the headquarters they set him up in this building supposedly a hundred people worked on his pitch on his presentation wow they show him all this stuff whatever nike was known as like the top dog already at this point uh and they were expected to sign him right so he goes in there they they run through the whole pitch they offered him actually less uh they ended up offering him

Starting point is 00:08:30 70 million dollars around 70 million dollars so he had 100 from reebok 60 from uh adidas and then nike offered about 70 million dollars with a signing bonus but yeah right around the total deal size was like may 87 million i think if i remember correctly later on so so he's offered 70 from nike uh he leaves the campus that weekend whatever at this point he still believes reportedly that he's going to sign with rebot they're offering 100 million dollars so the draft is the lottery is the next week so his agent uh goodwin flies tells them to fly out rebot they send the lawyers they send a couple of the executives they fly to akron ohio or a hold up in a hotel and they're basically negotiating the terms eventually they raise their offer he's basically like pitching everyone against

Starting point is 00:09:09 each other right of course they raise the offer it gets up to like 115 million from reebok from reebok they are expected to sign them last minute phil knight authorizes it he says go higher go higher to nike to nike so they offer 87 million uh versus the 115 with an opportunity to basically get higher not to 115 but higher based on incentives with 10 million shining bonus etc so lebron picks nike over reebok that's a 28 million dollar uh discount was that the nike discount just is cooler just being good i mean they had good shoes people at that point uh athletes were leaving reebok because the shoes weren't great so like there was like you know they were offering more money they were trying to use him to build the brand all this stuff

Starting point is 00:09:53 but it's crazy to think now like reebok sold last year for two three billion dollars like lebron's deal so the the moral of the story right is like he gets his deal he's the number draft pick he has this incredible career whatever he's re-signed with nike twice since then right so he sent another deal in early 2010s and then he just signed another deal in 2016 i think uh that was a lifetime deal worth reportedly a billion over a billion dollars jeez so he's gonna be with nike forever now worth over a billion dollars he'll make from them so to think about that decision like basically he turned down 20 plus million dollars up front from reebok to go with the more established brand uh of nike and it turned into this massive partnership now where

Starting point is 00:10:33 it's probably one of the most lucrative in sports right behind michael jordan michael jordan has probably the best deal of all time which is the five percent royalty that he gets on all jordan brand sales so they don't give that out anymore well i don't know maybe he gets some royalty structure with his deal but the rumor is right it's worth over a billion um i find it hard to believe they're just paying them you know 30 million 40 million 50 million a year in cash it's kind of like don't you want to incentivize the guy to build the brand with you and what they're really going to do is most people expect them to roll out a similar strategy of what they've done with the jordan brand right they've already used lebron's logo on a couple college jerseys

Starting point is 00:11:07 right so they're starting to implement some of these things who knows obviously it's extremely difficult to build a business that jordan's built with nike but it wouldn't be surprising if that's what they try to do and if you're going to try to do that you probably want to incentivize the person to help blow this up and a royalty structure is is probably a pretty good way of doing that so maybe it's you know he gets some kind of caveat to it uh but he's he's reported to make over a billion dollars on the deal that is crazy yeah i mean you got to remember that this guy was literally he got in trouble for the jerseys in high school right like uh mary got the hummer yeah and everyone was freaking out and now he uh uh is signing billion dollar deals yeah he's got a building

Starting point is 00:11:47 named after him on nike's campus it just opened last year 750 000 square feet and like yeah this is the part that's crazy to me right like this is literally him in high school right the chosen one i always say it's the one thing that no one can take away from lebron james regardless of whether you like him on the court you don't like him you cheers for his team or you don't you like what he's done in the media you don't whatever the one thing that you can always say which is impressive to me at 16 years old he's on the cover sports illustrated as the chosen one the the pressure was unlike anything that anyone in sports probably has ever seen from high school all the way on up in the United States.

Starting point is 00:12:26 I can't think of a single scandal that he's been involved in. Yeah, not only that, he's exceeded the hype, right? From like even a basketball standpoint. When you're the chosen one, you're the number one pick. Like people expect you to have a great career, but like considered one of the best of all time, you know, top two. It's pretty remarkable that he's been able to do that given the pressure that he faced at such a young age.

Starting point is 00:12:46 do you think that you said top two not top three uh is kobe out of that conversation now yeah i mean i think uh like lebron to me is is the most talented player like physically i think probably in history uh but he just doesn't have the resume that matches up to like a jordan but you know kobe's right up there from a talent perspective i think he's probably slotted in three though yeah and then when you think about lebron how much of what he's doing now is only going to get uh put on steroids once he actually retires whether that's you know next year or five years from now uh because it seems like jordan obviously you know he had the brand and everything selling shoes when he's playing but it exploded afterwards is that the expectation yeah so we actually have

Starting point is 00:13:28 a chart here that shows jordan's earnings after he retired uh which is fascinating because it basically flatlined for a period of time and now he's making like over 150 million dollars each year like so this is jordan's earnings right this is his annual earnings according to forbes so So he was only making $20 million or so. So he retired in the early 2000s, right? His earnings declined dramatically because he no longer has the salary. So he's making in the early 90s about $20 million a year. Then it jumps all the way up to $80 million a year, kind of late 90s.

