How Roger Federer is Building the New Nike
Plus, Nike beats Verstappen, book a stay in the Ted Lasso pub, and Lebron's golden investment.
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Roger Federer is among the few athletes who have earned more than 1 billion dollars in their career. But only a fraction of that has come from actually playing tennis - the bulk of the billion comes from sponsorships and investments.
There is one deal in particular that changed everything for Federer. His decision to leave Nike and sign with Uniqlo. A decision that not only skyrocketed Federer’s net worth but also led to the creation of a completely new competitor for Nike.
This all began in 2018. Federer won the Australian Open and became the oldest number 1 in history. Quite a good position to negotiate a renewal with his long-time sponsor Nike.
Federer had been with Nike since 1994(!) and was one of those athletes who almost became synonymous with the brand.
But Federer surprised everyone when he decided to leave the market leader to sign with the relatively unknown Japanese brand Uniqlo.
For Federer there were two advantages to this deal:
He would make $30m per year for the next decade, even after his retirement (a crazy good offer for a then 37-year-old, even when we are talking about Federer).
The deal did not include shoes, leaving him free to sign a separate deal with a shoe manufacturer.
Initially, Federer just kept wearing Nike shoes, until he spotted that everyone in his home country Switzerland was wearing shoes made by a local company called On Running.
After sitting down with the founders, Federer agreed to become a global ambassador and took 3% of the company’s stock.
At the time, this may not have seemed like a revolutionary investment, but two years later, On Running was floated on the stock exchange and valued at over $10 billion.
Federer’s personal stake hit a value of $300m, and the company has continued to grow from there. In the past financial year, On’s sales jumped 69%, reaching more than $1 billion.
Interestingly, On’s story is remarkably similar to Nike’s.
Nike also started out just making running shoes before bringing in tennis player Ilie Năstase as the first sponsored athlete.
Nike has since increased its presence in almost every major sport, partnering with the biggest names and growing into the biggest sports apparel company in the world.
On could follow a similar strategy. The company has already announced sponsorship deals with current tennis stars Iga Świątek and Ben Shelton, which the company predicts will contribute to a 40% sales increase this year.
And just as Nike once expanded into the lifestyle segment, On started selling sneakers as well. This is where the real financial opportunities lie within the sportswear industry.
Running and Tennis footwear are niche markets compared to the sneaker business.
On Running entered a promising path, but still has a long way to go. One of its main challenges will be to legitimize the brand - and become more than the shoes worn by venture capitalists and people with knee injuries.
On made $1.3 billion in revenue in 2022 - 12 years after its founding. Nike made 14.1 million in 1976 (12 years after its founding), which would account for $74.5m today when considering inflation.
So, On Running is off to a good start - Nike not only lost Federer in 2018 but accidentally created a new competitor.
🍎 Sports Business Bites
👨🏻 Do you want to go to Ted Lasso’s pub?
When Ted Lasso first came out in the early days of the pandemic, many people wished they could jump into the bright and joyful world of Ted and Richmond AFC. Well, now you can…sort of.
Warner Bros and Airbnb have teamed up to offer fans the chance to stay at the real Crown and Anchor pub, the now famous watering hole of many of the Ted Lasso characters. The interior is decked out just like the real set, complete with a dart board, AFC Richmond imagery, and for some reason, Ted Lasso’s desk.
😈 Manchester United and Wrexham AFC to play U.S. friendly
Talking of North Americans trying to make it in British football, Wrexham AFC owners Rob Mcelhenney and Ryan Reynolds have organised a friendly for their National League side against Manchester United. The match will take place in San Diego at the end of July this year.
Despite the mismatch in terms of league position, it is no surprise that Manchester United has agreed to this friendly. The club is a pioneer in sports marketing. It was one of the first clubs to set up friendlies abroad and is never shy of attaching the club name to several products or services, from bobbleheads to pot noodles. Even Florentino Perez has praised United’s marketing chiefs for their work.
