Nike (NYSE: NKE) shows it still has game with win for Caitlin Clark deal

Nike (NYSE:NKE) CEO John Donahoe didn’t mince his words during a recent earnings call with investors when he admitted the company had gotten off its game. Now, the world’s largest maker of athletic shoes is turning to college basketball star and fresh WNBA draftee Caitlin Clark to help it get back on track.

After much speculation about which sneaker maker would get a sponsorship deal with the NCAA women’s all-time lead scorer amid fierce competition from rivals including Adidas (CBOE:ADS), Under Armour (NYSE:UAA) and Puma (CBOE:PUMD), the victor will reportedly be Nike with an eight-year offer worth $28 million. It’s an impressive number that shows just how serious Nike is about getting a deal done with the widely-praised athlete who was recently honored as the nation’s best basketball player for the second year in a row.

The development demonstrates the longstanding power of Nike’s brand, even as it loses ground to emerging favorites like On (NYSE:ONON) and Deckers Outdoors-owned Hoka (NYSE:DECK). The company, known for its emblematic swoosh logo, has seen its shares decline 11% this year as it works to recover from several past moves — such as cutting out wholesalers to prioritize its own retail operations — that even Donahoe now acknowledges were strategic mistakes. Over that same period, On shares have surged 23% while Decker has seen gains of 27%. 

“We know Nike is not performing at our potential,” Donahoe told investors last month, speaking about the company’s last fiscal quarter when net income fell 5% to $1.2 billion after revenue came in flat. “We must sharpen our focus on sport … Our brand storytelling will leverage our athletes and sport moments to become sharper and bolder, beginning with the Olympics this summer.”

Demonstrating that the company is willing to quickly pivot after a mistake, Donahoe added that it would make a renewed effort to work with wholesalers again for a “more holistic offense.” “We recognize that our wholesale partners help us scale our innovation and newness in physical stores and connect our brands in the path of the consumer,” he said.

CFO Matt Friend, meanwhile, said the company would focus the brand “to tell fewer, bigger stories with greater reach.”

That’s exactly why the latest deal the young basketball superstar was a must get for the company. What the NCAA has already labeled the “The Caitlin Clark Effect” is just getting started, and the Iowa native has her first season at the Indiana Fever ahead of her. She’s also widely expected to get a spot on the US Olympic women’s basketball team at the upcoming Summer Games in Paris. Reach like that doesn’t come around every day.

Nike may be going through a rough spot, but the biggest and best players have a hard time saying no when it comes calling. That’s a good sign for the long-term viability of the brand, which remains synonymous with influential athletes across multiple sports including Michael Jordan, Cristiano Ronaldo, Serena Williams, Rafael Nadal and LeBron James. The company is also quickly moving on from bad decisions and not doubling down, and that’s reason enough to warrant a fresh look from investors.