Starting point is 00:13:57 That's when he retires. It falls off a cliff, goes all the way back down to what looks like maybe $35 million or so. Yeah, $35. And stays there pretty much from 2000, almost to 2008 maybe, somewhere in there. And then it just explodes. Yeah. So the Jordan brand, obviously, they started putting much more juice behind it. And they've started building up the business.

Starting point is 00:14:14 And with that royalty structure, his earnings have grown along with it. Now he makes over $150 million a year from the Jordan brand, which is nearly two times as much as he made in his entire NBA career, right? So just from a dollar standpoint, it's absolutely incredible, the business that they've built. And he's benefited tremendously from it from a pure dollar perspective. Yeah. And how much of this is Jordan actually putting muscle behind the brand and driving it versus like someone at Nike was like hey we should really juice this like let's start diverting

Starting point is 00:14:44 marketing dollars well I think yeah so this this compares him to to other athletes today so this chart is uh maybe a couple years old at this point it's yeah January 2020 but I mean look at that size right there Micah Jordan had been retired for two decades and he was still making 130 million dollars a year from from the Jordan brand versus LeBron at 32 Kevin Durant at 26 etc yeah I'm surprised that LeBron is so close to I mean James Harden makes 50 percent of what LeBron James makes Yeah. I mean, that number's changed now that he signed the lifetime deal, I think, but, uh, uh, I don't know. I mean, look, there there's, and then there's a whole host of guys. I think there's like, uh, maybe there's like 16 guys that have signature shoes, right? So the market is pretty small relative to the total number of NBA players. Uh, but Jordan has just dominated it for so long. And to answer your question, I mean, Michael Jordan is, uh, certainly good on the business side. His name affords him a lot of these opportunities, of course, but he's done pretty well. You know, he owns the Hornets who have appreciated greatly. Obviously, part of that is just being involved in the NBA and the media rights and so forth.

Starting point is 00:15:46 But most of this is really Nike, right? They've said, hey, look, we have a jackpot here, some gold, and we're going to go pump this brand up because he's really not seen that much. Like, he doesn't market a lot of this stuff. He's not active on social media. He doesn't really have this massive audience or these platforms. It's really just his name, image, and likeness now that they use to promote all of this stuff. And the opposite of that, right, is LeBron James, where he is willing to put his name and like really promote some of these things, which I think is probably an underrated component.

Starting point is 00:16:13 Everyone says, look, LeBron's brand will never be Jordan's brand. Maybe that's true, but also I think people probably underestimate his ability to market some of this stuff. Yeah, it is incredible to see how well LeBron has done because if what happened with Jordan happens here, I mean he may make more than Jordan on the annual basis. Well, he's also much more active from an investment perspective. He puts his capital to work probably at a higher clip than Jordan does. Jordan relies on much more of his annual income and then spreads it around where he can, but that might give him the opportunity.

Starting point is 00:16:47 And with higher salaries, right? He's been making $30 million, $40 million a year for a while now. Yeah, it's pretty crazy. All right, where can we send people to find you on the internet, big dog? ReadHuddleUp.com. R-E-A-D, HuddleUp.com. Joe Pomp Show dropped this morning. This was actually a pretty cool episode.

Starting point is 00:17:07 Heider Rafiki from OKX told me exactly how they negotiated the deals, their sponsorship deals. Spent hundreds of millions of dollars with Manchester City and McLaren's F1 team walking through all the details. Yeah, he was like, here's all the goods. Here's exactly how it went down. I was like, oh, shit. It's pretty good.

Starting point is 00:17:25 Check it out. It's on the podcast. Joe's got the solves. Got the solves. Appreciate y'all. I appreciate you. We'll see you tomorrow. Thank you very much.

Starting point is 00:17:33 Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you're subscribed on Apple, Spotify, or your favorite podcast player. And if you're looking to try to transition to get a new job in the Bitcoin or crypto industry, we've got you covered. Head over to palmscryptocourse.com.

Starting point is 00:17:48 We've developed a curriculum with the top teams across the industry. It's a three-week intensive training program with over 50 events packed into that three-week time period. Go to palmscryptocourse.com to learn more and I'll meet you guys for the next episode.

The Pomp Podcast - #985 Joe Pompliano On How LeBron James Turned $10M Into $100M As A Rookie

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.