Nike Keeps Yao in Backcourt as Clock Runs Out on Its Deal

He has mugged with Mini-Me for Apple computers, and his legs have dangled off the top of a bunk bed in ads for ESPN. He has played the straight man in a Visa commercial that pokes fun at his name. One New York importer is using him to hawk Chinese beer to Texans. Up next? A Gatorade commercial.

Yao Ming, the Houston Rockets’ 7-foot-5, 296-pound rookie sensation, seems to be everywhere. Everywhere, that is, except the one place you’d expect: in ads for Nike Inc., the sneaker giant that helped groom him for the global spotlight.

Nike signed Yao in 1999 to a four-year, $200,000 contract, which expires in May. But the Beaverton, Ore.-based company has so far held back from capitalizing on the player’s disarming smile, self-deprecating humor, earnest attempts at English and coming-to-America success story.

Now that Yao and the Rockets have wrapped up their season and his Nike sponsorship is ticking down, some wonder whether the company hailed as the sneaker world’s most formidable marketing machine hasn’t blown an easy promotional layup.

“It’s weird,” said Robert Dorfman, creative director for San Francisco-based Pickett Advertising, who writes a sports endorsement newsletter. “If you’ve got him in your pocket, why are you keeping him in your pocket?”

Nike executives acknowledge that they have done nothing to tout Yao in the United States and have barely trotted him out in China, where other companies are using the player as entree into that untapped, basketball-crazed market.

Publicly, they say they hope to unveil a Yao promotional campaign this year if he continues to endorse their shoes. Privately, however, company insiders say they are sitting on one of the NBA’s hottest properties for practical reasons: They fear that boosting Yao’s profile would only drive up his fee during contract renegotiations or make him more attractive to a competitor.

“We don’t want to hype the hell out of the guy and have him jump ship,” one insider said.

Such a move would represent a reversal of fortune for Nike, the biggest player in player endorsements and long admired for locking up a stable of marquee names.

Nike tried last year to lock up Yao as he prepared to enter the NBA draft in June, said a source close to the discussions. Nike offered to “tear up” Yao’s original contract and give him a new $1.6-million deal through 2006, making him China’s highest-paid athlete endorser, the source said.

Yet Nike withdrew the offer when Yao’s financial advisors, anticipating his potential marketing punch, insisted on raising his annual endorsement fee to “a couple of million dollars,” the source said.

“That made people step back and say, ‘Whoa. Maybe he’s not worth that. Let’s play out the contract and see how it goes.’ ”

Although that decision may look like a marketing misstep, one expert said it would have been difficult to anticipate how quickly Yao would become a star, earning a spot in February on the cover of Sports Illustrated along with the declaration: “He shoots, he smiles, he sells.” Indeed, at the same time Nike opted to put Yao on the promotional bench, it was furiously positioning itself to write endorsement contracts with Ohio high school phenomenon LeBron James and the Los Angeles Lakers’ Kobe Bryant.

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Rock Star Status

“Who Yao is today is 100% different than he was eight months ago,” said Rick Burton, executive director of the Warsaw Sports Marketing Center at the University of Oregon. “Yao is now an American idol.... He’s Elvis.”

Still, Burton said he’s perplexed that Nike didn’t make better use of Yao in China, where he already had become a hero and one of the most recognized sports personalities in Asia.

The saga of Nike and Yao illustrates the hopes and perils of sports celebrity marketing.

Even if the timing is right, companies can pour millions of dollars into promoting a star only to find he fails to connect with key consumers. Then there are the hazards that a player will pull up lame, get arrested -- or be traded to Cleveland or some other marketing Siberia.

Yet companies keep spending, hoping to replicate Nike’s wildly successful collaboration with basketball great Michael Jordan, a pairing considered the gold standard in sports marketing. In its last annual filing, Nike projected spending nearly $900 million during the next five years for endorsements, including its record $100-million sponsorship of golfer Tiger Woods.

Yao represents an important personality in Nike’s lineup. For the first time in its 31 years, the $10-billion company is selling more shoes and products overseas than in America, and it has identified China as a key market for future growth. Revenue from China, a modest $100 million last year, is growing at a double-digit pace.

None of Yao’s advisors, who include the associate dean at the University of Chicago business school, would comment about Nike’s handling of their client’s sponsorship. Interviewed after a tough loss to the Lakers this season, Yao seemed to shrug off his growing marketing presence.

“It’s just like playing basketball,” the 22-year-old player said. “I try to keep a good attitude and have some fun.”

More than 100 years after Christian missionaries introduced basketball to China, Nike spotted the player it believed could ignite a commercial sports revolution in the communist nation.

He was a towering 16-year-old kid who already had turned pro with the Shanghai Sharks, a franchise in the Chinese Basketball Assn. During a Nike event in late 1996, he shed his warmups, began lobbing three-pointers and gave the Nike executives gathered at Shanghai’s Jin An Stadium a collective epiphany.

“Right then, we said to ourselves as a group, ‘There’s the future of Chinese basketball,’ ” recalled Terry Rhoads, then Nike’s China sports marketing director.

Nike’s branding efforts faced cultural hurdles in China. Unlike in America, celebrity marketing is a relatively new phenomenon in the country where idolizing athletes runs counter to values that emphasize modesty and teamwork.

