Kevin Durant's representation, Roc Nation Sports, informed Nike on Wednesday that he has a deal on the table with Under Armour worth between $265 million and $285 million over 10 years, sources told ESPN.com.
The deal includes Under Armour stock and other incentives such a community center built in his mother's name whose exact worth will not be known for some time.
Nike, which saw its signature business related to the Oklahoma City Thunder forward grow to roughly $175 million at retail this past season, will now have the right to match, which is a condition of Durant's current contract with the brand. Durant can still choose Nike if they don't match, but can't legally choose Under Armour if they do.
Nike's last offer, sources said, would have given Durant a base and a minimum royalty guarantee that would equal no less than $20 million a year.
If Under Armour wins the services of Durant, it would be the largest sponsorship deal the company has ever committed to. The average of $26.5 million to $28.5 million means that Under Armour would be devoting nearly 10 percent of its current annual marketing budget on him. Although Under Armour has given investors guidance that it might hit $3 billion in revenues this year, only about one percent of that is from basketball shoes.
Because Under Armour has such a small basketball business, the company has to guarantee Durant his money up front, instead of the typical shoe deals that offers a minimum guarantee plus up to five percent royalty on the wholesale revenues. Michael Jordan, for example, made more than $100 million last year from Nike largely from royalties on sales of his Jordan brand.
Durant's potential move to Under Armour, despite the lure of more guaranteed money, is surprising if only for the fact that he was one of the most loyal Nike athletes.
In 2007, before he played in his first NBA game, he wanted to sign with Nike badly enough that the $60 million contract he signed with the Swoosh was more than $20 million less than what Adidas had offered.
But sources say his move to Jay Z's Roc Nation last summer started to turn the tables. His new agents were interested in a stronger negotiation, which would include both Under Armour and Adidas, which dropped out last week.
Durant's shoe deal free agency to Under Armour turned out to be a bigger deal because of the interest expressed by the company's founder and CEO, Kevin Plank. Sources say Plank felt Durant could accomplish two major goals including growing its small shoe business and improving its international presence that has been lagging behind its North American sales growth.
Making things more appealing was the fact that Under Armour is a Baltimore-based company.
Durant is a local kid having grown up in Seat Pleasant, Maryland, 36 miles southwest of Under Armour's headquarters, and the company has a record of spending marketing dollars in the community.
The company sponsors the Baltimore Marathon, put its name on the Baltimore Ravens' practice facility and training center, backed native and Olympic great Michael Phelps and recently added nearby Navy and VMI to its stable of schools, which includes Plank's alma mater, Maryland, for which it makes shoes and uniforms.