July, 3, 2024

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Nike has a tough task ahead in the second half of 2024 to give the company a positive year. … As college football season draws near, the impact of conference realignment is back in the spotlight. … One NWSL owner has strong thoughts on women’s soccer ownership models. … And Front Office Sport Today dives into the biggest stories of the first half of the year.

— David Rumsey [[link removed]] and Eric Fisher [[link removed]]

Nike’s Worst Stock Plunge Forces Big Changes to Win Back Consumers [[link removed]]

KEN BLEVINS/Wilmington Star-News

Nike already was facing an uphill climb to restore its own financial health and consumer confidence in the face of several major challenges. But the company is now also doing so on the heels of its worst single day on the stock market and in the midst of trying to forge a new market for itself.

A day after last Thursday’s release [[link removed]] of weak quarterly earnings and a downgraded future outlook, Nike shares plummeted 20%, wiping out about $28 billion of shareholder value. The drastic fall marked the steepest one-day percentage decrease in Nike shares since the company went public in 1980. Two subsequent days of trading have been comparatively calmer, with Monday’s 1.9% gain countered by a 1% fall Tuesday. But Nike shares remain at their lowest level since the early days of the COVID-19 pandemic in 2020.

Going into last week’s quarterly earnings report, Nike had been in the midst of a $2 billion cost-cutting campaign [[link removed]], and was battling ongoing issues both internally and across the sporting goods and footwear business—while also working damage control [[link removed]] for its MLB uniform debacle [[link removed]].

But the earnings report, and a subsequent management call with industry analysts, revealed further issues, including a projected Fiscal Year 2025 sales decline of roughly 4–6% instead of a prior expectation of a gain during the year, and a 10% drop in the current quarter. In addition to consumer sentiments increasingly favoring rival brands such as Hoka, On, and New Balance, Nike is grappling with currency issues, underperformance in its digital business, and a weakened sales outlook in China.

“We have been navigating several headwinds, which we now expect to have a more pronounced impact on fiscal 2025,” said Nike president and CEO John Donahoe.

Many of those analysts were quick in their criticism of the company.

“Our key conclusion is there will be no quick rebound for Nike’s earnings,” wrote UBS analyst Jay Sole in a research note to investors. “We believe Nike is embarking on what will be a multiyear reset of its business.”

A Cheaper Nike?

A significant part of that reset will be the introduction of less-expensive shoes. One such release will be a new lineup of footwear priced below $100. That effort is designed to address rising consumer concerns about ongoing price creep, particularly as many of Nike’s top models currently sell for as much as twice that figure.

“Our teams are attacking opportunities across price points,” said Matthew Friend, Nike chief financial officer.

Navigating College Football’s 2024 Realignment Landscape: What’s Next? [[link removed]]

USA TODAY

The start of college football season is a little more than 50 days away, when fans will begin to get their first looks at the new Power 4 era [[link removed]], on the field at least.

But this week marked the official transition for some schools, like Texas and Oklahoma, which departed the Big 12 to join the SEC. Schools leaving the Pac-12 will formally become members of their respective new conferences on Aug. 2, just a few weeks before the first football games of 2024 kick off.

New Faces in New Places

To recap the busy season of realignment, which includes 15 schools on the move, here are the conferences that are adding new members this summer:

ACC: Cal, Stanford, SMU American Athletic Conference: Army (football only) Conference USA: Kennesaw State Big 12: Arizona, Arizona State, Colorado, Utah Big Ten: Oregon, UCLA, USC, Washington SEC: Oklahoma, Texas

The two remaining members of the Pac-12, Oregon State and Washington State, have a football scheduling partnership with the Mountain West Conference, and a separate deal with the West Coast Conference for basketball and other sports.

More Moves to Come?

Two of the biggest remaining pieces for future realignment center around Florida State and Notre Dame.

FSU is leading a lawsuit [[link removed]] against the ACC so that it can leave the conference before 2036 without paying more than $500 million in exit fees. Clemson is also challenging the ACC in court, and the conference has counteresued both schools. If FSU and Clemson were successful in departing, that could set up a battle between the Big Ten and SEC for two more high-profile members.

Golden Dome

Meanwhile, Notre Dame remains the most lucrative potential catch of them all, so long as it continues to stay independent. The iconic school recently extended [[link removed]] its media rights deal with NBC Sports and hired the network’s chairman as its new athletic director.

That new deal, which runs until 2029, lines up with the Big Ten’s broadcast deals that expire that same season. The conference has long been seen as a logical landing spot for Notre Dame if it decides to join one. If FSU and/or Clemson move out of the ACC, that could put more pressure on the Fighting Irish to reconsider staying independent.

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FRONT OFFICE SPORTS TODAY A Half Year of Huge Sports News

Mark J. Rebilas-USA TODAY Sports

With the first half of the year in the rearview mirror, four Front Office Sports writers joined the show for a roundtable discussion on the NFL’s supremacy, the rise of women’s sports, the creeping threat of betting scandals, the state of sports media, and plenty more.

🎧 Watch, listen, and subscribe on Apple [[link removed]], Google [[link removed]], Spotify [[link removed]], and YouTube [[link removed]].

LOUD AND CLEAR Building Blocks

Aaron Doster-USA TODAY Sports

“On the women’s side, multiclub is a necessity, not a luxury, or greed.”

—Washington Spirit owner Michele Kang (above, right), on the value of building multiclub portfolios in women’s soccer. In addition to the NWSL club, Kang also owns [[link removed]] top-flight French side Olympique Lyonnais Féminin (Lyon) and second-division English team London City Lionesses.

“To professionalize women’s football to the level that they deserve and to reach the potential women’s football has, we need to invest,” Kang said [[link removed]] in an interview with Forbes. “Unfortunately women’s football right now, because of the lack of media dollars, there isn’t that much money to invest.”

Kang said her three-club portfolio could break even within the next two or three years, but isn’t sure when she’ll be making more money than she’s spending. “[Profitability] is going to be a little more challenging,” she said.

TIME CAPSULE July 3, 2001: A Rare Miss for the NBA

USA TODAY Sports

On this day 23 years ago: The NBA’s Board of Governors unanimously approved the relocation of the Grizzlies from Vancouver to Memphis, just six years after the expansion franchise arrived in Canada. Marking the league’s first team move since the Kings went from Kansas City to Sacramento in 1985, the saga of the Grizzlies represented a particularly rare failure for the NBA in a new market.

Hoping for a West Coast version of the strong fan reception for the expansion Raptors in Toronto, the Grizzlies never came close to clicking in Vancouver. During the six years there, the Grizzlies failed to even win 25 games in a season, much less reach the playoffs. The franchise was sold twice during the short and financially unprofitable run, while another scuttled deal contemplated a potential move to St. Louis. One of the Grizzlies’ heralded young players, Bryant “Big Country” Reeves, didn’t fully translate his prior collegiate success to the NBA, while 1999 No. 2 draft pick Steve Francis refused to play for the team and forced a trade to Houston.

In Memphis, it’s been a better story for the Grizzlies, despite a league-low franchise value [[link removed]] of $2.4 billion. Owned by billionaire Robert Pera and still operating in one of the NBA’s smallest markets, the team has reached the playoffs 10 times since 2010. Meanwhile, talks continue with local and state officials about renovations to the 20-year-old FedEx Forum—a move that would further solidify the Grizzlies’ presence there.

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With the new format and rule changes that MLB has announced, are you planning to watch the Home Run Derby this year?

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