Is a $200 Million Endorsement Worth $200 Million?

james-hardenA few minutes ago I read that Adidas gave NBA star James Harden a 13-year, $200 million endorsement deal to wear their shoes on and off the court.

That’s a staggering amount of money. In fact, I wondered for a few seconds if Adidas even makes that much money, but I took a look at their financial reports…yeah, they make a lot of money. Like, tens of billions of dollars each year.

So they can afford it. But, still: Do endorsements reap financial rewards equal to or greater than the investment?

I must be thinking too small about this, but I just can’t imagine that one basketball player has that much of an impact on buying behavior. It’s not like Harden has his own brand of shoes for Adidas. There are no Air Hardens. Adidas is literally just paying him to wear their shoes.

Walk me through this process. Do kids see Harden wearing Adidas, inspiring them to go buy Adidas shoes? Or does it plant the seed in their head that Adidas is cool, so someday they buy Adidas? Do all of those kids (and adults) possibly add up to $200 million in profit over the next 13 year?

Perhaps I’m missing something big here. Adidas knows what they’re doing. Am I vastly underestimating the power of celebrity endorsements?