Why Nike Uses Endorsements & Sponsorships

Nike, under the direction of its president and chief executive, Philip Knight, creates and markets shoes and sports apparel. The Beaverton, Oregon-based company also has developed a full range of golf products to go with its soccer balls and other athletic equipment. One major tool Nike has used to drive its popularity growth is the use of celebrity endorsers and well-placed sponsorships.

Knight, a former University of Oregon track athlete, and his coach Bill Bowerman started Nike in 1964 under the name Blue Ribbon Sports. The company became globally recognised for its "swoosh" logo and its trademark slogan "Just do it." The first celebrity endorsements of Nike products were built around its tennis products. Ilie Nastase, who was as well known for his unusual personality as his game, was the brand's first featured athlete.

Nike depends heavily on its endorsements and sponsorships to promote itself. According to Reuters, adidas has the second largest budget for sponsorships among sports gear companies, but spends about 25 per cent less on it than Nike does. A Reuters report estimated Nike spent £169 million on sponsorships in 2008. Its 2009 number was in that ballpark, though the company did trim its budget slightly.

By tying its products to successful athletes in many sports, Nike has succeeded in boosting its image and creating the impression that the shoes or the clothes play a role in the success of the athlete. Nike went quickly to the lead in basketball shoes following its connection to Michael Jordan and the 1984 Air Jordan shoe line. The company vaulted itself into the top ranks of golf equipment manufacturers when it built its complete product line around Tiger Woods.

As of 2010, the company is tied to almost everything in the athletic department at Knight's alma mater, the University of Oregon. It also has deals with many college and pro sports teams that use its equipment exclusively. The company has some unique sponsorship deals with the Indian national cricket team, the national soccer teams in Brazil and Portugal and soccer teams like Manchester United. Nike uses these deals to get its logo in full sight on uniforms and inside stadiums throughout the world, which constantly enhances the visibility of its products.

Nike takes its sponsorships to a personal level through the sponsorship of clinics and camps. The company sponsors youth golf schools, basketball camps and track and field events as a way of making its name synonymous with sports success in the eyes of the young participants. These grass roots events are the company's way of taking its products out to the consumer.

There is a risk when companies like Nike attach themselves to celebrities. When one of its athletes makes a mistake either on the field or off, the company's reputation can take a hit too. The issue came up in 2009 when Woods was involved in a major personal scandal. Other sponsors dropped the golfer but Nike chose to continue to sponsor him.