Perhaps Buffalo is not the ideal venue to celebrate a deal that will effectively make Connor McDavid a millionaire before he even sets foot on an NHL ice surface - might be rubbing it in just a little - but equipment giant CCM has a lot to celebrate next week. So does McDavid.
Next week at the annual NHL draft combine in Buffalo, CCM will announce it has extended its deal with the most hyped prospect since Eric Lindros for another five years. It’s a deal that will give the equipment company two of the most recognizable players in the game. But unlike his last deal with CCM during which he has earned a total of about $250,000 for his three years of junior hockey, it’s believed this one is worth $1 million a year, second only to the $1.4 million per year deal Sidney Crosby has, also with CCM. It’s also the richest endorsement contract ever signed by an NHL rookie, making him the league’s first-ever million-dollar endorsement baby.
Crosby stands to cash in as well. His deal with CCM-Reebok expires in the summer and the two sides are currently negotiating an extension. Crosby’s equipment deal is already the most lucrative endorsement deal for a player in NHL history and he’ll likely get a raise on it.
Jeff Jackson of the Orr Hockey Group, who negotiated the McDavid extension, refused to comment on the terms of the contract with CCM. But there’s little doubt CCM was eager to get McDavid locked up on a long-term equipment deal. McDavid would have been a hot commodity had he gone on the open market. It’s been speculated that Easton Hockey was prepared to offer both McDavid and Crosby a percentage of ownership in the company in exchange for their endorsements.
What makes McDavid’s deal so unique is not only the amount. It’s also the fact that if it is at the $1 million as has been speculated, it means he’ll earn more in endorsement money for the first three years of his career than he will in base salary. Under the terms of the collective bargaining agreement, an entry-level player can make a maximum of $832,500 in base salary, plus a $92,5000 signing bonus, although McDavid will have the chance to earn up to $2.85 million more in performance bonuses. (And McDavid will actually take home more from his contract with the Edmonton Oilers, since agents typically charge between two and four percent on playing contracts, but somewhere in the neighborhood of 20 percent for endorsement deals.)
McDavid will be the centerpiece of CCM’s “Made of Hockey” campaign and will be part of a company that will be increasing its presence in the hockey market in the next couple of seasons. CCM and Reebok, which are both under the umbrella of global giant Adidas, are in the process of rebranding themselves. By January, 2016 almost all of the hard equipment, sticks and skates will carry the CCM brand, with Reebok having only a very small presence in the marketplace. There had been rumors in the industry that with the exception of sweaters, Reebok would be entirely out of the hockey equipment business, but Reebok-CCM Hockey vice-president, sales and marketing Sean Williams said Reebok will continue to have a “very limited presence in the equipment market. But the focus will be CCM.”
And it looks as though Reebok’s presence in the NHL apparel market will be gone as well. The league deal with Reebok for apparel is set to expire after next season and when it comes up for renewal, it’s expected that either Adidas will be the brand that takes over the apparel market in Reebok’s place or it will go to another bidder. In fact, industry sources say Under Armour is poised to aggressively pursue the deal, which could be worth as much as $400 to $500 million over the next 10 years. The current deal with Reebok was for $160 million over 10 years. Should the NHL get the $500 million number, that would be worth $25 million a year to the league and $25 million to the players, since it would be considered hockey related revenue and would be split 50-50.
In any event, McDavid, Crosby and the NHL all stand to cash in over the next little while.