In professional football, there is an unmistakable sign that a coach’s days are numbered. As soon as his boss publicly assures him of his “unreserved support”, that means: either you win the next games or you’re out. In the sporting goods industry, which is naturally closely linked to professional sport, things are no different. Accompanied by much praise, the Adidas supervisory board extended the contract of the already embattled CEO Kasper Rorsted; shortly afterwards he was gone. John Donahoe, 64, head of the American market leader Nike, is in a similar situation. In July, the company’s saint and founder Phil Knight, 86, declared him virtually untouchable, but Donahoe has to go in mid-October.
His successor at Nike is an old acquaintance who is said to have resigned from Nike in 2020 primarily because it was not him who was appointed to the top job, but Donahoe. So Elliott Hill took early retirement at the age of 56 after 32 years at the sporting goods giant, having held a total of 19 positions. Since then, he has been privatizing at a high level. He was recently celebrated by his former university, Texas Christian University, because he and his wife Gina made their lavishly renovated farmhouse, located between Florence and Rome, available for art students’ seminars.
Elliott Hill, who turns 61 on October 2nd, started out as a sales intern at Nike. Now he is tasked with getting the largest sporting goods company out of its biggest crisis. In 1989, Nike overtook Adidas as the world market leader and has seemingly been unassailable ever since. 51.4 billion US dollars in sales – that was more than twice as much as the German three-stripe brand generated in the past financial year. On the one hand. On the other hand, Nike’s business is declining; sales are expected to shrink by two billion euros this year. The same amount is to be saved and 1,700 employees are to be laid off as a result. Adidas, on the other hand, has just come out of a multi-year slump, and the company has just raised its forecast for the second time in a matter of months. The company is expected to generate around two billion euros more in sales in 2024 and make an operating profit of one billion euros instead of the originally expected 300 million euros.
At Nike’s headquarters in Beaverton, Oregon, employees and managers were clearly less and less confident that John Donahoe could bring the brand with the swoosh back to success. The parallels to Rorsted and his forced departure from Adidas two years ago are astonishing. Both managers came to the companies as outsiders to the industry; Rorsted was previously head of the consumer goods manufacturer Henkel, Donahoe from eBay and Service Now. Both initially drove up the balance sheet figures, but over time they increasingly gave the impression that they had never internalized the peculiarities of the emotional sporting goods industry. Both relied one-sidedly on online direct sales and thereby alienated many retailers who offer customers who run, play tennis or play football special shopping experiences that the best internet shop cannot create.
There are also currently delivery difficulties
Rorsted’s successor at Adidas, the ex-professional footballer and former Puma boss Bjørn Gulden, has long since corrected this mistake. Elliott Hill is expected to do the same at Nike. And there is another similarity: as with Adidas under Rorsted, many top creatives and experienced sports equipment experts also left Nike under Donahoe. This made the product range more boring and important sectors were neglected. Running, for example, where Nike reacted too late to technical innovations at Adidas and Puma, but also to hip upstarts such as On or Hoka. There is currently also talk of some massive delivery problems at Nike.
Experts like Matthew Boss from JP Morgan are therefore not surprised that Elliott Hill, someone with a strong sense of familiarity and the proverbial Nike gene, who knows the business inside and out, was hired as Donahoe’s successor. This alone triggered a hype on the stock market; Nike shares rose by almost eight percent on Friday. There is speculation in the Anglo-Saxon media that other Nike departures could now return to Beaverton, attracted by the inspiring and down-to-earth reputation that Elliott Hill enjoys.
The manager, born in Austin, Texas, with Italian roots, who reportedly has an Italian passport in addition to his American one, is just the right person with his “global expertise, leadership style, deep understanding of our industry, coupled with a passion for sport,” said Donahoe’s predecessor Mark Parker, 68, with the pathos typical of the industry. Parker is the executive chairman and, together with Knight, has the say at Nike. Parker did not answer the question of why he and the other managers did not promote Hill to CEO in 2020 despite all these qualifications. It was probably a matter of priorities. They wanted a manager who they trusted to take Nike to a new level in terms of digitalization.
The name John Donahoe will at least be associated with the spectacular jersey deal in which Nike beat Adidas to the German Football Association (DFB) in early summer. After more than 70 years of cooperation, the national teams will play in Nike kits from 2027 and no longer in those from Herzogenaurach. In return, Donahoe guaranteed the DFB up to 100 million euros per year in a personal meeting in Frankfurt – twice as much as Adidas currently pays, and an insanely high sum compared to the global equipment market for national teams. After the hype surrounding the pink DFB jersey at the last European Championship and the fact that the players were enthusiastic about the living and training location that Adidas offers them in Herzogenaurach, the deal may be done economically, but not yet emotionally.
Donahoe celebrated the DFB deal in June as “proof that if we do our best, nobody can beat us.” His best was definitely not enough.