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Nike slashes NBA payouts
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December 23, 1998: 1:18 a.m. ET
Shoe maker stops paying most players, teams, reduces payments to league
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NEW YORK (CNNfn) - Sporting goods giant Nike Inc. on Tuesday swooshed away from the strife-torn National Basketball Association, announcing that it had suspended contract payments to the league's teams and most of its locked-out players and cut its payouts to the league itself.
"As the NBA lockout continues to disappoint fans and inflict harm on the sport of basketball, the value of our investments in the NBA also diminishes," Ralph Greene, Nike's global basketball director, said in a statement.
A spokeswoman at the company's Beaverton, Ore., headquarters declined to discuss the dollar amount involved in the decision.
"Our actions are consistent with our contracts with the players, the teams and the league," said Vizhier Mooney, the spokeswoman. "We are emphasizing our rights under our contracts."
She said the information about contracts was confidential, and the company was making the announcement in response to news reports in recent days that Nike found "very one-sided and very misleading."
"This is not about taking sides," Mooney emphasized. But in light of the protracted labor dispute that has shuttered the league for nearly half its season, "we need to reassess the value of our investments," she said.
NBA owners locked out the players before the season was due to begin last autumn because the two sides could not agree how to split revenues.
The sports apparel maker, known for its trademark "Swoosh" logo, has been involved in basketball since 1973, when it introduced its first basketball shoe, the Bruin.
Today, some 230 of the league's players wear Nike sneakers, and the company outfits 10 NBA teams.
Analysts say middle-range basketball players earn around $100,000 a year from their Nike contracts, while bigger stars can get as much as $250,000 to $1 million a year.
Nike said the suspension of payments was within its contractual rights. About 230 players in the NBA wear Nike footwear.
A spokeswoman was not available on Tuesday to elaborate, but the New York Times reported Dec. 19 that payments to most players had been suspended, with the exception of a few signature clients like Michael Jordan.
Last week, Nike attributed a decline in its second quarter sales and earnings in part to the NBA lockout.
Analysts agreed that the labor dispute has hit the company hard, particularly in the United States where its revenues declined 15 percent to $665.9 million.
Nike shares (NKE) climbed 1/8 to 39-1/4 in trading on Tuesday.
-- From staff and wire reports
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