Marvin Bagley III has signed a 5-year footwear and apparel deal with Puma, rumored to be worth up to $9 million annually, the largest rookie shoe deal since Kevin Durant signed a 7-year $60 million deal with Nike in 2007. Bagley, projected to be a Top 5 selection in Thursday evening’s NBA draft, will become the first NBA player to be sponsored by Puma since Vince Carter signed a 10-year $50 million deal with the company back in 1998; Carter terminated the deal in his Sophomore season to sign with Nike. Puma is negotiating with several other rookies (Trae Young has been mentioned) in the 2018 draft class and will reportedly target veterans with expiring shoe contracts later this fall, as the company looks to re-enter the lucrative U.S. performance basketball shoe market (down 13% from $1.3 billion peak in ’15).
Howie Long-Short: Puma is coming on strong and now taking aim at the U.S. market; in addition to their aggressive basketball ambitions (Nike controls 81.3% of the market including Jordan brand), the company announced it has signed a lease for 24,000 SF on 5th avenue for a North American flagship store. Puma has surpassed Under Armour and is now third in sales among athletic apparel brands, behind just Nike and Adidas.
Puma SE, a subsidiary of Kering, trades over-the-counter under the symbol PMMAF. The German athletic footwear and apparel brand reported net profit rose +36% YoY (to $82.5 million) in Q1 ’18, with sales increasing double-digits across all product categories and markets (+15.6% in U.S.). China/Asia experienced “exceptionally high growth” (+35%), while the running, training and sportstyle categories grew the fastest. PMMAF also increased FY18 sales (from +10% to +10%-12%) and EBIT (from $354-$377 million to $360-$383 million) guidance during the April earnings call.
Fan Marino: Nike won’t be pleased with this decision, considering they’ve been paying for Bagley’s allegiance since 2012. In 2008, the Bagleys filed for Chapter 7 bankruptcy, claiming household income of $44,000. Four years later, shortly after Nike sponsored the Phoenix Phamily (the team Bagley III played on, coached by Marvin Jr.), the family moved into a California home estimated to be worth between $750,000-$1.5 million; rent in the area ranges from $2,500-$7,500/mo. The elder Bagley has acknowledged the family used Nike money to “make ends meet.”
That kind of arrangement isn’t atypical, The Oregonian released a piece back in March detailing how sneaker companies skirt NCAA regulations by targeting the family members of star prospects who control their own AAU programs; offering a “blank check” for their allegiance. What is unusual, is Bagley took Nike money and then signed with Puma; analysis of 2017 NBA first round picks indicates that most players signed professional shoe deals with the company that sponsored their grassroots team. It’s worth noting that Bagley’s deal with Puma includes a commitment from the brand to continue funding his father’s AAU program.
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