✔️ Why Are So Many Athletes Leaving Nike?

In the last 30 days my platform has grown somewhat.

• I have crossed 1,000 followers on Instagram

• I have crossed 1,000 followers on TikTok

• I have doubled my YouTube subscribers in the last 28 days and will soon cross 400.

More importantly there are double the amount of readers of this newsletter today than there were on March 1st.

If you are new here, welcome to The Long Play.

The business behind sport fascinates me and I intend to bring you much more content as we gear up for a mammoth year.

Today, we start with an interesting trend I see emerging at the moment. Something that I never thought I would see happen.

Athletes are leaving Nike! Nike have had a strangle hold on sports apparel for decades but for the first time ever, that dominance is beginning to wane. Today we explore.

On February 12 Tiger Woods announced the launch of his new apparel company Sun Day Red.

The company is Tiger’s own apparel firm distributed under the Taylor Made umbrella, company owned by Adidas.

Despite people celebrating Tiger’s solo venture it had me scratching my head as Tiger Woods and Nike are a partnership I never imagined would come to an end.

It made me wonder why Tiger is the latest athlete following Roger Federer, Neymar, Raheem Sterling and Harry Kane to leave Nike. It made me wonder why Nike and Tiger couldn’t collaborate on this venture together.

It made me wonder if Nike are… in trouble?

So I set out on a journey to try and find out other athletes who have left. And boy, was I surprised at the list. Let’s take a look at the footballers alone:

Puma

• Kyle Walker ⚽️

• Ederson ⚽️

• Robert Lewandoski ⚽️

New Balance

• Bukayo Saka ⚽️

• Raheem Sterling ⚽️

• Endrick ⚽️

Adidas:

• Raphael Varane ⚽️

• Robert Lewandoski ⚽️

• Casemiro ⚽️

• Ousmane Dembele ⚽️

• Sergio Ramos ⚽️

• Thiago Alcantara ⚽️

• Anthony Martial ⚽️

Thats a long list.

Everyone listed above however is a male athlete. Perhaps the most concerning were two elite female athletes who left Nike for new pastures.

Allyson Felix is the most decorated female track-and-field athlete of all time. She too was a marquee Nike athlete for many years.

Just before the pandemic, Felix asked Nike to protect her sponsorship in the midst of a pregnancy cycle.

Nike declined her request.

This forced her to leave Nike and she has since joined Athleta, a company under the GAP umbrella as their marquee athlete. Since then Simone Biles has followed!

Simone Biles has been particularly tight lipped on her decision to leave Nike, never publicly berating them like Felix. But she too has cited similar reasons for leaving and spoke of Athleta “aligning with her values” more than Nike ever did.

It’s quite alarming when you look beneath the surface. This became quite a PR nightmare and quite a few other female Olympians expressed their displeasure at Nike too.

As I continued to explore I identified three reasons why this could possibly be happening. The first being:

1. Nike simply didn’t want them!

Uni Qlo paid a then aging Federer $30m/yr for 10 years to prize him away from Nike. That’s a lot of money for a Federer who was showing signs of slowing down his on-court production.

It’s perfectly plausible Nike did not want to match that deal.

Similarly, despite many of the above list being good players, has anyone ever bought some Nike Mercurial Vapors because Raphaël Varane wore them?

I imagine they figured out that the $1-3m Nike pay these athletes annually is quite a lift on the bottom line for not that much in return.

2. Nike Cost-Cutting

Similarly, Jack Donohue Nike CEO announced in December 2023 severe cost-cutting measures at the company.

Revenue has been growing in recent years but he cites that revenue growth will slow in the years to come. As a result they are on a mission to shave $2bn off the bottom line and as a result will fire 2% of the global workforce (close to 1,600 employees!)

Yikes.

3. A concerted shift in business focus

In the same report Jack said they will focus on three key areas.

1. Running

2. Womens apparel

3. The Jordan Brand

Brands we haven’t mentioned so far are HOKA and ON Running. They are both making very big strides in the running market.

Similarly, the Jordan Brand has more than doubled its’ revenues in the last 5 years so it’s a no brainer as to why they are aiming to double down there.

This somewhat explains the lack of desire to renew existing mid-tier athlete contracts. It also explains the lack of attention in sports like Tennis in recent years. Where they’ve had a stronghold before.

Well, the final question to answer is has all of this impacted them?

The interesting question here is what is the metric we use to measure the impact?

If it’s revenue, then no. Their revenues have grown year-on-year for the last five years.

If it’s share price then… kinda.

• Nike Share Price in the last 5years: +17%

When compared with the S&P500 this is a big miss.

• S&P500 Share Price in the last 5years: +83%

But when compared to their contemporaries, its much better

• Adidas Share Price in the last 5years: -5%

• Puma Share Price in the last 5years: -23%

So, all-in-all I do not think there is too much cause for concern for Nike and Nike shareholders.

Most retail businesses are facing challenging headwinds at the moment with the significant cost of materials rising and Nike are no different.

This summer is the Paris Olympics and the EURO2024 competition where Nike always put their best foot forward. Let’s see the innovation they being in a few months time.

See you next week.