In the last eight months alone, the company has inked deals with National Basketball Association rookies LeBron James ($90 million) and Carmelo Anthony ($15 million); NBA star Kobe Bryant ($45 million); tennis superstar Serena Williams ($40 million); 14-year-old U.S. soccer phenom Freddy Adu ($1 million); and Canadian world champion hurdler Perdita Felicien ($1 million).
Just do it. The math, that is. Total: $192 million over the next several years, not counting multimillion-dollar deals already in place with golf star Tiger Woods, football's Michael Vick, baseball's Derek Jeter, track's Marion Jones and soccer's Mia Hamm.
The signings and the expected ad campaigns-one featuring Mr. James has already started-hark back to Nike's glory days, when it parlayed endorsement contracts with Michael Jordan and Bo Jackson into huge sales and critically acclaimed commercials.
A Nike spokesman said the company does not discuss its strategies, but one sports-marketing expert said the Swoosh is reaching out to a different consumer. "While they're gobbling up the world's top athletes, unlike the `80s, they're selling to a new marketplace," said David Carter, president, Sports Business Group, Los Angeles. "Nike now has a vast global audience....You can see why signing a Freddy Adu or a Serena Williams speaks to a broader audience."
Nike estimated its total endorsement commitments for 2004 will be $338.6 million, 53.6% higher than the $220.3 million it paid out in 2003. Part of that is certainly due to the company's stunning financial successes. Nike's stock is up 60.1% since dropping to a 52-week low of $42.38 last February. By contrast, main competitor Reebok's stock is up 37%.
Last month, Nike announced second-quarter results, posting net income of $179.1 million, or 68¢ a share, up 18% from last year and beating analyst expectations of 61¢ a share. The company said future orders in the U.S. were up for the first time in six quarters, up 1%.
future orders up
Settling its dispute with athletic shoe chain store Foot Locker, which at one point had stopped stocking Nike, was key. Some of the $500 million in canceled wholesale orders are just now starting to restock Nike's coffers, one reason why Wells Fargo Securities analyst John Shanley thinks "the company is going to be in pretty good shape over the next several quarters."
It remains to be seen if Nike's endorsement deals will translate into the success it enjoyed with Air Jordans and the cross-trainers inspired by multi-sport star Bo Jackson. So far, results are promising. Wieden & Kennedy, Portland, Ore., produced a humorous spot for Mr. James' Air Zoom Generation shoe featuring several basketball greats and actor/comedian Bernie Mac. When the sneaker made its debut Dec. 20, it sold 32% of its stock on the first day, completely selling out in seven of the 15 Niketown stores in the U.S.