The Global Economics of Sport by unknow

Author:unknow
Language: eng
Format: epub
Publisher: Taylor & Francis Group
Published: 2022-03-22T00:00:00+00:00

When Nike was getting pummelled on the subject in the 1990s, it typically had only two responses: anger and panic. Executives would issue denials, lash out at critics, and then rush someone to the offending supplier to put out the fire. But since 2002, Nike has built an elaborate program to deal with the charges of labour exploitation.

(Holmes 2004)

A new vice president for Corporate Responsibility was appointed and the first corporate responsibility report contained the admission that Nike knew far too little about what was happening in the factories and that its monitoring system was not working well enough.

By the end of the fiscal year ending May 2004, Nike was back on its growth trajectory. Its turnover shot up 15 per cent on the year before (see Figure 5.1), jumping from $10.7 billion to $12.3 billion. Its net income doubled from $474 million to $946 million. As Figure 5.1 indicates, this growth trajectory in turnover and net income then continued right through to the start of the global recession in 2008–9, with revenues peaking at $19.2 billion in 2009 and net income at $1.9 billion, both at almost double their 2004 values.

As Holmes (2004) indicates, this turnaround in financial performance was also associated with a turnaround in business approach: ‘The New Nike … No longer the brat of sports marketing, it has a higher level of discipline and performance.’ Nike even became official US Olympic sponsor for Beijing 2008 and ‘toned down its anti-Establishment attitude’ (Holmes 2004). The financial turnaround was not only brought about by greater emphasis on corporate responsibility, but also by greater concentration on global business performance.

Not everything has changed. Nike still invests up to 13 per cent of turnover in marketing. It still has 31 per cent of the global sports footwear market and this generates over half of its revenues. However, overseas sales are now larger and growing faster than US sales. Sales in China, for instance, increased by more than 50 per cent in 2009 alone, the year of the global recession.

Transnational corporations in sport are not limited to producers or marketers of athletic goods (e.g. clothing, footwear, and equipment) but also now involve professional sports teams such as football clubs as well as media conglomerates that broadcast sport-related programming. The following case study of Real Madrid FC demonstrates how the organisation has gained the position of ‘commercial leadership’ in the global football market.

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