Back in The Saddle Again: Why Nike Re-signed Michael Vick
Before being jailed for illegally fighting dogs, Michael Vick was the spokesperson for several major companies. Many of the companies, whose products Vick endorsed, severed ties with him once he was convicted. Nike was one of those companies. However, in a surprise move, Nike recently re-signed Vick. This re-signing of Michael Vick, will all but guaranteed that the public and media alike will criticize Nike for another controversial and questionable decision. Why did Nike re-sign Vick to endorse their products? A cursory look at Nike’s business strategy will reveal why they chose to re-sign Michael Vick.
In 2003, Nike acquired one of its rivals Converse for $305 million. The acquisition of Converse was a business move that added value to the Nike brand. Tom Clarke, Nike’s president for new business ventures stated in regards to the converse acquisition:
Our strategy for growing through non-Nike brands is to identify strong brands with superior management teams where Nike can directly assist in the company's growth. Converse certainly meets our criteria and its brand equity offers potential to drive even greater revenue and earnings performance. We believe the addition of Converse to our increasingly diverse Nike, Inc. portfolio will contribute to creating long-term shareholder value (newyorktimes.com, 2003).
Nike also acquired the Starter Athletic Company in 2003. Again Nike’s Tom Clarke commented that "the acquisition of Starter is the next step in the evolution of Nike, Inc.'s multibrand portfolio growth strategy and will allow us to capitalize on an important value channel opportunity" (portlandbizjournal.com, 2004). More recently, in 2007, Nike acquired Umbro a very formidable soccer apparel and footwear company in Europe. Nike touted this acquisition as one that would give them control of an iconic soccer brand (Nike, 2007). Slack and Parent (2006) describes these types of sport business acquisitions as business growth strategies. Growth strategy methodology seeks to expand a business’ consumer base, product reach and product diversity (Parks, Quarterman and Thilbault, 2007). The growth strategy is also a means to build and enhance brand equity (Mullin, Sutton and Hardy, 2008).
The Nike company is in the business of expanding and building its brand. As a result, the company must take advantage of various business opportunities. This means signing athletes to endorse their products especially if that athlete is popular. Moreover, if that athlete’s signature shoe (i.e. the Jordan or Kobe Bryant Zoom Kobe II) has been a top seller it benefits Nike to maintain a relationship with that athlete even if he violates the law or is involved in some type of controversial activity. So the re-signing of Michael Vick, in reality, should be no surprise. It is crucial to remember that Nike produced several signature Vick athletic shoes such as the Air Vick Zoom I, II, III, and IV. “In what indeed may be a sad sign of the times CNBC’s Darren Rovell reported Wednesday Nike has every intention of moving forward with their planned release of the Vick V shoe, which retails for $100” (Bloom, 2007). Moreover, Dick’s Sporting Goods Chief Marketing Officer Jeff Hennion stated that "What’s going on with Michael Vick doesn’t change our merchandising marketing plan" (Bloom, 2007). The shoe is obviously a component of the overall marketing initiative with Nike. As a result, the re-signing of Michael Vick is yet another reminder that Nike is willing to do whatever and use whoever they need to sell athletic shoes and grow their business, even if they have to endure criticism and controversy.
References
A New Starter: Nike Acquires Brand For $43MWednesday Sport Business Daily (2004, August 11). Retrieved November 15, 2009 from http://www.sportsbusinessdaily.com/archive/article/87460
Bloom, H. (2007). Michael Vick – The Dog Days of Marketing Problems and Business Issues. Sport Business News (2007, July 19). Retrieved November 15, 2009 from http://sportsbiznews.blogspot.com/2007/07/michael-vick-dog-days-of-marke...
For $305 Million, Nike Buys Converse By Leslie Wayne (2003, July 10). Retrieved November 17, 2009 from http://www.nytimes.com/2003/07/10/business/10NIKE.html
Mullin, B., Sutton, W. and Hardy, S. (2008). Sport Marketing (3rd ed.). Boston: Human Kinetics.
Nike Drafts An All Star: Purchase of Converse Dismays Fans of Classic Chucks By Joshua Partlow Washington Post Staff Writer (2003, July 18). Retrieved November 22, 2009 from http://www.washingtonpost.com/ac2/wp-dyn/A9001-2003Jul17?language=printe...
Nike pays $43M for Starter Portland Business Journal Wednesday, August 11, 2004 http://portland.bizjournals.com/portland/stories/2004/08/09/daily29.html
Nike completes Converse acquisition Portland Business Journal (2003, September 5). Retrieved November 23, 2009 from http://portland.bizjournals.com/portland/stories/2003/09/01/daily37.html
Parks, J. B., Quarterman, J. & Thailbault, L. (Eds). (2007). Contemporary sport management (3rd ed.). Boston: Human Kinetics.
Ram, V. (2007, October 23). Goal! Nike buys Umbro. Retrieved December 4, 2009 from http://www.forbes.com/2007/10/23/umbro-nike-closer-markets-equity-cx_ml_...
Slack, T. and M. Parent (2006). Understanding sport organizations: The application of organizational theory (2nd ed.). Boston: Human Kinetics.