Allen Iverson officially retired from the NBA in 2013 but thanks to Reebok, he’s still receiving $800,000 a year. Better yet, the 11-time All-Star can collect another $32 million bonus from the athletic shoe company in 10 years.
Iverson celebrated his 45th birthday this week. That’s the earliest age at which NBA players can start taking their league pensions. But Iverson won’t need to tap his pension early because of the deal he made with Reebok in 2001.
Lifetime Deal Works for Both Iverson and Reebok
Iverson was famous on the court. He was the NBA’s No. 1 draft pick in 1996 and lived up to his promise. People still talk about the opening game of the 2003 playoffs when the Sixers guard scored 55 points. Unfortunately, Iverson was also famous off the court — for living beyond his means.
Iverson eventually blew all of his NBA earnings on cars, gambling, jewelry, and mansions. There’s even a story that he bought a new car because he couldn’t remember where he parked his old one at the airport. But the one thing he couldn’t spend were his future payments from Reebok. And that saved him.
In his rookie year, Iverson signed a $50 million, 10-year, endorsement contract with Reebok. In 2001, Reebok upped their investment in Iverson and offered him a lifetime deal. They would pay him $800,000 a year and, in 2030, he could get access to a $32 million trust. Due to his 2013 divorce, Iverson will get half that amount.
Reebok, now a subsidiary of Adidas, still swears by their investment, especially in the all-important Chinese market.
“He has a place in our heritage, and there is a group of consumers who want to connect to that,” Reebok CEO Matthew O’Toole said. “He’s an iconic personality. Let’s get on a plane to Shanghai together. You bring Allen Iverson into a market like that. I’ll stand firmly that he as a big place in basketball and sports history.”
Iverson and Reebok also still join forces for social projects. Early this year, Iverson and Reebok pledged to cover the college application fees for Bethel High School’s 2021 graduating class.
Deferred Payment Deals Gone Wrong
Not all long-term contracts work to both parties’ benefit. In fact, the sports industry is known for its notoriously bad deferred payment plans. Perhaps the most famous is Bobby Bonilla’s.
The New York Mets let Bonilla go before the 2000 season, but still owed him $5.9 million. Rather than paying off his contract that year, the Mets agreed to pay him $1.19 million every year from 2011 through 2035 — totaling nearly $30 million.
In hindsight, it seems like a bad decision by the Mets’ owners. But it is actually worse. The reason the Wilpons wanted to defer Bonilla’s payment was because they were making so much money on their investments. They didn’t want to cash out the $5.9 million. The only problem was, the Wilpons were invested with the Ponzi schemer, Bernie Madoff.
Another notoriously bad deferred payment plan was the one crafted by the Atlanta Braves. In 1984, the Braves signed pitcher Bruce Sutter.
Sutter’s contract included six, $750,000 annual payments for his six-year deal, but these were only interest payments on his MLB contract. After that, Sutter would receive annual payments of a minimum of $1.12 million (depending on the interest rate) for 30 years. In 2022, Sutter will receive a final payment of $9.1 million.
As it turned out, Sutter only played three years for the Braves. He’s been collecting his deferred payments ever since.
In retrospect, Iverson and Reebok did alright by each other.