Business of Sport: Nike defining the future of sport

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  • Roger Federer has been with Nike since 2002.

    Nike co-founder Bill Bowerman once said, “if you have a body, you are an athlete” and that statement remains the premise on which the American corporation has built its multi-billion dollar empire.

    Forbes magazine ranks Nike as the number one sports brand in the world, valuing its name alone at $26 billion – compared to $7.5 billion in 2007. No matter the economic climate, the controversies that impact sport, and the constantly changing patterns in the market, Nike continues to be a giant that keeps on growing.

    In their latest annual report for the fiscal year ending in May 2015, Nike Brand reported revenues of $28.7bn, which reflected a 14 per cent increase, with double-digit growth in North America, both European geographies and China. Revenues for Nike, Inc. rose 10 per cent to $30.6bn.

    Nike, Inc. expects revenue to increase 63 per cent to $50bn by 2020, boosted by growth in its e-commerce, women’s and Jordan brand businesses.

    “We don’t take anything for granted,” Trevor Edwards, President, Nike Brand, told Sport360° at the Nike Innovation Summit in New York earlier this month.

    “One of the clear mantras for our company has always been that we make sure we exist to serve consumers. And to have a reason for consumers to continue to choose us again and again and again actually comes out of great innovation. And our innovation is inspired by the great athletes because they challenge us to not rest on our laurels, to make sure that we are always challenging how we create products; make it new, make it better.

    “And I think that that strive actually helps us from a business perspective to continue to connect with consumers.”

    The main themes that dominated Nike’s Innovation Summit were personalisation and adaptability – two concepts Edwards believes will “define the future of sport”.

    The new Nike+ app that will be launched in June will combine the Nike Training Club, Nike Running Club and retail apps into one.

    As for adaptability, Nike has finally created the self-tying shoes with power-operated laces that the world got to see in ‘Back to the Future II’ in 1989. They’re calling it the HyperAdapt 1.0 and plan on releasing it by the holiday season at the end of this year.

    It is a big year for Nike and not just because of their new ground-breaking releases. With the Olympics, the European Championships and the Copa America all taking place this summer, Edwards says such events provide a perfect platform for the brand to showcase its innovations to the world.

    In football, Nike faces stiff competition from adidas with both brands fighting over global supremacy in the sport.

    The 2014 FIFA World Cup provided a valuable launching pad for Nike’s Flyknit with more than a third of the players in the competition choosing to wear the Magista, the brand’s first Flyknit boot, including Mario Gotze, who scored the winning goal in the final.

    Nike will be hoping to make further impact in France this summer.

    “This summer you have some incredible stages where the great football players will actually be on those stages to play football to the highest. So between the kits that we’re launching as well as the anti-clog product, which has this great traction – because we’ve combined sports and science to actually create material that now prevents mud from clogging the football boots. It’s a big deal,” explains Edwards of Nike’s new anti-clogging technology. “It makes the boots 50 per cent lighter. So we’re super excited about the benefit of that.

    “On the other side we’ve created some great uniforms. We’ve got this AeroSwift technology, which is super light, 10 per cent lighter.

    “It’s got 50 per cent more stretch in it, so it gives great range of motion and it dries 25 per cent faster, so when you’re playing on the pitch and you’re sweating, it’s actually moving sweat while you’re actually playing. So we’ve got some really great innovations around that time.”

    While football is a sport in which Nike faces the toughest competition, Edwards insists there is room for growth in every area and that’s where the Olympics can pay dividends.

    “For us, the Olympics is the proving ground for our products, for our performance innovations. So we take this moment very seriously and like the athletes, we’re helping them get prepared for that moment,” he adds.

    “At the same time it’s a great energy moment for everybody, because everybody is passionate about sport.

    “What we see happen when you come out of an Olympics or even during the Olympics, you’ll see people get out, they want to run more, they want to do things. So we know that we can tap into that collective passion for sport that we see and we provide some of these innovations for everyday athletes.”

    In basketball, Nike is unrivalled and owns almost 95 per cent of the footwear market.

    But such dominance did not breed complacency as the company inked an eight-year apparel deal with the NBA that will start in the 2017-2018 season – an agreement that is rumoured to be worth $1 billion, which is approximately a 245 per cent annual increase from the previous agreement with adidas.

    Through that deal, NBA uniforms will feature a logo for the first time in the league’s 70-year history.

    Some questioned whether Nike really needed to invest all that money in a sport it already is a dominant market leader of but Edwards explains the reasoning behind that move, with an eye firmly on horizons beyond the league’s American heartland.

    “We’ve obviously worked with the NBA for many many years. And I think one of the reasons the NBA and us thought it would be a great opportunity is that we see the global growth of basketball and the idea that two brands, the NBA and ourselves, could come together to innovate, to actually bring basketball to more people around the world was super exciting for us because more and more people are watching it,” he said.

    “If you go to China, that is the number one sport, that is what a lot of young kids play. You’ve also seen the growth in Europe. So the idea that brands together could create something really powerful is amazing.”

    In terms of venturing into new markets, Edwards says the main opportunity available in the Middle East is inviting people to participate in sport. Through events like We Run DXB, and through digital platforms like the Nike+ app, the brand can communicate with consumers in the Middle East and gain ground in the region.

    Some of Nike’s biggest athletes are heading towards the end of their careers with Kobe Bryant retiring at the end of this season and Roger Federer, while still maintaining his place at the top of tennis, is 34-years-old. Edwards is not concerned about the imminent exit of such superstars from their sports.

    “The great thing about sport is that it kind of recycles. There’s always a new person going to come in who wants to beat the goals of somebody else,” said Edwards. “So the idea that there’s a continuous cycle of amazing athletes is something that we live for. We still have young players like Neymar, Eden Hazard, there’s a lot of young players still coming up.

    “Some of the more seasoned athletes would join as ambassadors for the brand, they’ll still work with us. Roger is still playing amazing and until somebody stops him, we’re happy for him to keep going.

    “Kobe has chosen to retire but his products will still be around and he’s a great athlete in terms of giving us insight about creating products, so we’ll still work with those athletes to help us sharpen and make better products.”

    One thing Nike – and sport – cannot escape from is the controversy that comes with athletes committing doping offences.

    Nike recently suspended its contract with Maria Sharapova after the Russian tennis ace tested positive for a performance-enhancing drug but the company last year re-signed American sprinter Justin Gatlin, who has received two doping bans in the past.

    Nike has, somewhat understandably, received a huge degree of criticism as a result.

    “We take everyone by a case-by- case basis. Athletes represent us as people altogether and often there are frailties and we pay attention to that,” explained Edwards. “The thing about sports is that there are rules and there are consequences, and that’s something that’s just in life and we approach it that way.

    “We don’t condone the use of performance-enhancing drugs, we have strong beliefs about being ethical in sports and we truly believe in fair play, so the task that we always have is to make sure that sport continues to be energised, that’s what we believe in.”

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