Nike needs a win, and it's giving Caitlin Clark over $20 million to deliver one

By Weston Blasi

Some Nike athletes' careers are 'winding down,' one expert said, and the company is looking to make a big splash with Clark's meteoric rise

Caitlin Clark is reportedly adding to the $76,535 starting salary she'll make in the WNBA in a big way: with an eight-figure endorsement deal with Nike Inc.

Clark's endorsement deal with Nike (NKE) will be for eight years and be worth "up to $28 million," according to the Wall Street Journal. It comes after an iconic run for Clark through the women's March Madness that saw her star rise to a point where the women's tournament final had more viewers than the men's final for the first time.

As part of the Nike deal, Clark would be getting a signature shoe, something almost unheard of for a basketball player who has yet to play in a professional game.

In the basketball space, Nike has been the top dog for a long time. It's had many of the top athletes in the sport, like Michael Jordan, LeBron James and Kevin Durant, under its umbrella for decades now. But James will turn 40 this year, and Durant will turn 36, so they're closer to the end of their careers than the beginning.

"Their careers are winding down," Andrew Zimbalist, professor emeritus of economics at Smith College and a leading expert on the economics of sports, told MarketWatch. "At Nike, they are looking for something new, and why not latch on to a spectacular women's athlete."

Nike is always looking for athletes who can help the company sell shoes and add to its marketing machine. But a few of its younger athletes in the basketball space haven't quite had the same impact on the court as James and Durant.

Nike's signature athletes have included Paul George, who has battled injuries in recent years; Ja Morant, who was suspended by the NBA for brandishing guns on social media several times; Zion Williamson, who has battled injuries and has never appeared in a playoff game; and Kyrie Irving, who left the brand shortly after the star shared a link on social media in 2022 to a film containing antisemitic material.

"They are going after marketing success by signing Clark and it's a good marketing move," Zimbalist said.

Nike is hoping Clark's skill and success can help sell shoes, and most importantly give the company a good public relations win at a time when the company is struggling.

During its fiscal third-quarter earnings in March, Nike saw cooling demand for shoes and apparel and slipping digital sales. Nike executives expect sales to be down by low single digits in the first half of fiscal 2025, and shares of the sportswear giant are down 25.82% over the last year, compared to a 20.29% gain for the S&P 500 SPX.

Read on: These 10 college athletes are making over $1 million a year in NIL deals

But one retail expert is unconvinced that bringing Clark into the Nike family will sell many shoes.

"There's virtually no women's performance basketball business in shoes," Spurwink River's retail expert Matt Powell told MarketWatch. "Nike is never going to make any of this up in shoe sales. This is all about marketing and being associated with her and sharing in her success."

He added that he hopes Clark's new Nike shoe design will cater more toward the feet of female athletes than male athletes. That's because of structural differences that can sometimes exist when comparing men's and women's shoes that involve the toe box, forefoot, arches and heel space. New York Liberty's Sabrina Ionescu has a signature shoe deal with Nike, but her shoe is listed as "unisex."

Of the roughly 450 players in the NBA, just 26 have a signature shoe. The WNBA's signature shoe list is only three players: Breanna Stewart (Puma), Ionescu (Nike) and Elena Delle Donne (Nike).

Clark will appear in Nike commercials and billboards (things she is already doing as part of her NIL deals) and represent the brand at high-profile events like the Olympics. She will also wear the swoosh on her shoes during the 2024-2025 WNBA season.

"There is just tremendous value for Nike to be associated with an ascendant star," Powell said.

See also: Who owns the Tiger Woods 'TW' logo now that he's left Nike?

Perhaps more than anything else, Nike is looking for wins during an uncertain time for the Oregon sportswear brand.

The major endorsement deal for Nike comes as the athletic wear giant announced 740 job cuts at its flagship headquarters in Oregon as part of its $2 billion in cost-cutting measures over three years.

"I think this Clark move and the German federation move were really intended to show that Nike is winning at retail again. They are a long, long way from fixing that, so I think they are trying to make some quick PR wins here," Powell added.

In March, Nike agreed to a deal with the German soccer federation (DFB) that will see the company supply Germany's national teams with apparel and equipment from 2027 to 2034, ending a 70-year partnership between the DFB and the Germany-based Adidas.

Nearly all the top basketball brands were interested in signing Clark to a deal, showcasing her level of stardom.

Adidas (XE:ADS) offered Clark $6 million over four years, and Under Armour (UAA) offered $16 million over four years with a signature shoe, according to a WSJ report. Under Armour even brought in NBA superstar Steph Curry, the brand's most famous athlete, to join the pitch meeting with Clark before she ultimately signed with Nike.

"What's happening now is there is an intersection between the rapid growth of women's sports and women's basketball," Zimbalist said. "It's the emergence of a superstar who basically is a female version of Steph Curry."

In addition to Nike, Clark has endorsement deals with Gatorade (PEP), State Farm and Xfinity, and made an estimated $3.4 million from those name, image and likeness deals during her last season at Iowa.

Nike did not respond to MarketWatch's request for comment.

See also: When LeBron James chose Nike in 2003, he gave up $28 million - it could end up making him $1 billion

-Weston Blasi

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04-23-24 1016ET

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