Nike moved quickly to befriend Yao. It sent him to basketball camps around the world and placed him as a counselor in its “Jordan Flight School” at UC Santa Barbara, where he played in nightly scrimmages against the future Hall of Famer.

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The First Signing

In 1999, Nike signed the 19-year-old to a $200,000 contract -- small by U.S. standards but considerable for a player earning $30,000 a year in the Chinese league, Rhoads said. As an official Nike-sponsored athlete, Yao was on China’s 2000 Sydney Olympics basketball squad, which came in 10th place. He led the Sharks to the 2002 Chinese Basketball Assn. championship.

Along the way, Nike used him in “bits and pieces” of low-key marketing campaigns, in the words of one company executive. Nike featured him on a poster for the 2000 debut of its Shox model shoe in China. Yao also appeared at a smattering of grass-roots events, such as Nike-sponsored high school tournaments.

Even after Yaomania was a growing force on the mainland and he was selected as the highly publicized No. 1 NBA draft pick last summer, some within Nike remained cautious. Many in the sneaker world believe that big men can’t sell shoes. What’s more, some were afraid that Yao would flop.

“I’ll tell you the truth. There’s always been, on the other side of the Earth, skepticism about Yao Ming,” said Rhoads, now general manager of Zou Marketing in Shanghai. “The question was ‘OK, he’s now No. 1. But does he have game?’ ”

Yao required only a few months to answer the critics. For many, his NBA breakthrough came Jan. 17 against the Lakers, when he blocked Shaquille O’Neal’s first three shots in what became a dramatic overtime Rockets victory.

Such performances -- plus Yao’s selection to the All-Star team as a rookie -- galvanized Chinese bursting with nationalistic pride.

“Everybody considers him a national hero,” said Jim Lundberg, owner of a Beijing factory. “He’s this Chinese guy who has gone over and conquered the world.... Be like Mike? Be like Yao!”

Companies on both sides of the world have been hopping onto the Yao train ever since.

Harbrew Imports Ltd., a New York beer distributor, ran into the locomotive when one of its salesmen was attending a restaurant convention in Houston the day Yao was drafted. After learning that a local radio station was presenting a draft-watching party, he sold 10 cases of Yanjing Beer to the sports bar where the event was being held.

The next day, he got a call from a Rockets club official who was in attendance. Not only had the Yao-crazed crowd sucked down every drop of the Chinese import in 20 minutes, but it also went through another 10 cases that the bar had rushed out to get from the local Harbrew distributor. The Rockets wanted to know: Would the firm be interested in becoming an official sponsor of the basketball team?

Harbrew now sells 600 cases of Yanjing a month throughout Texas. The beer is the official import at Rockets home games, and the brand’s name is carried on arena signs beamed to Chinese audiences.

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Brand-Name Deals

Apple Computer Inc. and Visa International signed deals with Yao in December, and executives at PepsiCo Inc. subsidiary Gatorade sealed a sponsorship arrangement with Yao in January. In a Gatorade commercial airing this month, Yao takes his place in the lineup of famous athletes who stop by to ask a young boy out to play.

Meanwhile, San Mateo, Calif.-based Sorrent Inc., a maker of interactive entertainment products, plans to market a wireless game based on Yao’s playing style, and China Unicom Ltd. this year inked a contract to make Yao its cellular rep.

Yet perhaps no enterprise has benefited as much from Yao’s rise to prominence as the National Basketball Assn.

The league ramped up its television coverage in China by broadcasting 168 games -- a third of them with the Rockets -- this year, compared with 119 games last year. Houston will play two preseason games in China next fall. Chinese viewership has more than doubled, league officials say, to an average of 15 million a game. And the Chinese are buying more league-licensed products, especially Rockets memorabilia.

One of the items that Reebok International Ltd. introduced throughout China in January was a line of NBA basketball shoes that competes against Nike’s offerings. In fact, many fast-selling NBA products are made by Reebok, which holds the licensing rights for league-sanctioned apparel.

Reebok’s ability to cash in on Yao, even indirectly, offers a cruel irony for Nike.

Nike has made a couple of efforts to claim its affiliation with Yao. In December, it ran a limited print campaign in portions of China featuring a picture of Yao and the headline “A real giant is not measured by his height.” After Yao was televised wearing powder-blue Nike shoes during the Feb. 9 All-Star game, the company used them in an Internet ad.

But otherwise, the company has relied merely on the exposure it gets when Yao wears his Shox on the court.

“There is no so-called real advertising for Yao Ming so far,” said Frank Pan, Nike’s current China marketing director.

Rhoads said the company could quickly change all that with a television commercial based on corporate video archives showing Yao in his Nikes as he matured from the 16-year-old in the Shanghai gym to an NBA star on the world stage. His suggested motto: “Nike’s been with Yao each step of the way.”

Such a campaign not only would break Nike’s virtual silence with consumers, Rhoads said, but it also would serve to send a sentimental message of sorts to a player now culturally popular enough to cut multimillion-dollar sponsorship deals. And it might keep Yao with Nike.

“Deep in his heart, he’s a Nike guy,” Rhoads said. “But now it’s about business.”