Right player, right time, right brand, right sport - Rory ticks all right boxes
“Nike are in a difficult position,” he says, “because their number one golf property historically has fallen on hard times, relatively speaking. When Tiger Woods crashed his car into a fire hydrant in 2009, Phil Knight of Nike described it as a minor blip. Commercially that’s quite interesting because I think they genuinely believed that there was still some sustainability and financial value in the Woods brand heading into the future. But that just hasn’t transpired. Tiger hasn’t won a Major since then and his public reputation hasn’t recovered to where it was.
“That’s a problem for Nike because what you’ve got to keep in mind is that Nike essentially built their whole golf business on the back of Woods and for a long time the vast majority of their commercial activity and their marketing was based around him. And it was very successful. They didn’t used to have a significant golf business but now they do. The problem is that to a large extent, they’ve been left high and dry. They now have a global golf business without a credible brand spokesperson.
Carry the brand
“So essentially what they’ve been looking for is an heir apparent, somebody with the same competitive characteristics as Woods but without the baggage, as well as somebody who can conceivably carry the brand into the future. That’s why I think the length of the deal is absolutely crucial.
“It seems to me that what they’re attempting to do is to build a sustainable business on the back of McIlroy over the next 10 years, just as they did with Woods over the first 13 years of their time together.”
The Woods angle is interesting, not least because the former world number one is such a competitive animal. Up until the revelations about his nocturnal how-do-you-dos came out in late 2009, his Nike deal was worth $20 million a year.
When the likes of Gillette, Gatorade, Accenture and ATT dropped him, Nike stood by their man. They did, however, make sure they got a little more value out of him, halving his deal to $10 million a year. Quite what he thinks of McIlroy coming in and sweeping up the sort of deal that simply didn’t exist at Nike for a golfer pre-Woods would be interesting to know.
Especially since it’s not a given just yet that McIlroy is the bigger draw of the pair. Granted, Nike can’t really be expected to sit around waiting on Woods to get back on course in his quest to pass Jack Nicklaus’s record of 18 Majors – especially since they’re much harder to win now than in the years when he was routinely gathering in a couple without breaking a sweat. Nonetheless, there is research in the US that says that last year Woods delivered a bigger bang for Nike’s buck than McIlroy did for his various alliances.
The sports market research firm Repucom estimates that in 2012, Woods generated $18.9m in media value in the US for his sponsors. They calculate that figure based on the amount of TV time he got in a season during which he won three times on the PGA Tour. Yet even with the sort of stellar season McIlroy had last year, Repucom put the figure generated by him at only $12.9m. The best explanation for the disparity is that McIlroy’s best form came late in the season, his two Fed-Ex Cup wins taking place in September just as the NFL season was kicking into life. Americans don’t watch golf in September, never have and never will.
That said, Nike obviously aren’t just signing McIlroy up to appeal to Americans. The US may well be the biggest sports market in the world but the area of greatest growth in golf over the coming decade will be in Asia. Right from the beginning of his career, even in his ISM days, McIlroy played far more golf in the Far East than most of his contemporaries.
As far back as September 2009, Chandler brought him to South Korea to play in a nothing tournament where he, Ryo Ishikawa and Danny Lee were the main attractions. The appearance fee comfortably outstripped the prize-money on offer but there was no doubting that even then, the main reason for the trip was to build his profile in Asia. The power brokers in golf have been saying for so long now that the next explosion in golf will be in the east that one day we’re all going to wake up and it will be true. Nike are ready and waiting.
“The interest in golf in places like China is really important,” says Chadwick. “There is obviously a very significant latent market for golf over there right now. I think in terms of commercial potential over the next five or 10 years, China alone probably justifies Nike spending such an amount of money on McIlroy.
“I’ve spent a reasonable amount of time in China and what’s clear to me is that golf in China right now is where golf in Europe was maybe 30 to 40 years ago. It’s very elitist, it’s very aspirational and for a lot of people it’s very much a status symbol. It’s what you do when you get a good job with a good salary – you get yourself a nice car and you buy a set of golf clubs. So they’re just at the very early phase and they’re discovering the game and it can only grow from there.