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Nike Keeps Yao in Backcourt as Clock Runs Out on Its Deal

Has the sneaker giant erred in not touting the Chinese player more, even if doing so would mean a costlier endorsement accord?

April 21, 2003|Ralph Frammolino | Times Staff Writer

He has mugged with Mini-Me for Apple computers, and his legs have dangled off the top of a bunk bed in ads for ESPN. He has played the straight man in a Visa commercial that pokes fun at his name. One New York importer is using him to hawk Chinese beer to Texans. Up next? A Gatorade commercial.

Yao Ming, the Houston Rockets' 7-foot-5, 296-pound rookie sensation, seems to be everywhere. Everywhere, that is, except the one place you'd expect: in ads for Nike Inc., the sneaker giant that helped groom him for the global spotlight.

Nike signed Yao in 1999 to a four-year, $200,000 contract, which expires in May. But the Beaverton, Ore.-based company has so far held back from capitalizing on the player's disarming smile, self-deprecating humor, earnest attempts at English and coming-to-America success story.

Now that Yao and the Rockets have wrapped up their season and his Nike sponsorship is ticking down, some wonder whether the company hailed as the sneaker world's most formidable marketing machine hasn't blown an easy promotional layup.

"It's weird," said Robert Dorfman, creative director for San Francisco-based Pickett Advertising, who writes a sports endorsement newsletter. "If you've got him in your pocket, why are you keeping him in your pocket?"

Nike executives acknowledge that they have done nothing to tout Yao in the United States and have barely trotted him out in China, where other companies are using the player as entree into that untapped, basketball-crazed market.

Publicly, they say they hope to unveil a Yao promotional campaign this year if he continues to endorse their shoes. Privately, however, company insiders say they are sitting on one of the NBA's hottest properties for practical reasons: They fear that boosting Yao's profile would only drive up his fee during contract renegotiations or make him more attractive to a competitor.

"We don't want to hype the hell out of the guy and have him jump ship," one insider said.

Such a move would represent a reversal of fortune for Nike, the biggest player in player endorsements and long admired for locking up a stable of marquee names.

Nike tried last year to lock up Yao as he prepared to enter the NBA draft in June, said a source close to the discussions. Nike offered to "tear up" Yao's original contract and give him a new $1.6-million deal through 2006, making him China's highest-paid athlete endorser, the source said.

Yet Nike withdrew the offer when Yao's financial advisors, anticipating his potential marketing punch, insisted on raising his annual endorsement fee to "a couple of million dollars," the source said.

"That made people step back and say, 'Whoa. Maybe he's not worth that. Let's play out the contract and see how it goes.' "

Although that decision may look like a marketing misstep, one expert said it would have been difficult to anticipate how quickly Yao would become a star, earning a spot in February on the cover of Sports Illustrated along with the declaration: "He shoots, he smiles, he sells." Indeed, at the same time Nike opted to put Yao on the promotional bench, it was furiously positioning itself to write endorsement contracts with Ohio high school phenomenon LeBron James and the Los Angeles Lakers' Kobe Bryant.

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Rock Star Status

"Who Yao is today is 100% different than he was eight months ago," said Rick Burton, executive director of the Warsaw Sports Marketing Center at the University of Oregon. "Yao is now an American idol.... He's Elvis."

Still, Burton said he's perplexed that Nike didn't make better use of Yao in China, where he already had become a hero and one of the most recognized sports personalities in Asia.

The saga of Nike and Yao illustrates the hopes and perils of sports celebrity marketing.

Even if the timing is right, companies can pour millions of dollars into promoting a star only to find he fails to connect with key consumers. Then there are the hazards that a player will pull up lame, get arrested -- or be traded to Cleveland or some other marketing Siberia.

Yet companies keep spending, hoping to replicate Nike's wildly successful collaboration with basketball great Michael Jordan, a pairing considered the gold standard in sports marketing. In its last annual filing, Nike projected spending nearly $900 million during the next five years for endorsements, including its record $100-million sponsorship of golfer Tiger Woods.

Yao represents an important personality in Nike's lineup. For the first time in its 31 years, the $10-billion company is selling more shoes and products overseas than in America, and it has identified China as a key market for future growth. Revenue from China, a modest $100 million last year, is growing at a double-digit pace.

None of Yao's advisors, who include the associate dean at the University of Chicago business school, would comment about Nike's handling of their client's sponsorship. Interviewed after a tough loss to the Lakers this season, Yao seemed to shrug off his growing marketing presence.

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