Phil Knight started sports giant Nike Inc. in 1964 and named it after the Greek goddess of victory. Located in Beaverton, Oregon, Nike is the world's largest sportswear manufacturer and began making golf products in 1986. It was not until the signing of an endorsement contract with Tiger Woods 10 years later that the company began to flourish in the golf business.
First Products
Nike's first golf related-product was a golf shoe called the Air Linkster that hit the market in 1985. Nike released other golf clothing shortly thereafter and Curtis Strange was wearing Nike golf apparel when he won consecutive U.S. Open championships in 1988 and 1989.
Tiger Woods
Nike had a history of success with endorsements by sport stars, including Michael Jordan and John McEnroe. In 1996 Nike took a chance on the 20-year-old Woods and signed him to an endorsement contract reportedly worth more than $40 million. Tiger wore Nike clothing and began playing a Nike ball and using its clubs as they were developed.
Capitalizing on Tiger
In addition to shoes and other apparel, the company eventually sold golf balls and clubs, and accessory items, including gloves and bags. Woods immediately gave credibility to whatever product the company produced. As he collected tour wins and his major championship total rose, Nike capitalized on his success with emotional advertisements about the revolution he had brought to the sport. Of course the Nike swoosh was always prominently displayed. Tiger's good looks and outstanding physique behind the colorful clothing he wore didn't hurt sales either.
Success
Nike Golf reached a peak of $725 million in sales in 2008. Nike continued to sign endorsement contracts with emerging golf stars, and now are affiliated with 13 U.S. golfers, including 2009 U.S. Open Championship Lucas Glover, British Open champion Stewart Cink, and another young phenom Michelle Wie.
Hard Times
Nike Golf's income dropped 11 percent in 2009 to $648 million while the revenue for Nike as a whole grew 3 percent during the same period. The company says the drop is due to the slowdown in the economy, and similar drops in profits of other golf equipment makers substantiate this conclusion. On top of this trend, the public problems of Woods in late 2009 did little to help stem Nike's loss in sales. His tarnished image, absence from the spotlight for much of 2010, and lack of dominance when he returned prevented him from turning the tide against the declining golf equipment market.
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