Have you ever listened to an earnings call? Every quarter, public companies have to release their financial results and then discuss them on a teleconference.
The great part about it? Everyone can listen in!
But usually, nobody does. Because it’s just a bunch of old men talking about numbers that nobody actually understands. Unless we’re talking about Nike.
Instead of putting everyone to sleep with finance slang like EBIDTA, currency-neutral basis, and inventory levels, Nike’s CEO John Donahoe started their recent call by talking about sports.
So let's start with (...) our connection to sport (...)Rafael Nadal made history by becoming the first male tennis player to win 21 majors with his victory at the Australian Open, and he now stands alone at the top of the men's game.
Aaron Donald, Cooper Kupp and Odell Beckham Jr. led the L.A. Rams to a thrilling Super Bowl victory. And in the NBA All-Star game, a face-off between Team LeBron and Team KD ended with LeBron hitting the game-winner. I was able to attend the game and I loved getting to see the league showcase of its 75th-anniversary team. It was just an awesome reminder of the power of sport and what sport has meant to so many of us over the years.
He went on to talk about the Winter Olympics and finally wished Coach K a happy retirement.
So why is this noteworthy?
Because unless you’re a finance buff, earnings calls are just dry and boring, filled with financial figures to keep the shareholders happy. The fact that, even on their earnings calls, Nike first talks about athletes, shows what’s in their DNA. Or as their CEO puts it:
NIKE's connections with consumers are driven by sport and cultural authenticity. And our roster of athletes is second to none.
We kept listening and it turned out that the numbers part was interesting after all! Despite a global pandemic, a broken supply chain and a war in the middle of Europe, Nike managed to grow.
Here’s what they did in a nutshell.
Because of the pandemic, countries like Vietnam shut down their production for months. That meant that the whole sportswear industry was struggling to make enough products to meet the demand - and make sales. Inventory and supply chain challenges can actually be a huge threat even to major corporations like Nike.
So Nike took the products they had in stock and sold these through their own website and stores, instead of selling the products to wholesale accounts like Foot Locker. By cutting out the middlemen, Nike was able to increase its margin and make a higher profit with every sale.
That’s part of a wider strategy that Nike calls the ‘Consumer Direct Acceleration’. Over the past four years, Nike has reduced the number of wholesale accounts worldwide by more than 50% while delivering strong revenue growth in direct-to-consumer sales (D2C).
Ten years ago only 16% of Nike’s total revenue came from D2C. Now it is more than 40% and growing.
Nike’s direct-to-consumer revenue worldwide from 2011 to 2021
2011: $2.9 billion
2012: $3.6 billion
2013: $4.4 billion
2014: $5.3 billion
2015: $6.6 billion
2016: $7.9 billion
2017: $9.1 billion
2018: $10.4 billion
2019: $11.8 billion
2020: $12.4 billion
2021: $16.4 billion
Mbappe in Row over Image Rights 📸
Do you want to earn income from your selfies without setting up an OnlyFans account?
Simply take pictures of your fee… oh sorry wrong newsletter!
On the topic of making money from photos, a recent argument between Mbappe and France Football could completely change how national teams get sponsorship from brands.
Mbappé has refused to appear in a team photoshoot with a number of the French national team sponsors. (While the exact brands are unconfirmed, the list of sponsors includes Volkswagen, Uber Eats, Orange, Xbox, Coca-Cola and Konami.)
This rebellion is down to the fact that Mbappé wishes to re-negotiate his current image rights deal with the national team.
This all sounds very confusing, let us explain…
Essentially, brands pay the French Football Federation (FFF) a bunch of money so they can take photos of the national team with their products.
This money is put into a big pot and most of it is distributed equally among the players. After negotiations conducted in 2010, each player receives around €25,000 per cap.
Since his first appearance in 2017, Mbappé has given every cent earned from image rights to charity.
As Mbappé’s global image grows, he has become more concerned about which brands he associates himself with.
France football has complete control over which brands get to take photos with the players and Mbappe does not like that they can force him to take pictures with brands that do not match his moral viewpoints or personal brand image.
Mbappé’s concerns over image rights don’t stop with moral or ethical considerations, the PSG player is reportedly attempting to convince the federation to spend more of their image rights earnings on growing grassroots football in France.
Both the FFF and Mbappé’s current club PSG are said to want to talk with the star about his current stance, but it is unlikely that Mbappe will suffer any sanctions for the boycott.
With Real Madrid currently putting together a lucrative contract proposal to lure Mbappe away from PSG, image rights have yet again become an issue.
Real Madrid normally takes on 50% of the image rights of any player that signs for them, but Mbappé is reportedly holding out to keep the majority of his rights. His mother is also pushing for Mbappé to get a percentage of his own shirt sales while at Madrid.
Mbappé isn’t the first high-profile player to fight for their image rights. Ronaldo went through an entire saga over image rights that culminated in him selling them to billionaire Peter Lim. You can watch our video on the topic here.
🎬 Video of the Week
How Tony Hawk Created a Billion-Dollar Business
Even if you think you don’t know anything about skateboarding you probably still know the name, Tony Hawk.
Perhaps you played one of his many video games or participated in his crazy treasure hunts?
Tony Hawk has managed to reach a level of fame where he is not only considered the most famous athlete in his sport, but he also gets mentioned in the same breath as Michael Jordan or Cristiano Ronaldo.
So how on earth did a skateboarder get this famous? In this video we break down how Tony Hawk pioneered the viral video to grow himself into one of the most influential athletes of all time.
🤪 Weird Deal of the Week
Mercedes Look to Boost F1 Season by Going to Sleep 😴
The dominance Mercedes held over Formula 1 from 2014-to 2021 was responsible for more people falling asleep than all of the major sleeping pills combined.
Seriously, if you want to fall asleep just put the highlights of the 2020 season on repeat. It is basically just 10 minutes of the commentator screaming ‘And that’s another win for Hamilton.’
Considering Mercedes experience in sleep therapy it’s not surprising that they have signed ‘the world's first sleep fitness company’ Eight Sleep as a team sponsor.
So, what on earth is Eight Sleep? Well, in the words of their press release:
“We design products at the forefront of innovation to make people's sleep count for more by using the latest technology in sensors, software and machine learning, and pairing it with proven science and data to personalize each night for everybody. As a result, preliminary data has shown that people who sleep on our products recover better and faster.”
The company, which is backed by Silicon Valley investors, will be providing the entire Mercedes team with access to their technology with the aim of ensuring that everyone is able to increase and maintain their energy levels throughout the season.
Mercedes team boss Toto Wolff has welcomed the sponsorship of Eight Sleep, stating:
“Our team is made up of over 2,000 people across Brackley and Brixworth, all of whom perform at their peak every day in a sport where every single detail matters. To achieve the level of sustained performance that is required to compete in Formula 1, we are relentless in exploring all possible optimisations, including sleep. By partnering with Eight Sleep we are looking to utilise their technology during the upcoming season while also spreading a key message about the importance of recovery when you aim for peak performance.”