Marketing Analysis of Nike not extending Neymar's contract? How did it fare after 2 years?

In 2021, Nike chose not to extend its boot deal with Neymar. This sparked a lot of discussion as to why Nike would not sign arguably one of the top 3 players in football. Everyone thought that Nike would benefit immensely from this deal, as Nike's Hypervenom series was a huge success, and Neymar is the only footballer ever to wear Jordan brand football shoes. It's been 2 years since that saga; let's assess the winners and losers from the deal. But before that, let's discuss the major reasons why Nike chose not to extend Neymar's contract.

There are primarily four reasons from a marketing standpoint for Nike's decision:

1. Revenue Maximization: Neymar's asking price was substantial, and there had to be something to justify it. Neymar, being a South American football player, primarily addresses the South American fans. While this is a significant market, it may not be as lucrative for Nike as Europe, where the per capita income is higher. Therefore, with more popularity in Europe, Nike could increase its revenue substantially. (Attached infographics)
2. Future of Football: Nike had the choice to either extend Neymar's contract or invest in two European prodigies, as you now know, Mbappe and Haaland. Aligning with their European interests, it was an obvious choice to choose the latter. Mbappe caters to France, one of the biggest markets for Nike, and Haaland excels in arguably the best league in the world. This also gives Nike a central position for the upcoming generation of football stars.
3. Company Image: Nike is very careful about its image, as its relationship with customers often revolves around sports personalities. During that time, Neymar faced allegations of sexual assault. Nike wanted to understand the full story and asked Neymar to cooperate with the investigations, which he refused. Although the allegations were proven false, Nike feared that if something serious happened in the future, they might lose credibility. This also convinced Nike not to extend Neymar's contract.
4. Nike's Face in Football: Nike's face of football is Cristiano Ronaldo (who has a lifetime contract). Nike cannot afford to lose the most followed person on Instagram. Investing in another footballer of that caliber would threaten Cristiano's position as Nike's number one. Having one face for a sport gives them marketing liberty for big events, and the focus is always on the best, without division.

Now that we know the reasons for non-renewal, let's analyze the situation after 2 years. Which party benefited the most?

Neymar's Side: Neymar had a ￡78.6 million deal with Nike that was set to expire in 2022. This deal was the third-best deal in football history, but he secured an even better deal with Puma, earning ￡23 million annually, along with commissions from playing for Al-Hilal. It seems Neymar is living a great life with all his associations.

Nike: Let's discuss some statistics. Nike witnessed a substantial 17% increase in its total revenue from 2021 to 2023. The top contributor to this growth? Europe. Nike's revenue share from the EMEA region has been consistently growing every year. Additionally, Nike's revenue from the football segment increased by 6.7% from 2020 to 2021. It's safe to say that Nike's bet was on target, and with the trajectory of world football, Nike's two prodigies, Mbappe and Haaland, will be at the center stage of it all. Nike is poised to reap more rewards from this deal.

Considering future prospects, it appears that Nike got the better end of the deal, but in the ever-changing business landscape, one can never predict what the future holds. Perhaps, in a year's time, we may be writing about Mbappe or Haaland not renewing their contracts. This is the nature of business and resource allocation

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