Nike banks on Rory McIlroy as the new Mr. Swoosh

Andrew Redington

After months of speculation, Rory McIlroy on Monday let the golf world in on what had become the worst kept secret in sports: He is the once and future crown prince of Nike golf.

King of the empire that Tiger Woods built might be a more appropriate appellation since Nike, which did not divulge the specifics of the long-awaited, much-hyped deal, likely paid a royal ransom to keep the world's best golfer in Swoosh-emblazoned gear and togs for years to come.

In a cheesy official announcement complete with pomp, circumstances, pyrotechnics, and searchlights beckoning the company’s new pitchman down a runway and onto a floodlit stage, the world No. 1 pledged his fidelity to Nike.

“I’ve always associated Nike with the best,” said McIlroy, who will go all Swoosh in clubs, ball, footwear, glove, apparel, headwear, and accessories for the foreseeable future. “I’ve watched Tiger make some history as a Nike athlete, Roger Federer, Rafael Nadal, and I’m excited to try and create my own history and be part of the Nike family.”

The multi-year contract, which, if reports estimating it at more than $200 million over 10 years are in the ballpark, would make the 23-year-old, two-time major winner Nike’s highest-paid athlete.

Remember when observers wondered if Woods was worth the reported $100 million Nike signed him to in 2000? Pundits noted that, sure, golf’s superstar was a good choice to replace Michael Jordan, the world’s most marketable athlete who was closing in on his third, and final, retirement. But, some wondered, how much could Nike actually make off a player in a niche sport like golf?

Woods, of course, went on to establish Nike Golf as an industry powerhouse and was, indeed, “worth every penny” of the $500 million the manufacturer paid out in the first five years of the relationship.

“He's a 24-year-old golfer who transcends the game of golf, and really is the most visible athlete in the world,” Nike’s director of golf Mike Kelly said back then. “And to attach our brand name and our products with Tiger, you know, we're very excited about it, because he does transcend the game of golf and actually sport, to some degree.”

Sound familiar? Here’s what Cindy Davis, president of Nike Golf, had to say Monday about Tiger’s new stablemate:

“Rory is an extraordinary athlete who creates enormous excitement with his on-course performance while, at the same time, connecting with fans everywhere,” Davis said. “He is the epitome of a Nike athlete, and he is joining our team during the most exciting time in Nike Golf’s history. We are looking forward to partnering with him to take his remarkable career to the next level.”

Woods remains the headliner on the franchise’s marquee, but he’ll be 37 when he kicks off his 17th professional campaign on Thursday. Nike signaled with its signing of McIlroy that the company was looking down the road. With Forbes naming McIlroy “one of golf’s most marketable young stars,” that road looks paved with gold for the golfer and his handlers.

McIlroy’s manager, Horizon Sports Management, for example. The Dublin-based firm, which signed the Ulsterman after his record-breaking U.S. Open romp in 2011, expects a serious bump to its bottom line from its star client’s new deal. The Northern Irishman had already boosted Horizon’s profits 135 percent between December 2010 and the end of last year, according to the Irish Examiner.

Anyone expecting Tiger to play second fiddle to his new teammate, however, should reconsider. Though absent from the on-stage fireworks, Woods was front and center throughout the announcement spectacle -- joining McIlroy in a new promo Nike unveiled as well as in a video with a handful for stars, including Federer, welcoming Rory aboard the good ship Nike.

“Hey Rory, welcome to the family. This is an exciting time to be a part of Nike,” Woods said. “Nike Golf is doing some amazing things with product innovation. Just want to wish you all the best, and congratulations.”

McIlroy has earned his perch atop his sport. His five worldwide victories in 2012 included his second major championship. He won the money titles and Player of the Year honors on both the PGA and European Tours.

He recently declined to resign with long-time sponsor, Dubai hotel chain Jumeirah, and, presumably, with eyewear vendor Oakley, which is suing him and Nike for breach of contract. Most notably, McIlroy joined Nike’s other recent signees, Nick Watney and Kyle Stanley, in a mass exodus from Titleist, whose gear he had used since turning pro in 2007. Indeed, critics like Nick Faldo believe the switch to new equipment from from sticks and balls he used with such success posed a serious potential pitfall for young Rory.

McIlroy was unconcerned.

“I feel like I’m hitting the ball really well,” said McIlroy, who noted that his new VR_S Covert driver has helped him boost his ball speed from the mid-170s to 180 mph since he began hitting it late last year. “The change to the new equipment has been seamless.”

Should McIlroy experience a mid-season slump similar to last season’s, when he missed three cuts in four starts (including the U.S. Open) -- or even a couple of mishits -- his decision to join Team Nike will most certainly come under increased scrutiny.

But that’s what happens when you’re the best golfer on the planet and one of the world’s richest athletes. Last year, Forbes pegged him at No. 91, with estimated earnings from bonuses, appearance fees, prize money, and sponsorships between June 2011 and June 2012 totaling $17.4 million.

Forbes did the math before McIlroy won the 2012 PGA Championship ($1.5 million), two FedEx Cup events (a combined $2.8 million), and the World Tour Championship (about $1.4 million), and chalked up perhaps another $3 million for a some top-5 finishes on the PGA and European Tours. Figure at least another couple million for his World Golf Final start in Turkey and China exhibition with Woods, and even before accounting for the Nike endorsement or some likely Ws during the first half of this year, McIlroy has bounced up into the top 20 on Forbes’ roster of today’s richest athletes.

Nike, whose golf division’s $726 million revenues for its fiscal year ending in May were 10 percent higher than in 2011, according to Forbes, is placing a sizable bet on McIlroy’s youth (he’ll be 24 in May) and cross-over popularity that spans age groups and sports. By committing the millions to its new young star, the company believes it has found the heir apparent to Woods both on the course and in the wallets of McIlroy’s growing base of worldwide fans.

It remains to be seen, however, whether Nike’s all-in gamble on McIlroy will pay off, since Woods still delivers some 50 percent more bang for sponsors’ bucks than his young rival, according to a sports research firm.

Based on the amount of TV time the golfers brought to their sponsors and the cost of that exposure, Repucom estimated that Woods generated $18.9 million in media value in the U.S. for Nike and Fuse Science ($18.1 of that for Nike), compared with the $12.9 million McIlroy made for his primary backers, Jumeirah, Titleist, and Audemars Piguet.

Nike is betting McIlroy’s increasing appeal will pay off now and into the future. As for the golfer himself, he claimed that signing with Nike was not about the Benjamins.

“I don’t play golf for the money, I think I’m well past that. I’m a major champion, which I’ve always dreamed of being. I’m world No. 1, which I’ve always dreamed of being,” he said. “I play for titles. I don’t play for money.”

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