IN AN AGREEMENT which has amazed some observers, Nike is set to be announced as a Tier 3 partner of the Rio 2016 Olympic Games as well as the official kit partner of Team Brazil at London 2012 and Rio 2016.
The deal was chosen over a more comprehensive full Tier 1 pitch from Brazilian sportswear brand Olympikus which is believed to have included not only the team, but outfitting staff and volunteers and even a name change to avoid potential conflict with Olympic brand IP.
The Olympikus offer also guaranteed that apparel and uniforms would be Brazilian made, normally a significant consideration for Rio 2016 organisers.
No official announcement of the agreement has been made but the decision was confirmed to Frontiers by a senior source at Olympikus.
The deal raises questions in a number of areas, not least over the financial rationale for accepting a Tier 3 deal over a Tier 1 agreement, which appeared to tick more boxes for the organisers.
Why too would Nike agree to accept a lower-grade category in a deal complicated by the fact that individual Brazilian sport federations have the right to stick or sign-up to competitive brands? The Brazilian volleyball Association, for example, will continue to wear Olympikus apparel.
Clearly, Nike’s supply agreement will be worth far less than the $100m-plus deals struck with Rio 2016 Tier 1 partners.
As a benchmark, the United States Olympic Committee signed a competition and podium uniform deal with Nike last year worth around $20m over the Olympic cycle from 2012 to 2016. Depending on the final detail in the kit supply contract, the Brazil deal is likely to be worth twice that figure at best.
According to one leading sports industry source, the deal emerged from a unique set of circumstances. “Nike were in a very strong negotiation position. They could get what they needed from a Tier 3 deal, so why pay for a Tier 1?
“Strategically the key reason for going for a Tier 3 deal was because Nike are all about elite athlete performance. They would only be interested in kitting out the athletes, not the volunteers (which an Olympic kit supplier deal would traditionally cover). I suspect they gave Rio a ‘take it or leave it’ Tier 3, athlete-only deal.”
Other benefits, such as synergies with Nike’s sponsorship of the Brazilian soccer team, and Brazil’s status as a key emerging market would also have been factored in.
The Brazilian Olympic Committee (COB) then accepted the deal for two key reasons: “Nike is a global brand with great distribution, and adidas weren’t tendering. The COB needed a kit manufacturer for London 2012, so were under time pressure for that,” the source said.
“They therefore decided to break out the volunteers into a separate category, which may well go to a local sportswear brand such as Olympikus.”
All this is a far cry from the all encompassing Tier 1 partnership made by adidas for London 2012 and highlights Nike’s preferred status as an outsider at the official Olympic feast.
Nike’s only foray into a top-tier local partnership at Sydney 2000 was made in extraordinary circumstances when Nike assumed the sporting goods contract after Reebok pulled out in December 1999.
Under the terms of that deal, Nike paid a relatively small amount to supply kit for Team Australia, as well as apparel for the Sydney 2000 workforce, a component which is thought to have put a greater stress on Nike as an organisation.
The Rio 2016 model owes more to Nike’s association with the Vancouver 2010 Winter Olympics. Under the Tier 3 Official Supplier agreement, Nike held exclusive rights to market and promote within the “high performance sporting goods” product category in a deal that gave Nike the all-important right to provide Team Canada ice hockey jerseys. The official workforce and podium uniforms were provided by Hudson’s Bay Company.
By Matthew Glendinning