Kaepernick Nike Billboard Unveiled In San Francisco Union Square
SAN FRANCISCO (CBS SF/CNN Money) -- A giant billboard heralding former 49ers quarterback Colin Kaepernick's Nike deal was unveiled high above San Francisco's Union Square Tuesday.
The billboard perched atop the downtown Nike store depicted Kaepernick's face and the words -- "Believe in something. Even if it means sacrificing everything.
Kaepernick was the first athlete to kneel during "The Star-Spangled Banner" to protest police brutality against blacks and hasn't played a game since 2016.
While the sports apparel giant's decision to use Kaepernick in an ad campaign and launch his clothing line has generated some criticism, Nike has calculated that his loyal following and popularity with star athletes will outlast boycotts and short-term stock pressure.
"Colin Kaepernick is cool now," said N.D.B. Connolly, a historian of race and politics at Johns Hopkins University. "It's a good way for Nike to venture out into a slightly edgier political arena and tap people who want to be part of a counterculture movement."
The company expected backlash from critics who resent the protest movement Kaepernick started in the NFL two years ago. And it arrived quickly after he posted the ad on Twitter on Monday.
"Believe in something. Even if it means sacrificing everything. #JustDoIt," he said.
The Nike campaign also promotes LeBron James, Serena Williams, NFL receiver Odell Beckham Jr. and Shaquem Griffin, a rookie linebacker for the Seattle Seahawks whose left hand was amputated when he was a child.
But everyone was talking about Kaepernick.
People started #BoycottNike and #JustBurnIt on social media. Some even posted pictures cutting their Nike socks and burning their Nike shoes. Texas Republican Senator Ted Cruz tweeted that Nike was "on the wrong side of the American people."
On Tuesday, Nike's stock was down as much as 3%, and some Wall Street analysts questioned the strategy.
Careful timing
Nike has had an endorsement deal with Kaepernick since 2011. But it has not used him in ads since 2016, when he began raising awareness about police brutality and racial injustice by sitting and later kneeling during the national anthem.
Kaepernick has not played in the NFL since 2016. He is suing the league for allegedly conspiring to blacklist him because of the protests.
According to Yahoo Sports, it was only after rival sneaker companies showed interest that Nike put Kaepernick in ads.
Nike also signed Kaepernick to a new, multi-year deal, a source familiar with the negotiations told CNN. According to the source, the agreement with Kaepernick was a "top of the market deal for an NFL player."
So Nike's decision to elevate his profile was deliberate.
"Big corporations tend not to stick their necks out first, but follow where the smaller fish swim," Connolly said. "This is a pretty consistent example."
Following trends
Nike told shareholders in its latest annual filing that its success depends in part on its ability to "anticipate, gauge and react to changing consumer demands." And the company has been targeting younger, urban shoppers in recent years.
"Their core customer is a 14- to 22 year-old male," said Christopher Svezia, an analyst at Wedbush Securities. "Those are the sneakerheads."
Two-thirds of Nike sneaker customers are younger than 35, noted Matt Powell, a sports retail analyst at market research firm NPD Group. And those customers want brands to take stands on social issues, he said.
Last year, Nike announced a realignment to focus on 12 cities, which it expected to represent more than 80% of its growth through 2020: New York, Los Angeles, London, Shanghai, Beijing, Tokyo, Paris, Berlin, Mexico City, Barcelona, Seoul and Milan.
Those younger customers in cities are much more likely to support Kaepernick.
A CNN-SSRS poll on the NFL protests last September found sharp divides along racial, political and age lines. But 62% of respondents 18 to 34 believed that athletes who protest by kneeling during the National Anthem were "doing the right thing."
Nike is wagering that Kaepernick appeals to that audience, even if he inspires visceral anger elsewhere, including inside the White House.
"We believe Colin is one of the most inspirational athletes of this generation, who has leveraged the power of sport to help move the world forward," Gino Fisanotti, Nike's vice president of brand for North America, told ESPN. Nike declined further comment to CNNMoney.
Support from athletes
Nike is also taking its cues from athletes in an era when more of them are speaking out on race and politics.
Nike has waded into social issues before. Last year, it launched an "Equality" campaign featuring athletes like James, Williams, and gymnast Gabby Douglas. One ad featured Alicia Keys singing Sam Cooke's "A Change Is Gonna Come."
"Nike can stand just to the left of Jerry Jones or another NFL owner," Connolly said, referring to the Dallas Cowboys owner, who has vocally opposed player protests. "They're trying to be the brand of the players and young people, not owners."
The former Super Bowl quarterback may never play another game in the NFL, but he has emerged as a social activist with deep support in pro sports circles.
Last year, he won Sports Illustrated's Muhammad Ali Legacy Award and was honored with an award by the American Civil Liberties Union. He was named GQ's Citizen of the Year and was runner-up for Time magazine's Person of the Year.
Nike has defined its brand around star endorsers, many of whom are black. The company spends more than $3.5 billion a year — a tenth of its total sales— on advertising and endorsement deals.
Top Nike endorsers, including James and Williams, have publicly backed Kaepernick. Others have donated to his foundation, which aims "to fight oppression of all kinds globally, through education and social activism," or his Know Your Rights camp to raise awareness on black self-empowerment.
When companies link their brands closely to sponsors, they create risks. "However, with Nike's stable of athletes and marketing savvy, they have shown, repeatedly, that the athlete wears their brand, not vice-versa," said Simeon Siegel, a retail analyst at Nomura Securities.
On Saturday, Williams praised Kaepernick and former 49ers defensive back Eric Reid, who joined Kaepernick as one of the first to protest through kneeling and who is now also without an NFL team.
"I think every athlete, every human, and definitely every African-American should be completely grateful and honored how Colin and Eric are doing so much more for the greater good," Williams said at the US Open. "I feel like they obviously have great respect from a lot of their peers, especially other athletes — people that really are looking for social change."
The company also probably won't take much of a hit from the NFL. In March, Nike signed an eight-year extension as the league's official uniform sponsor.
"Nike's money is still going to be made on the field, but they can tap into folks who want to see themselves as avant-garde and outside the corporate landscape," Connolly said. "Nike have their cake and eat it, too."
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