Is Cristiano Ronaldo’s $1 Billion Nike Deal a Bargain?
Professional athletes aspiring to dethrone Cristiano Ronaldo as Forbes’ richest athlete might have to put in some extra time gym time. News broke last month that Ronaldo inked a contract with Nike that will reportedly yield him an estimated $24 million per year for the remainder of his life. Ronaldo stands to make more than $1 billion from the landmark deal.
Nike’s lifetime deal with global soccer icon Cristiano Ronaldo is only the third deal of its kind for the $31-billion-in-revenue sports giant, and represents the first non-basketball player to acquire one. The two other athletes are LeBron James, who inked his own lifetime contract (for an undisclosed amount) 12 months ago, and Michael Jordan, who is presumed to have a “lifetime” deal as the name and logo of the Nike-owned Jordan brand.
A contract worth a potential dollar amount north of $1 billion might seem like a lot, but according to a news report from Hookit, a firm that measures the social and digital media value for brands, Nike’s contact with Ronaldo is a steal. They found that Ronaldo’s massive social media presence generated a staggering $474 million in value for Nike this year alone.
“Cristiano is one of the top influencers on the planet who has effectively leveraged his social following and engagement into a media powerhouse to drive tremendous value for his sponsors,” says Hookit co-founder Scott Tilton. “He’s been incredibly effective at integrating his sponsors into the content he shares with his over 240 million global followers.”
Ronaldo’s most valuable post from 2016 was on Instagram after Ronaldo led Portugal to the Euro 2016 title as team captain. Nike’s slogan “Just Do It” was the hashtag, while the same slogan as well as the Nike Swoosh were both in the image for a post with 1.75 million likes and nearly 13,000 comments. Acording to Hookit, the payoff was a staggering $5.8 million in media value for Nike.
While social media marketing metrics and KPIs have been notoriously nebulous with respect to their effects on a company’s bottom line, it would appear the value of Ronaldo’s social media presence combined with the cleats/boots and apparel he helps Nike sell is above and beyond the value of Ronaldo’s contract with Nike. Soccer generates more than $2 billion annually in revenue for Nike.
Whether an endorsement contract or an M&A transaction, every negotiation is unique and needs to be approached with the proper strategy and insight. Talley & Company is uniquely equipped to provide the technical and managerial expertise to help you plan, negotiate, structure and execute on your acquisition strategy.