In a major setback, the NFL lost $14 billion in court this week, with its top partner Nike faring even worse. On Friday, Nike saw $28 billion in shareholder value vanish as its stock dropped almost 20 percent in a single day. The significant drop occurred after Nike announced an expected decline in sales for the upcoming fiscal year. Nike’s stock has been steadily decreasing since November 2021, going from over $177 per share to $75.65 at the close of trading on Friday. According to CNBC.com, this was the worst day for Nike shares since the company went public in December 1980.
The NFL’s agreement with Nike runs until 2028, and by then, the league may have recovered from its loss through future court decisions. However, whether Nike can reverse its fortunes remains uncertain. The company’s excessive focus on established brands, lack of innovation in new styles, and direct-to-consumer sales approach have caused friction with retail partners, resulting in lost shelf space to competitors. In addition to these issues, there are rumors that CEO John Donahoe may be replaced among other significant alterations at the company’s top level.
Nike has cut two percent of its workforce and reduced its payroll by $2 billion as it shifts its focus to larger issues beyond uniform designs such as potential leadership changes. The NFL has been relying heavily on Nike as their exclusive apparel provider since 2012 and their logo being displayed on player uniforms is a testament to this partnership. However, as seen with recent losses and declining sales, this partnership may not be sustainable in the long run.
Overall, both the NFL and Nike are facing challenges that could impact their future successes or failures respectively. It will be interesting to see how they navigate these challenges and what changes they make moving forward.
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