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

Joe Pompliano is the Founder of Huddle Up & the host of The Joe Pomp Show. In this conversation, Joe breaks down the bidding war to sponsor LeBron James coming out of high school. Joe talks about how LeBron turned his initial offer from Reebok into a $100M deal from Nike and how Nike structures their sponsorship deals today. ======================= Brave Wallet is the first secure crypto wallet built natively in a web3 crypto browser. No extension required. Store, manage, and grow your portfolio, get NFT & multi-chain support, and more. Download the Brave privacy browser at brave.com/Pomp, and click the wallet icon to get started. ======================= The Pomp Podcast is powered by BetOnline.ag, the world's largest sports betting, casino, poker and horse racing website that accepts cryptocurrency for wagering. BetOnline.ag gives you the ability to use Bitcoin and more than a dozen altcoins to make deposits and withdraw your winnings. There are no crypto transaction fees, and processing is instantaneous and secure. Visit https://promotions.betonline.ag/pomp and use PROMO CODE: POMP100 to receive a 100% matching bonus on any crypto deposit. BetOnline.ag is available in nearly every country around the world, making it the top global gaming destination for crypto users. =======================

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  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 was a fascinating story, and I 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 to you by FTX US.

• 0:43Anthony Pompliano?

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• 1:28Anthony Pompliano?

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• 2:10Anthony Pompliano?

  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. Just use ARC promo code POMP100 to get started.

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• 3:11Speaker 01

  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. This podcast is for informational purposes only.

• 3:34Anthony Pompliano?

  All right, what do you got for us today?

• 3:36Speaker 02

  All right, we're talking about LeBron James rookie deal. Nike turned down a $10 million check into a billion dollar deal with Nike.

• 3:44Anthony Pompliano?

  He turned down a $10 million check for a billion dollar Nike deal.

• 3:48Speaker 02

  Yeah, 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. 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. 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.

• 4:33Anthony Pompliano?

  Million guaranteed.

• 4:35Speaker 02

  Guaranteed, hundred million dollars. And as part of the deal, he tells this story, LeBron has told this personally, of an executive at Reebok. Writing, he, he, 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, you know? And then all of a sudden he pops up and he, he throws something over to LeBron. It's a $10 million check, literally that he just wrote out at the table, $10 million. Gave it to LeBron and said, you can cash this today, it's yours, but you can't go talk to Nike or Adidas.

• 5:09Anthony Pompliano?

  Oh damn.

• 5:12Speaker 02

  So I'm going to read you a quote. So I don't know if you guys remember LeBron had that show with 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 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 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.

• 5:51Speaker 02

  So then he continues and he goes, they asked him what happened. He's like, well, then I started thinking, if this guy, if he's willing to give me a $10 million check right now, what's to say Nike or Adidas isn't willing to give me 20 million? Or 30 million upfront, or maybe to say the upfront isn't what really matters? Maybe let's start thinking about the backend.

• 6:07Anthony Pompliano?

  Damn, so he was smart.

• 6:08Speaker 02

  Yeah. So he essentially was like, damn, this guy's about to write me 10 million bucks. Why is he going to do that? Right? And realized that maybe Nike or Adidas would offer something even better. So 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.

• 6:25Anthony Pompliano?

  Oh, wow.

• 6:25Speaker 02

  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 a Lakers playoff game at the Staples Center, courtside seats, and they watch Kobe drop 39 points on the Spurs in 2003. Then, the next day, they go out to Malibu, where Adidas rented a massive house on the beach overlooking the Pacific Ocean. They show him all the mockups, they show him this presentation, they show him all this stuff. Now, there's this guy, Sonny Vaccaro, who used to work at a-

• 7:06Anthony Pompliano?

  Legend.

• 7:07Speaker 02

  Yeah, legend. And so he worked for Adidas at this point, and he had hinted to LeBron and his agent that they were gonna give him a hundred million dollar deal. 10 years, a hundred million dollar deal, guaranteed 10 million a year.

• 7:17Anthony Pompliano?

  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, and he really-

• 7:26Speaker 02

  Very involved with Jordan's deals with Nike, etc. So now he goes, he had hinted at this to them supposedly. So they're expecting a hundred million bucks. All of a sudden, the paperwork comes down. He had talked to their bosses, everything. Last minute Adidas renegs on the deal. They offer him like 60 million bucks. And so way lower than he initially expected, not what he was told, right? So he goes home, he's like, alright, Adidas is out. And he had liked Adidas, but 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.

