Nike and Trek to end link

Nike and Trek to end link

Nike used to be big in cycling, supporting Lance Armstrong with sponsorship and products. The company was also a prime mover behind the yellow wristbands which benefitted the Lance Armstrong Foundation.

The Bike Portland blog – situated in the same State as Nike's HQ - originally reported that all cycle-specific employees were to be dropped but Nike has now said some will be retained.

Nike's cycling-specific website lists the company's current bike line, including cycling shoes.

The Nike news was broken by Bike Portland's Jonathan Maus on today's recording of the Spokesmen podcast, a fortnightly round-table discussion between self-confessed bike geeks and industry types, including the editor of BikeBiz.com.

Bob Applegate, Nike’s communications director for Oregon, said:

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“As of December 31st, 2007 we have decided to not renew our relationship with Trek.”

When asked if the ending of the Trek relationship meant the end of consumer offerings, Applegate said that fact was “still not certain” and that the future Nike’s consumer cycling line was “under review.”

He added that Nike will continue to be involved in developing and producing gear for elite-level, Nike-sponsored cyclists.

Nike and Trek have been partners for seven years, brought together by Lance Armstrong. Both were key members of Armstrong's F1 team of tech sponsors.

In February, Nike's CED Mark Parker said the company would be downsizing some of the product offerings in certain sports. The aim would be to "streamline, edit and optimize".

The ending of the partnership with Trek is said to be by "mutal consent," said representatives of Trek and Nike.

Trek paid Nike royalities on products sold.

Trek general manager Pat Sullivan told The Oregonian:

""It was not a very profitable business for us. It was in both parties' best interest to move on."


UPDATE

Trek has issued FAQs for IBDs...

Q: Why is this happening?
A: There are a number of reasons why Trek has decided not to renew the Nike Cycling licensing agreement:

Trek’s Nike business has not been profitable and we could not envisage a model where it would be profitable in the future;

Given this fact, it is in the best interest of both Trek and our dealers that we reallocate our resources into Trek-branded products;

Working with Nike proved extremely challenging for a number of logistical reasons;
The Nike Cycling business was too small for Nike to be enthused about it and they have decided to concentrate on their core business.

Q: When does this take place?
A:
The contract expires December 31st, 2007. Trek will continue to bring in new and in-line Nike products until that date. Trek has the right to sell Nike products until December 31st, 2008. Trek dealers have no timing obligations.

Q: What are Trek’s intentions in the clothing and shoe categories?
A:
We’ve reallocated our considerable Nike resources to expanding the Trek clothing line for Spring ’08. We will be expanding all categories and be offering many more styles for both men and women.

We are also evaluating many new technologies and designs for shoes. For Spring ’08 we will be introducing a core-collection of innovative Trek-branded cycling shoes.

Q: Will Trek continue to warranty Nike products?
A:
Yes. We will warrant all products that we sold under the limited warranty of the item.

Q: Will you be discounting and devaluing my inventory?
A:
We will continue to order and stock Nike products under our commitment to you as a world class supplier through the end of the year. We have no intentions of discounting outside the normal course.

Q: How does this affect the relationship with Lance?
A:
Lance is a Trek athlete for life. Our relationship with him is in no way tied to Nike. Lance currently has a contract with Nike as well. We do not know the terms of his contract with Nike.

Q: Will Trek continue with the Autumn/Winter FA07 line?
A:
Yes. Enclosed is our FA07 catalogue that includes the forthcoming Autumn/Winter apparel line and new Tour de France offerings.

Q: What happens to Discovery team products?
A:
We will continue to produce and sell Discovery team wear through the end of the year. Discovery has decided not to extend their sponsorship next year, so team directors are looking for a new sponsor. It is unknown what clothing brand will sponsor the new team.

Q: Is Nike going to introduce their own line of cycling clothing and shoes?
A:
Currently Nike is not planning to introduce a line of cycling clothing or shoes. They intend to develop products to support their athletes in the cycling world but not commercialise them.



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