The economics of sports: Did you already know..? Volume I

Business is multifaceted. I recognize this very often when I glance at my favorite business: the sports industry. The “giant” companies were not always “giants”, and most of the time it is astonishing how it all started. Somebody has to start it somehow, and usually you cannot predict whether your business will be successful or not. Today, I will start off with Nike´s success story, and next week archrival Adidas will follow.

The omnipresence of victory

And nowadays, you will find them, definitely. If you do not own any yourself, you will certainly find somebody wearing Nike clothes or shoes on the streets. Nike, the brand with the “Swoosh”, right? But where did it come from, and how did it become the market leader?

It all started with a vision: high quality and low-cost running shoes. Philip Knight, co-founder of Nike proposed that quality running shoes could be manufactured in Japan that would compete with “more established German brands”. At the University of Oregon he wrote a paper with the title: “Can Japanese Sports Shoes do to German Sports Shoes what Japanese Cameras did to German Cameras?”.

Before Nike, there was Adidas. And Adidas was successful everywhere – especially in the soccer business. And Nike was not always Nike. When Philip Knight started his business with Bill Bowerman, he first imported Tiger brand shoes from the Onitsuka Company in Japan and sold them under the brand name Blue Ribbon Sports. And I bet you know these shoes. Today, they are called Aasics. Weird how everything is linked with each other in business, right?

Re-inventing the business

Blue Ribbon Sports did this for seven years, until finally in 1971 Bowerman and Knight decided to launch their own brand. Nike – the greek goddess of victory – the name was a suggestion of Blue Ribbon Sports´ first full-time employee Jeff Johnson. The “Swoosh” was designed by Carolyn Davidson, a graphic design student. She was paid 35$ for her work. Philip Knight stated: “I don’t love it, but I think it will grow on me.” It turned out to grow on him I guess, since in 1983, Knight gave Davidson a diamond swoosh-ring and an envelope filled with Nike stock to express his gratitude.

Since 1989 Nike has never given up its pole position in the sports industry, still fighting for supremacy in the soccer business with archrival Adidas though. Another interesting fact that reveals that business is multifaceted: Converse is a Nike subsidiary since 2003, and Umbro since 2007. Anybody knows what Umbro actually means? Well, it´s the portmanteau of Humphrey Brothers. You see them all but you don´t know it all. Who would assume that one of the most well-known and easily recognizable brand logos in the world was designed by a student and not by “professionals”? Who would have guessed that a vision, a running coach (Bowerman), and a business student (Knight) at the right time and the right place would meet and become one of the biggest global players in the world?

What I am trying to say is that the only thing that anybody needs is luck, passion, and patience. Substitute your habit of procrastination with courage and perseverance. You might not become Nike, but one thing is for sure: without starting somewhere, you will never get anywhere. And even   if it does not work out, experience is something that cannot be learned in lectures. What was Nike´s slogan again? “Just do it“, right?

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