• 8:03Anthony Pompliano?

  Damn, you know LeBron's like, hey man, Adidas, y'all renting out properties? Nike got their whole campus that I get to go to.

• 8:09Speaker 02

  Yeah, so he goes to the headquarters. They set him up in this building. Supposedly 100 people worked on his pitch, on his presentation.

• 8:15Anthony Pompliano?

  Wow.

• 8:15Speaker 02

  They show him all this stuff, whatever. Nike was known as like the top dog already at this point, and they were expected to sign him, right? So he goes in there, they run through the whole pitch. They offered him actually less. They ended up offering him 70 million dollars, around 70 million dollars. So he had 100 from Reebok, 60 from Adidas, and then Nike offered about 70 million dollars with a signing bonus, but yeah, right around-

• 8:39Anthony Pompliano?

  And the total deal size was like maybe 87 million, I think, if I remember correctly?

• 8:43Speaker 02

  Later on. So he, it's offered 70 from Nike. He leaves the campus that weekend, whatever. At this- Point, he still believes reportedly that he's going to sign with Reebok. They're offering a hundred million dollars. So the draft is the lottery is the next week. So his agent, uh, Goodwin flies, tells them to fly out. Reebok, they send the lawyers, they send a couple of the executives, they fly to Akron, Ohio. Are holed up in a hotel and they're basically negotiating the terms. Eventually they raise their offer. He's basically like pitching everyone against each other, right?

• 9:10Anthony Pompliano?

  Of course.

• 9:10Speaker 02

  They raise the offer. It gets up to like a hundred and fifteen million.

• 9:14Anthony Pompliano?

  From Reebok.

• 9:14Speaker 02

  From Reebok. They are expected to sign them. Last minute, Phil Knight authorizes it. He says, go higher, go higher.

• 9:22Anthony Pompliano?

  To Nike.

• 9:23Speaker 02

  To Nike. So they offer eighty seven million, uh, versus the hundred and fifteen. With an opportunity to basically get higher, not to a hundred and fifteen, but higher. Based on incentives with ten million dollar shining bonus, et cetera. So LeBron picks Nike over Reebok.

• 9:38Anthony Pompliano?

  That's a twenty eight million dollar, uh, discount. Was that the Nike discount just is cooler?

• 9:42Speaker 02

  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 of this stuff. 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 one draft pick. He has this incredible career, whatever. He's resigned with Nike twice since then, right? So he signed another deal in the early twenty teens. And then he just signed another deal in twenty sixteen, I think. That was a lifetime deal worth reportedly a billion, over a billion dollars.

• 10:17Anthony Pompliano?

  Jeez.

• 10:18Speaker 02

  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 twenty plus million dollars upfront from Reebok. To go with the more established brand, uh, of Nike. And it turned into this massive partnership now where 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.

• 10:45Anthony Pompliano?

  So they don't give that out anymore.

• 10:46Speaker 02

  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 him, you know, thirty million, forty million, fifty million a year in cash. It's kind of like, don't you want to? incentivize the guy to build a 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 of college jerseys, 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 probably a pretty good way of doing that. So maybe it's, you know, he gets some kind of caveat to it.

• 11:29Speaker 02

  But he's, he's reported to make over a billion dollars on the deal.

• 11:32Anthony Pompliano?

  That is crazy.

• 11:33Speaker 02

  Yeah.

• 11:33Anthony Pompliano?

  I mean, you gotta remember that this guy was literally, he got in trouble for the jerseys in high school, right? Like, remember he got the Hummer?

• 11:41Speaker 02

  Yeah.

• 11:41Anthony Pompliano?

  And everyone was freaking out. And now he is signing billion dollar deals.

• 11:46Speaker 02

  Yeah, he's got a building 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.

• 11:58Anthony Pompliano?

  I always say, 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 cheer 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 of 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. I can't think of a single scandal that he's been involved in.

• 12:30Speaker 02

  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, at such a young age.

• 12:47Anthony Pompliano?

  Do you think that, well, you said top two, not top three. Is Kobe out of that conversation now?

