Nike Stops Paying NBA Stars During Lockout

Nike Inc. has a new message for its high-priced National Basketball Assn. pitchmen: No play, no pay.

Slumping sales and a six-month lockout due to an NBA labor dispute have led the world’s largest athletic-shoe company to exercise its option to withhold quarterly endorsement payments to most of the 230 league players it has under contract.

“We are doing this because the lockout is hurting fans, it’s hurting the sport and it’s hurting the value of our investments in the NBA,” Nike spokeswoman Vizhier Mooney said Tuesday.

Nike, which confirmed that it has reduced payments to the league as well, risks alienating some athletes, Mooney acknowledged. But after three straight quarters of declining profit, she said, the company must reassess its investment in the league.

“There is no way we’d threaten our relationship with the NBA or the many NBA players we’re partnered with,” Mooney said. “But as a business, we have to make common-sense, fiscally responsible decisions.”

The maker of sports apparel, known for its trademark “swoosh” logo, has been involved in basketball since 1973, when it introduced its first basketball shoe, the Bruin.

Analysts say middle-range basketball players earn about $100,000 a year from their Nike contracts, while bigger stars can command as much as $250,000 to $1 million a year.

Some player agents expressed surprise over Nike’s decision.

“I believed they had every intention they would pay,” said Aaron Goodwin, an agent whose clients include Damon Stoudamire of the Portland Trail Blazers and Gary Payton of the Seattle SuperSonics.

“I’m disappointed they made this decision,” Goodwin said. “But I understand fully what they’re doing. It’s a business, and things like this happen.”

Some agents have said Nike should also withhold the money it pays the NBA to show it is impartial in the lockout, but the company had declined until Tuesday to confirm that it has cut back payments to the league.

“We’ve been taking these types of steps since July, when payments to the league were reduced,” said Mooney, who declined to say which big-name players were included in the cuts.

Nike has a reputation for standing by the star athletes in its stable. For years, the fear was that it could not afford to alienate big names and have them defect to other companies. Now, Nike and its competitors are reexamining the value of big endorsement contracts and cutting back.

Last week, Nike attributed a decline in its second-quarter sales and earnings in part to the lockout.

Analysts agree that the labor dispute has hit the company hard, particularly in the United States, where revenue declined 15% to $665.9 million.

Nike shares rose 13 cents to close at $39.25 on the NYSE.