Nike, Too Big To Fail?
We have watched corporations and famous Americans have ups and downs throughout the years.
We’ve all watched as Tiger Woods, Robert Kraft, and most recently, billionaire Jeffrey Epstein have had low moments.
Sadly we heard last weekend about coal billionaire Chris Cline’s tragic and fatal helicopter crash.
Time and again we learn none of us are too famous, too successful or too rich to encounter a human downward life turn and tragedy.
The Nike athletic shoe and apparel corporation is the world leader in athletic and apparel sales. They made about $34 billion in 2017. They have a global presence of athletic sales in over 160 countries. Their products are sold through 22,000 retail accounts worldwide. They are the largest supplier of athletic footwear in the world.
Almost all of Nike shoes are made outside the US in Asia and Latin America. Nike does not make the shoes themselves but they contract production out to other companies. There are various reports about who Nike employs and how much their workers make. One report claims Nike has 100,000 people making their shoes in Indonesia and that these workers make about $3.50 per day or about $3,500 a year. Thus Nike is very profitable and has massive dollars for marketing.
For example, Nike entered into a $50 million endorsement deal with tennis star Serena Williams in 2003. When golfing star Tiger Woods turned pro in 1996 Nike lavished him with a $40 million five-year golfing endorsement. They would later go on to pay Woods $30 million a year in endorsements. From 2002 to 2012 Nike paid Michael Jordan $44 million a year to represent their brand. They still pay him. Forbes estimated Nike paid Jordan $100 million in 2015 as Jordan’s brand still made $3 billion for Nike in US sneaker sales. Lebron James is reported to receive as much as $1 billion from Nike in endorsement money by the time he is 64 years old.
Colon Kaepernick was already on Nike’s payroll before he became controversially famous for not standing for the National anthem. Nike wasn’t using him and reportedly didn’t know what to do with him until he became famous over his social issue stance. Kaepernick is currently not playing professional football. No one has signed him after he became a free agent but he is making millions a year by being the face of Nike’s revived “Just Do It” campaign.
Recently Kaepernick ignited controversy by reportedly telling Nike to pull its Air Max 1 Quick Strike Fourth of July sneakers. Nike said he told the company he believes the colonial flag used on the shoes is offensive, because it was flown when slavery was legal. While there has been much consternation toward Nike’s decision, Nike’s stock has risen $3 billion within the last week. If you can find a pair of the Betsy Ross shoes they are going for about $2,500.
The question is this, Can Nike do no wrong? Are they too big to fail? Nike is utilizing controversy well to breathe new air into its products. With major national sports figures wearing and promoting the Nike brand and cheap Asian labor Nike has locked into a formula that appears unstoppable.
Nike will continue on their path of global success if the American people buy their products. It’s a free country. If Americans decide to stop buying Nike products it would be financially troubling. Either way, Nike’s continued success or failure will be decided by how Americans utilize Nike’s slogan, “Just Do It,” and how Americans decide to “Just Do It.”