Derrick Rose was on top of the basketball world in February 2012. The point guard was the NBA’s reigning MVP after averaging 25 points per game and leading the Chicago Bulls to the NBA’s best record during the prior season. At 22, Rose was the youngest player ever awarded the MVP trophy. He was playing in his third straight All-Star game and in the process of leading the Bulls to the top of the NBA standings once again (they finished tied with the Spurs).
Adidas targeted Rose as its ticket to dent Nike’s monopoly in basketball. Three years ago this month, the German sportswear giant inked Rose to the richest individual endorsement contract in the history of sports (Kevin Durant’s Nike deal has since exceeded it). Rose’s 13-year deal, which kicked in with the 2012-13 season, was worth $185 million and potentially more based on sales of Rose’s signature shoe. The sky was the limit for Rose and Adidas.
Rose’s season is likely over after his third major knee injury in three years.
And then the bottom dropped out. Rose tore his left ACL two months later against the Philadelphia 76ers in the Bulls first playoff game of 2012. The injury sidelined Rose for the entire 2012-13 season. He played 10 games to start the 2013-14 season before surgery to repair the medial meniscus in his right knee ended his year and the Bulls’ championship hopes. The latest cruel blow was delivered Tuesday night when the Bulls announced Rose has a torn meniscus in his right knee and will undergo surgery. Rose will likely be sidelined for the rest of the season, although a firm timetable will not be known until after surgery. He has played in only 56 NBA games over the last three years. Rose has two seasons and $41.4 million remaining on the five-year, $94 million deal he signed with the Bulls at the end of 2011.
Adidas ran an extensive ad campaign on the “Return of D Rose” after his first knee injury. It highlighted Rose’s determination and comeback to return to the court. The campaign turned awkward when Rose was questioned repeatedly why he did not return to play in games during the 2012-13 season, despite practicing the last few months of the season. It will be hard for Adidas to use Rose in major ad campaigns after this third major knee injury. At this point, he almost represents a sunk cost.
Rose’s signature Adidas shoe struggled to make headway against Nike with Rose on the sidelines. Adidas sold $25 million worth of Rose sneakers in 2012 and $40 million in 2013, according to SportsOneSource. Nike’s top guys moved $300 million (LeBron James) and $175 million (Kevin Durant) of product in 2013. The Jordan Brand is still Nike’s meal ticket with more than half of the market and $2.25 billion in retail sales in the U.S. in 2013. Adidas’ market share in basketball remains in the low single digits with Nike, including its Jordan Brand, topping 95% most months.
Adidas is working to expand its offerings beyond just Rose. It launched the first signature shoes over the last six months for a pair of young guards, Damian Lillard of the Portland Trail Blazers and John Wall of the Washington Wizards. Lillard’s Adidas deal could be worth as much as $100 million over 10 years, although the base is thought to be closer to $4 million a year. Adidas signed the top pick in the 2014 draft, Andrew Wiggins, to a $2 million a year deal this summer. It remains to be seen if any of these three can move product. Adidas also has big men like Tim Duncan, Dwight Howard and Joakim Noah under contract, but these guys are not selling shoes to any extent. Howard’s signature shoe had only $5 million in retail sales in 2013.
The Bulls were one of the favorites to win the NBA title with Rose rounding into form before the All-Star break, but those chances likely went up in smoke Tuesday night (the title odds fell from 8-1 to 20-1 at the WestGate SuperBook). Adidas hopes its prospects in the basketball shoe market didn’t just do the same.
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