• 12:52Speaker 02

  Yeah, I mean, I think like LeBron to me is is the most talented player like physically. I think probably in history, 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.

• 13:08Anthony Pompliano?

  Yeah. And then when you think about LeBron, how much of what he's doing now is only going to get put on steroids once he actually retires, whether that's, you know, next year or five years from now, because it seems like Jordan, obviously, you know, he had the brand and everything, he sold his shoes when he was playing, but it exploded afterwards. Is that the expectation?

• 13:27Speaker 02

  Yeah. So we actually have a chart here that shows Jordan's earnings after he retired, which is fascinating because it basically flatlined for a period of time. And now he's making like over $150 million each year. Like, so this is Jordan's earnings, right? This is his annual earnings, according to Forbes.

• 13:43Anthony Pompliano?

  So he's only making 20 million or so.

• 13:45Speaker 02

  So he retired in the early 2000s, right? His earnings declined dramatically because he no longer has the salary.

• 13:50Anthony Pompliano?

  Well, 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. 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.

• 14:02Speaker 02

  35.

• 14:03Anthony Pompliano?

  And stays there pretty much from 2000, almost to 2008, maybe somewhere in there. And then it just explodes.

• 14:09Speaker 02

  Yeah. So the Jordan brand, obviously, they started putting much more juice behind it and they've started building up the business. And with that royalty structure, his earnings have grown along with it. Now he makes over $150 million a year from the Jordan brand.

• 14:21Anthony Pompliano?

  Jesus.

• 14:21Speaker 02

  Which is nearly two times as much as he made 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.

• 14:33Anthony Pompliano?

  Yeah. And how much of this is Jordan actually like 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 marketing dollars.

• 14:45Speaker 02

  Well, I think, yeah. So this this comparison to to other athletes today. So this chart is maybe a couple of years old at this point. It's, yeah, January 2020. But, I mean, look at that size right there. Michael Jordan had been retired for two decades and he was still making $130 million a year from from the Jordan brand versus LeBron at 32, Kevin Durant at 26, et cetera.

• 15:03Anthony Pompliano?

  Yeah, I'm surprised that LeBron is so close to, I mean, James Harden makes 50% of what LeBron James makes.

• 15:09Speaker 02

  Yeah. I mean, that number's changed now that he signed the lifetime deal, I think. But.

• 15:14Speaker 02

  I don't know. I mean, look, 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. But Jordan has just dominated it for so long. And to answer your question, I mean, Michael Jordan is 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 are have appreciated greatly. Obviously, part of that is just being involved in the NBA and the media rights and so forth. But most of this is really Nike, right? They've said, hey, look, we have a jackpot here, some gold, and we're gonna 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

• 15:59Speaker 02

  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. 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.

• 16:22Anthony Pompliano?

  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.

• 16:33Speaker 02

  Well, he's also much more active from an investment perspective. Like, he puts his capital to work, so probably at a higher clip than Jordan does. Jordan relies on much more of this annual income and then, you know, spreads it around where he can. But that might give him the opportunity and with higher salaries, right? Like, he's been making, you know, 30, 40 million dollars a year for a while now.

• 16:52Anthony Pompliano?

  Yeah, it's pretty crazy. All right. Where can we send people to find you on the internet, big dog?

• 16:58Speaker 02

  ReedHuddleup.com. R-E-A-D Huddleup.com. Joe Pomp Show dropped this morning. This was actually a pretty cool episode. Hyder 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, walked me through all the details.

• 17:17Anthony Pompliano?

  Oh.

• 17:18Speaker 02

  Yeah, he was like, he was like, here's all the, all the goods.

• 17:20Anthony Pompliano?

  You got the sauce.

• 17:21Speaker 02

  Here's exactly how it went down. I was like, oh, shit. It's pretty good. Check it out.

• 17:26Anthony Pompliano?

  So on the podcast, Joe's got, uh, got the, got the sauce.

• 17:28Speaker 02

  Got the sauce. Appreciate y'all.

• 17:30Anthony Pompliano?

  I appreciate you. We'll see you tomorrow. Thank you very much. Thanks so much for listening to today's episode. I really hope you guys enjoyed this one. Make sure you subscribe 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 pompscryptocourse.com. 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 pompscryptocourse.com to learn more and I'll meet you guys for the next episode.