The Strategy Behind Nike's Growing Investment in Sports Sponsorships and Athlete Endorsements

The Strategy Behind Nike's Growing Investment in Sports Sponsorships and Athlete Endorsements

After dropping another star athlete in the midst of yet another scandal, it seems the time has come for Nike to reevaluate its sponsorship strategy.

In the last year or so, the sportswear brand’s relationship with tennis star Maria Sharapova was suspended pending further research after she failed a drug test. Nike was also quick to cut ties with boxer Manny Pacquiao after he made disparaging remarks about same-sex couples.

Nike’s Track Record with Endorsements

These scandals have led sponsorship insiders to question Nike’s strategy for athlete endorsements. Prior to Pacquiao and Sharapova, Nike has previously dropped other athletes due to controversies, including:

  • Oscar Pistorious (2014)
  • Lance Armstrong (2012)
  • Tiger Woods (2010)
  • Ray Rice (2014)
  • Michael Vick (2007)
  • Adrian Peterson (2014)
  • Joey Barton (2008)

Sponsorship Spend Currently in Play for Nike

In the past few years, Nike has felt pressure from competitors like Adidas and UnderArmour to increase sponsorship spend for sports teams and athlete endorsements. So much so, in fact, that Nike spent more than $9 billion on endorsements in 2016.

This is a massive Mike Powell-style jump in spending from 2015 to 2016 as the value of Nike endorsements increased by more than 50%. Perhaps more shocking, the $9.42 billion budget for 2016 is double the $4.7 billion in sponsorships Nike spent in 2014.

Nike is a big brand with a big reputation, and if you’re thinking of chasing down some endorsement or sponsorship dollars, make sure you get your strategy for pitching high profile brands nailed down.

Estimates for Future Sponsorship Spend

Nike’s uptick in sponsorship spend was not a traditional trend for the brand. In fact, before 2007, the brand’s financial obligations in this arena never exceeded $2 billion annually.

However, with competitors’ laser-focus on big endorsements deals with professional sports teams, NCAA teams and athletes, it might not be too far in the future when the brand is spending more than $15 billion to get the most successful athletes in their shoes.

Future Opportunities for Sponsorship Sales

The biggest hurdle that the brand will have to get over is managing the reputation they have gained for being a brand that picks up — and then drops — star athletes in times of scandal or controversy. Or maybe the reputation is for picking up athletes who invite trouble or are already troubled.

If you think that you can offer Nike a better sponsorship deal or activation strategy with scalable, long-term value and ROI, now is the time to contact decision makers and get your foot in the door.

If you don’t know how to reach key decision makers at Nike, request a free trial of Winmo for instant access to the contact information you need to win more business!

Update:

Known for their swoosh logo, sports equipment, and athletic apparel, Nike is one of the most sought after companies in the partnership realm. However, Nike is also known for ending endorsements. We’re providing an updated report and pointing out Nike’s sponsorship scandals and success over the years, and also providing insight on the history and future of company spend.

According to studies, in 2017 Nike invested more than one billion dollars in the sponsorship realm. Nike not only holds the title of largest sporting goods company in the world but also is one of the largest sponsors in the sports industry with a consistent trend of increased partnership spend.  

In 2016, Nike announced a new long-term apparel partnership with Chelsea FC starting with the 2017-18 season, expanding into yet another sport growing in popularity. Nike’s endorsement budget has grown substantially in the past decade, and they continue to grow their endorsement roster both in the United States and abroad. In 2016, Nike reported $9.4 billion in endorsement contracts, a 52% increase in just one year.

Nike has expanded its NFL on-field rights partnership, which includes uniforms, sideline apparel, and other perks until 2028. The company promoted Dirk-Jan van Hameren to CMO and VP, which was followed by some marketing shake-ups and departures after misconduct allegations. Former Under Armour SVP Adrienne Lofton made the switch to Nike to complete 2018’s transitions.

2018 also served as a year of controversy for Nike. The company announced the decision to increase pay for 7,000 employees in a response to an inequality outcry. Secondly, Nike released a gutsy campaign incorporating a former quarterback blacklisted from the league due to the movement he started. Nike celebrated the 30th anniversary of its “Just Do It” campaign, featuring Colin Kaepernick after nearly following their trend of dropping athletes before they chose to embrace him. According to studies, the campaign yielded record engagement with the brand as their sponsorship success continues into 2019.

The brand has increased its relevancy through recent campaigns and continues to expand its investments in sports sponsorship in order to protect its title as the largest sporting goods company in the world currently. Since 2003, trends have reported a steady rise in endorsement deals, making Nike the king of sponsorships as they continue to expand.

Reports suggest that no company in the world spends as much on sports sponsorship as Nike, with endorsement spending typically increasing by more than 10% a year. So while their strategy may be questioned, it has certainly proven successful.

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