Nike Inc (NKE)’s Wrong Bet In Brazil

Bloomberg’s Bloomberg Surveillance took a look into the developments down in Brazil and how the 2014 FIFA World Cup event that is almost drawing to an end turned out to be a devastating experience for Nike Inc (NYSE:NKE).

Nike Inc (NYSE:NKE) is a famed maker and seller of athletic apparel and footwear. The company’s market is worldwide.

Scott Galloway, a professor at New York University School of Business, was on Bloomberg Surveillance together with Brendan Greeley of Bloomberg BusinessWeek to discuss Nike’s wrong bet this time around in the World Cup and how rival Adidas played it smart to the point of having two finalists – Germany and Argentina.

On their part, Nike Inc (NYSE:NKE) counted on Netherland and Brazil, all of which are out of the World Cup glory.

In this year’s World Cup, Nike Inc (NYSE:NKE) poured out its money to assocaite with soccer stars, many of whom failed to live up to the hype. Concerning Nike Inc (NYSE:NKE), Mr. Greeley noted, “It was running commercials loosely affiliated with the World Cup.”

In siding with the soccer stars, Nike sidelined FIFA, a move that apparently gave away the opportunity to Adidas to work closely with the World Cup organizer. On the same note, Mr. Greeley recalled his cover story on BusinessWeek in which he criticized how Adidas was throwing away the money.

“Adidas was paying $70 million or so to be associated with FIFA, and that was throwing the money away,” he wrote in the article.

However, he admitted that he was wrong in this take on Adidas’ approach. On the World Cup deals issue, Mr. Galloway had this to say:

“The more interesting story is what happens to the pricing are the sponsorship deals around FIFA because there has been fairly negative advertising.”

He went to state that, “When Nike purposely announces that we are not in negotiations, that lowers the market, because they basically announced to Adidas, ‘it is all yours.”

In the discussion, it appeared as though Nike Inc (NYSE:NKE) is fond of making wrong moves with its money. For example, the company threw money at France three years ago, yet the company did not perform well in the last World Cup.

Disclosure: none