11/04/2013

Curse of the Nike Swoosh

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Oscar Pistorius became the latest athlete in the Nike stable to be tainted by scandal. But Tiger Woods, Michael Vick, and Lance Armstrong are some of the biggest names in sports and all have one thing in common: Nike.

Manchester United's Wayne Rooney has also had his moments over recent years. But joins several other football stars sponsored by the firm who have been the subject of lurid headlines over the years - including Carlos Tevez, Cristiano Ronaldo, Franck Ribery, and Claude Makelele.

One would think that all the bad press would make Nike shy away from celebrity endorsements,  but the $25 billion corporation has done just the opposite.

Forbes senior editor Kurt Badenhausen, who covers the sports industry, says Nike is the victim of its own success. "Sticking by these big-name guys can potentially still be good for business," he said. "... Nike endorses so many athletes that if one of them does get in trouble, chances are, it's going to be a Nike guy."

Nike has $4 billion in endorsement contracts with athletes in many different sports, and the bigger the star, the less likely they are to sever ties.

Badenhausen said, "They've built a golf division from scratch with Tiger Woods. And now it's a $700-something-million business for Nike. It's hard to just kick Tiger to the side and say, 'We're done with you, we're going to move on now.' And I think that's why you saw them stick with Lance Armstrong for so long."

Even when Nike moves on from an athlete, it leaves the door slightly ajar. 

In 2007, Nike dumped NFL star Michael Vick in the midst of the dog fighting scandal, but they re-signed him when he regained his popularity in 2011.

Nike had decided to end a deal with the quarterback in 2007 under huge public pressure after he was jailed for bankrolling a dog-fighting ring discovered by police, who had raided his property in the Virginia countryside.

Vick's fall from grace cost him an estimated $100 million in lost salary and endorsements and his old club, the Atlanta Falcons, relinquished their rights to his contract after he was released from prison.

However, after restarting his career with the Philadelphia Eagles, Nike decided to resign Vick saying: "Michael acknowledges his past mistakes. We do not condone those actions, but we support the positive changes he has made to better himself off the field."


As has been well documented Nike ended their long-term relationship with the disgraced cyclist, Lance Armstrong, in October last year due to "seemingly insurmountable evidence" that he participated in doping, although they continue to support the Livestrong cancer charity that Armstrong was formally chairman of. Nike still sells a whopping 98 products in the US market that bares the Livestrong name.

When Tiger Woods was rocked by a sex scandal in 2009, Nike CEO Phil Knight said it was "part of the game" in signing endorsement deals with athletes. Woods admitted to infidelity in his marriage to Swedish wife Elin Nordegren as allegations of multiple extra-marital affairs rocked his life and career. Knight had said that Nike checked out Woods's background before signing its deal with the golfer and "he came out clean".

"I think he's (Tiger) been really great. When his career is over, you'll look back on these indiscretions as a minor blip, but the media is making a big deal out of it right now," said the Nike chief.

In 2003, the basketball star Kobe Bryant signed a five-year deal with Nike worth a reported $40m. Just days later, he was arrested in connection with an alleged sexual assault, as a 19-year-old woman accused him of rape.

The married Bryant admitted to sleeping with the girl but said the sex was consensual. The case was later dropped, but it certainly affected his brand.

A string of companies including McDonald's and Nutella terminated their deals with him, but Nike remained loyal, although they refused to use his image or market his shoe for two years until his brand recovered.

Now the company markets an entire 'Kobe Bryant collection.'

Marion Jones, the American sprinter endorsed the swoosh logo as she won five medals at the Sydney Olympics in 2000. However, Jones was stripped of her 100m, 200m and 4x400m golds and long jump and 4x100m bronze medals in 2007 for using banned drugs.

Jones even served a jail sentence for lying to federal prosecutors about her steroid use.

Nike were somewhat lucky when it came to Jones as her contract ran out in 2005, just when the scandal was blowing up. Needless to say, the company decided against renewing.

The sprinter Justin Gatlin won 100m gold in Athens 2004, but was later banned for four years for doping. He was the first athlete to have a contract terminated by Nike.

Gatlin has since returned to the sport, and he completed his comeback by clinching the bronze medal at the London Olympics. He also has deals with watch brand Deuce, and Chinese sportswear company Xtep.

Last month, golfer Rory McIlroy signed a $250m (£156m) 10-year deal with Nike, and has already appeared in an advertisement with Woods. The company was hoping that he would  not appear on a list similar to this one in the future.

But events at the PGA National on Friday when he walked off the course during The Honda Classic start to beg the question.


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