Sports Business: COMMENTARY
COMMENTARY: PELE VS. NIKE: GUESS WHO WON'T SCORE
For the Chinese, this is the Year of the Tiger. For marketing, this may be the Year of the Bonehead: In the beef industry, cattlemen are suing Oprah Winfrey, a woman who could turn the phone book into a best-seller. In the golf biz, the pga is trying to keep Casey Martin, a promising golfer with a bum leg and a lot of heart, off the Tour. And in the sports equipment game, Nike is butting heads with maybe the most beloved athlete ever, Pele.
Last year, Nike Inc.'s marketing logic seemed impeccable: To accelerate global growth, it targeted soccer, the world's most popular sport. And in typical, in-your-face Nike style, the Beaverton (Ore.) company paid a record $200 million to sponsor the Brazilian national squad, favored to win its fifth World Cup this summer in France.TAINTED FUNDS. But Nike now finds itself in a nasty political squabble. Its opponent? Pele, soccer's Babe Ruth and Muhammad Ali rolled into one. In an interview with BUSINESS WEEK, Pele, who is also Brazil's Sports Minister, complained that Nike is forcing the national team to play "unnecessary" exhibition games and that its millions are being siphoned off into the corrupt coffers of the Brazilian Football Confederation. "The federation got a lot of money from Nike, but no one knows how it is being used," Pele says. Nike and the federation say the money goes to training the next generation of Brazilian champions.
Pele maintains that sports in America has succeeded because it "is clean." His goal, he says, is to turn Brazilian soccer "into a modern sport with clubs run as companies, like in the United States." As early as Feb. 13, the Brazilian Senate is expected to approve the so-called Pele Law, which would--among other things--terminate the tax-exempt status of Brazilian soccer clubs and force them to share a portion of broadcast and advertising revenues with players.
Although the legislation has no impact on Nike's agreement with the Brazilian national team, it has drawn Nike into a furious battle. Its allies, the Brazilian Football Confederation and the World Football Federation (FIFA), are resisting Pele's cleanup. The nonprofit FIFA, based in Zurich, is headed by Joao Havelange, an 81-year-old Brazilian. Havelange has criticized the Pele Law, saying it would violate FIFA rules by weakening the Brazilian federation, which is run by Ricardo Teixeira, his son-in-law. Last year, Havelange even threatened to keep Brazil out of the upcoming World Cup competition.LASTING APPEAL. Nike dismisses the Brazilian soccer battle as irrelevant to its business plans. "Pele has become a politician," says Keith Peters, Nike's chief European spokesperson. "He's at odds with our natural partners, FIFA and the national associations."
Politics? Sure. And probably personal, too. Pele charges that "Nike came in and had the confederation break a contract" with Umbro, a Greenville (S.C.) sports equipment manufacturer. Pele remains a spokesman for Umbro outside of Brazil.
But no need to dis the man. Although it has been two decades since Pele, 57, kicked a professional goal, his appeal is still powerful. Before signing him as a spokesman, MasterCard International Inc. did research in 150 countries on sports icons. "Pele surfaced not only as the most popular among soccer stars but among all sports stars," says Mava Heffler, a Mastercard senior vice-president.
Last year, Nike took heat when worker activists accused it of producing sneakers in foreign sweatshops. Now, it has a soccer legend on its case. Wonder what pr magic it's planning for the millennium?By William Echikson with Ian Katz