Partnering with Wrexham AFC is another example of this marketing machine in action. The friendly will allow the United brand to associate with the Hollywood fuelled hype surrounding Wrexham and its owners. The club has already started activating this partnership with this hilarious video featuring Sir Alex Ferguson, Rob, and Ryan.
🏎 Could F1 have a guaranteed female driver by 2026?
Formula 1 veteran and founder of British American Racing, Craig Pollock, has submitted plans for a new F1 team named ‘Formula Equal’ to join the grid in 2026. The team is comprised of 50% men and 50% women, with this rule applying to every role from pit crew to drivers.
This would be revolutionary for a sport like F1, where female drivers make up just 6.5% of the available talent pool. On the technical side, only about 16% of workers are female.
While there are a few promising young female drivers that could take up a role with this team, getting 50% of the engineering staff to be female by 2026 could be difficult. Recent estimates claim that just 1 in 5 engineering degrees are earned by women. That being said, this new team could act as the perfect incentive for more women to take up STEM programs at University level.
👟 The Boot Room
⚖️ Max Verstappen is getting pretty used to winning these days, but he appears to have finally met his match.
The Dutchman was looking to exploit his recent success by launching a clothing brand called ‘Max 1.’ That was until Nike got involved. Nike holds the trademark for ‘Air Max’ and ‘Air Max 1’ as part of its shoe empire and sent a complaint to the trademark office arguing that Verstappen’s ‘Max 1’ was too similar to their trademarks and could cause confusion.
The trademark office looked into the complaint and eventually agreed with Nike. It, therefore, looks like Verstappen will need to change his brand name, although he can appeal. That being said, it’s surprising that Verstappen’s team didn’t see this coming. Air Max has been one of Nike’s most popular shoe ranges since 1987. The company even has an Air Max Day to commemorate the launch of the shoe.
It’s not like Nike doesn’t protect its trademarks either, the company has become pretty famous for several trademark lawsuits in recent years. This includes battles against large rivals such as Adidas and Puma, as well as a recent battle with a small plant business over their use of the phrase ‘Just Succ It.’
While Nike has defended its trademark, Adidas has just taken the opposite approach.
Adidas recently removed a complaint it made against the logo of the activist group Black Lives Matter. Earlier this month, Adidas objected to BLM’s use of a three-stripe design on the basis that it was too similar to their own logo and could cause confusion.
The retraction of this complaint is supposedly a PR move, with Adidas not wanting to appear to be in objection to the values of the BLM movement.
While this legal action may have faded away, Adidas is still pursuing several other claims against companies for breaches of a trademark. Not that all of these are successful.
Earlier this year, Adidas tried to get almost $8 million in damages from designer Thom Browne arguing that their two brands could be confused. Thom Browne's lawyers successfully argued that consumers can't confuse the two brands because Adidas is a sportswear company and Thom Browne is a luxury fashion house.
📱 Social Media Madness
📈 Many many years ago, the best investment was gold. So much so that people were known to replace their own teeth with gold replicas. In the modern day, big names like Lebron James make most of their money from deals with companies like Nike and Liverpool, but it doesn’t mean that they have forgotten the old ways. Recently, Lebron was spotted with two gold Nike swooshes in his mouth. The perfect combination of old and new.
🏟 Talking of Lebron, have you ever wondered about how the fall of Constantinople affected his legacy? Well, here is the answer:
🏎 That totally serious documentary aside, here at Athletic Interest we find a lot of interesting stories in our research, and we wanted to share some of them with you in this newsletter.
Starting with this video about how DHL changed its entire colour scheme just to sponsor an F1 team:
🧱 Have you ever wondered what happened to those people that would queue for hours just to spend thousands of dollars on a brick with a Supreme logo on it? They died… well more specifically, the subculture they all subscribed to died off.
Love your work. Nice newsletter.