Success in capitalism = selling out

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[From Stephen B. Snyde for Friday tidbits...]

The term "sell out" has such a bad connotation in everyday society, but did you know that more often than not, financial success in the capitalistic world requires you to sell out? The funny thing about it is when you sell out, usually you take the heart and soul of what you built with you. Unless you're Phil Knight and you take Nike public, in which case you are allowing the general public to become co-investors in your company. Or you're Jay Z, who sold Rocawear for something like $300 million, plus he retained around 20% equity (damn smart).

Remember, 50 Cent wasn't a founder of Vitamin Water. The founders sold him a 20% stake. If you're the original owners of Vitamin Water, you just made an insane amount of money (they are probably billionaires -- look out, NBA ownership!), but the tradeoff was that you gave up the excitement of being its heart and soul. That's the price of for-profit.

Anyhow, the point of this post is that the And1 apparel/shoe line and the And1 Mixtape Tour long ago sold out to the makers of Avia (remember when Avia and the Nike Air Revolution were the hot high school team buys back in the late 80's?). And all this time you could have sworn Avia was bankrupt and And1 was on its way to becoming a mini-Nike. I remember reading about the young founders of And1 way back when. Wonder what they are doing now. Probably still playing ball somewhere, dreaming up the next hoop fashion line (that's passion).

In fact, as Joe Vecsey reports for Bounce Magazine, not even the And1 Mixtape Tour will ever be the same. The original founders have broken off into a splinter group called Ball4Real and will go heads up against And1 Mixtape. Now I have to disgustingly hit the channel button at 1:00 in the morning to be cleansed of streetball twice?

Even as a non-fan of And1, in truth I (and Poor Man's Commish) am saddened by the reality of And1 now being another brand name. We respect passion for the game, even if we're not on the same team. Is that passion there behind the And1 "product" anymore? I don't think the motivation is the same. Best of luck to Ball4Real, but it's like the Terminator movies: humans vs machines.

RIP

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Hoops rule the almighty dollar

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Sports Illustrated just released its list of Top 50 highest-earning American athletes, which includes salaries and endorsements.

One thing we ballaz can be proud of: 4 of the top 10 are hoopsters Shaquille O'Neal, Kobe Bryant, LeBron James (who will surely move up now that his NBA salary is set to be the max), and Kevin Garnett. Just goes to show you that hoop rules the almighty dollar. Aside from LeBron, each of the stars was making about $20 million in salary and $15 million in endorsements, with KG making "only" $8 million in endorsements.

And before you start suggesting otherwise, don't forget about the recent $4 billion cash buyout of Glaceau, maker of Vitamin Water, by Coca-Cola. The May issue of Swish Magazine profiled Vitamin Water and not only did rapper 50 Cent make out with 10% or $400 million from the acquisition, but so did a large handful of NBA stars...

"I've got shares of stock, they give everybody shares in the company," says Dallas Mavericks swingman Josh Howard of his relationship with Glaceau. "They've also shown my camps a lot of support over the last year and a half. They come out to my underprivileged camps. When I was out there in Vegas (for All-Star) I did some events for them, just trying to help put their name out there. I'm pretty involved and I appreciate them. It's really a family-oriented business and an up-and-coming company, so Gatorade better watch out."

Whoa, Howard's gonna appreciate them, you bet. Back in my days as a Silicon Valley venture capitalist, it wasn't uncommon for startup companies to give out 0.25% in stock to people who sit on the Board or help out in other ways.

Let's see, 0.25% of four billion is TEN MILLION DOLLARS. OK, even if it was as low as 0.1% (I'd be surprised if it was that low), that's still four million! Just for pitching Vitamin Water, getting a few cases stocked in your fridge each month for free, and doing all of that for all stock and no cash. Howard, Chauncey Billups, Tracy McGrady, Shaq, Gilbert Arenas, Allen Iverson, Ray Allen, Tony Parker, Elton Brand, and Shawn Marion -- far outnumbering stars from other sports on the Vitamin Water roster -- just blew the Sports Illustrated average for endorsements out of the "water".

If they included the Vitamin Water deal, you'd probably see that at least 6 or 7 of the top 10 American athlete moneymakers are NBA stars.

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