Sports Finance Report: Kanye West Is Not the Highest Paid Person in Footwear, Top Adidas Exec Steps down

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Kanye West Is Not the Highest Paid Person in Footwear, Top Adidas Exec Steps down

Kanye West made several outlandish claims on Wednesday, including an assertion that he’s “currently the single highest paid person in footwear” meaning, “I make more money on shoes than Michael Jordan.” He added that he expects his label to do $1 billion in 2018 sales (for comparison purposes, Jordan Brand did $3.1 billion in ’17), that the brand is the 2^nd fastest growing business in history and that the company is on its way to becoming a decacorn ($10 billion valuation, would need to do $3 billion in sales annually). In other Adidas news, President Mark King has announced he will be stepping down effective July 1^st; to be replaced by Zion Armstrong.

Howie Long-Short: Mark King has been credited with spearheading the company’s U.S. turnaround, so his loss hurts. In addition to perception changing collaborations developed with celebs like West and Pharrell Williams, he built a pipeline of desirable lifestyle (and retro) sneakers (Superstar, NMD, Stan Smith) and landed marquee sneaker and apparel contracts with Louisville, Miami, Texas A&M and Kansas.

Adidas sales were up 35% YoY in fiscal 2017, enabling the company to surpass Jordan Brand in U.S. sneaker sales and Under Armour in apparel sales. ADDYY will release Q1 ’18 earnings results on May 3^rd.

Fan Marino: While it’s possible West earns more on per pair basis, there’s simply no chance he’s out-earning Jordan. His signature line is produced in such limited quantities and so few times/year (just 12x), that it couldn’t possibly generate comparable revenue. Jordan earned $110 million in 2017 royalties, 3x more than the next highest paid athlete (LeBron James). To put that number in perspective, West’s 2013 contract with Adidas in its entirety, was worth less than 10% of that figure ($10 million); he has since signed a new deal. Of course, West doesn’t just trail Jordan; he’s certainly behind Nike Chairman Emeritus Phil Knight too. Knight’s company did $34.35 million in 2017 sales. It must be noted that West has been acting erratically of late, earlier this week he fired his long-time manager Scooter Braun to “leave the traditional music business.”

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A.S. Roma Sign’s Massive Shirt Sponsorship Deal, Share Price Drops with Semi-Final Leg 1 Loss

A.S. Roma has announced the largest sponsorship deal in club history, a 3-year pact (begins in ’18-’19) that will make Qatar Airways the club’s official shirt sponsor through the ’20-’21 season. The deal, worth $48.7 million/season (or +/- 2.5x the NBA’s most valuable patch partnership), is among the largest ever signed by an Italian futbol club. The logo of Qatar’s state-owned airline will “adorn the front of the first team’s shirts” and the company will serve as the top flight Italian soccer side’s “Main Global Partner.” Qatar Airways becomes just the 7^th kit sponsor in the club’s 90-year history; the first team has played without a shirt sponsor since the ’14 season.

Howie Long-Short: Limited shares of A.S. Roma trade on the Borsa Italiana under the symbol ASR (OTC: ASRAF). Interestingly, the share price over the last 30 days has mirrored the first team’s success (or lack thereof) on the pitch. When the club stunned Barcelona (overcoming a 4-1 loss in Leg 1) on April 10^th to advance to the Uefa Champions League semi-finals, the share price jumped 22% to $.73; by Tuesday morning it had risen to $.82. The team dropped the first leg of the semi-finals (to Liverpool, 5-2) on Tuesday afternoon and the share price began to dip in after-hours trading; by Wednesday’s close, shares were down -14.7% (to $.70) from Tuesday’s high.

While stock performance has little correlation with wins and losses in North America (see: MSG +48% since Oct. ’15, Knicks winning percentage over same span is .374, RCI hit a 5-year low during the Blue Jay’s first trip to the playoffs since ’93 in ‘15), it requires a closer look in Europe. Like Roma, MANU is having a strong season on the pitch ranked 2^nd in the EPL standings; since the club’s August 12^th EPL season opener, shares are up 14% (to $19.10). JohnWallStreet will take a deeper dive the correlation between on-field performance and the share price of publicly traded European clubs, in the coming weeks.

Fan Marino: ASR is playing in the Uefa Champions League semi-finals for the first time in 34 years, but the club is going to need a dominant performance (at least a 3-goal victory) on May 2^nd (2^nd leg), to qualify for the final. Of course, had the team not scored 2 late goals (they trailed 5-0 in Leg 1); all hope would have dissipated. For those wondering, Real Madrid and Bayern Munich are competing in the other semi-final; Real Madrid won the 1^st leg 2-1 on Wednesday afternoon.

U.S. soccer fans will have a chance to catch A.S. Roma (+ Liverpool, Real Madrid and Bayern Munich) live in action this summer. Beginning on July 20^th, 18 of the world’s top club teams will compete in the 6^th International Champions Cup presented by Heineken. The event’s 27 matches are spread across 3 continents (North America, Europe and Asia), with 17 on U.S. soil; Roma will play in East Rutherford (NJ), San Diego and Dallas. You can find full schedule and ticket info, here.

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