CONGRATULATIONS : LeBron James now the ambassador of adidas and …

Why Does a LeBron “Lifetime Deal” Matter?

LeBron James almost wore adidas. James was still in high school and being pitched by sneaker consultant Sonny Vaccaro to say no to Nike and instead wear the adidas brand.

Vaccaro purportedly received authorization to provide James with a 10 year, $100 million contract to become the face of adidas basketball, but there were strings attached. The base compensation was actually $7 million per year with added incentives therein, which could potentially boost the overall amount received by James.

Nike prevailed to the tune of 7 years and $90 million to lock up LeBron. Now, the swoosh does not want to even come close to losing him. That is why a “lifetime deal,” in whichever way it is crafted, is worth it to the Nike brand; adidas had a shot at James once and Nike will not let the idea of a change to even come close to crossing his mind.

What Does a “Lifetime Deal” Between Nike and LeBron Even Mean?

At least at the moment, it is impossible to tell what lies within the document that is being described as a “lifetime deal.” It may be assumed that the term of the contract, which typically stipulates how long a contract will be in effect, is set to expire upon James’ death.

Most likely, the compensation section of the agreement includes a payment schedule that explains the amount of money James is set to receive on a yearly basis, with static (or slightly changing) payments to be made well into James’ retirement. Similarly, James’ obligations to be an ambassador of the brand should stretch into the later years of his life.

Michael Jordan’s agent David Falk estimates Nike’s deal with James to be $400 million to $500 million, which provides a large range.

Expect to be buying James’ basketball sneakers the same way you purchase Michael Jordan’s shoes, even though he has gone from basketball player to team executive. It is likely that James will receive royalties based on sales of his sneakers in addition to the base compensation that reportedly blows Durant’s deal out of the water.

So Nike and LeBron Live and Die With Each Other?

Basically, what Nike does will reflect either positively or negatively on LeBron’s brand and vice versa, with James’ on and off court acts being more likely to influence the perception of the swoosh. The two brands are so intertwined as is, that the “lifetime deal” only further establishes the marriage.

A divorce is unlikely, but it would likely be ugly.

LeBron scores LIFETIME deal w/ Nike. Such deals are virtually unheard of b/c the brand is betting the athlete will never have a scandal.

— Daniel Roberts (@readDanwrite) December 7, 2015

Even a “lifetime deal” should have a termination provision, which may allow Nike to back out if James wears or uses products of a competitor or if James commits an act that violates widely-held principals of public morality or decency (commonly referred to as a “morals clause”). It would be surprising if, at a minimum, Nike failed to negotiate an out if James is convicted of a felony.

Thus, a “lifetime deal” may not necessarily be for life if there is a right to terminate by either party. Furthermore, nothing prevents a party from breaching a contract. It just means that the breaching party may have to make the other party whole, often through payment of money (referred to as damages).

Why is it a Win for LeBron and Nike?

Nike is still the preeminent basketball apparel brand, but it continues to have a competitor in adidas and more recently Under Armour .

James is still king of the NBA, but many have begun to think that the throne is being passed to players like Stephen Curry.

Nike is James and James is Nike, but as stated by Artistotle, “the whole is greater than the sum of its parts.” Together, locked in for life, Nike and James achieve more and are further destined for success.