Nike, the NFL and the Big Business of Sports Entertainment ... Customers Reign Supreme ... For the Owners, Sponsors and Players, It's All About Customer Satisfaction

Lately there has been lots of dramatic and generally horrific bad news hitting the headlines about a few professional athletes and their terrible off-the-field behaviors.


Professional sports in general, and the NFL in particular, are big business --- and a hugely successful entertainment business at that.


In addition to being highly skilled and trained athletes, the extremely well paid athletes are part of a huge business whose purpose it is to entertain customers and help generate big dollars from fans and sponsors for their teams, their leagues and themselves.


So the customers, aka fans, always call the signals in the end, as is the case with all businesses. Customers reign supreme, and the team owners, league sponsors and employees/players all know, or at least should know, that simple fact of their business lives.


So what will happen now to the people who have violated the trust of their fans and customer base? And what will the sponsors choose to do? And how will the owners and the league anticipate or react to those choices?


Well, that's up to the customers, aka fans, since they pay the bills. And that's the way it should be.


So hurry and clean up your act, NFL owners, or suffer the consequences. The customers and the sponsors will be calling the shots, so listen carefully to what they have to say. And if that means that some new replacement players accompanied by a new attitude and set of behaviors will be required to keep the fans/customers happy and on board, so much the better.


Nike Shareholders Express Concerns About Sponsorships is subtitled 'Athletic Gear Maker Has Ended Contracts With 3 Prominent Athletes' and says in pertinent part:

Shoes are displayed in the Nike store in Santa Monica, Calif.           

KE in Your Value Your Change Short position

"Nike executives fielded concerns about risks in the company's athletic endorsements at their annual shareholder meeting Thursday, in the wake of several high-profile suspensions of sponsored athletes for violent behavior.

Within the past month, Nike has terminated or suspended contracts with three prominent athletes over issues of domestic violence. One shareholder asked Nike brand President Trevor Edwards if "recent athlete incidents change your view on sponsoring professional athletes."

Mr. Edwards responded that the company evaluates such incidents "on a case-by-case basis, really looking at that individual situation and making sure that we make our decisions really based on the situation at hand. And importantly, the facts that we know at that point in time."

On Wednesday, Nike issued a statement announcing the suspension of its contract with Minnesota Vikings running back Adrian Peterson, who is facing charges of injuring his 4 year old son after allegedly beating him with a switch. The company said it "in no way condones child abuse or domestic violence of any kind and has shared our concerns with the NFL."

The statement followed earlier terminations of contracts with Baltimore Ravens running back Ray Rice and Olympic sprinter Oscar Pistorius. Mr. Rice has admitted to hitting his then-fiancee in a hotel elevator earlier this year, while Mr. Pistorius was convicted last week of culpable homicide in the 2013 shooting death of his girlfriend.

Nike executives also addressed questions more directly tied to business operations at the meeting, which took place at the company's Beaverton, Ore., headquarters. Asked how the company might capitalize on shifting consumer trends in athletic apparel, Chief Executive Mark Parker said that the plan is to drive "performance apparel into lifestyle apparel to create a unique position for Nike."

According to recent analysis by Barclay's, the athletic apparel industry is projected to swell by nearly 50% over the next six years to roughly $100 billion in U.S. retail sales. Much of that growth is projected to come from consumers who in growing numbers are buying workout clothes for non-workout purposes, while traditional athletic brands like Nike face increased competition from lifestyle apparel makers pushing more athletic-inspired clothes.

Nike conducts roughly 30% of its annual revenues from sales of apparel; the majority of sales come from footwear. Mr. Parker said apparel is considered one of the biggest growth opportunities for the company and that "we're going to apply basically the same approach to apparel as we have in footwear."

Summing Up

Nike is in business to satisfy its customers.

So is the NFL.

So are the players.

Only by doing that will team owners, aka shareholders, be happy campers and realize satisfactory profitability on their funds invested.

All successful businesses need to have happy customers and for the NFL, that means a happy and satisfied fan base. Thus, frequently it's necessary for the owners to fire some of the existing players, aka entertainers, and hire new ones to replace them.

Because when it comes to business, big or small, customers and advertisers are the ones paying the bills and therefore always in charge as the people who are really calling the shots. It's that simple.

So let's stay tuned as big and necessary changes are on their way to the NFL.

That's my take.

Thanks. Bob.