Basketball is having a moment, and that's good news for Nike

• Nike recently signed a 12-year deal with the NBA, WNBA, and NBA G League.
• EMARKETER analyst Rachel Wolff said the deal "makes perfect sense" for Nike.

Nike is deepening its partnerships with the NBA and WNBA as basketball explodes in popularity in 2024. That's good news for the company as it tries to get back to its sports roots and reinvigorate sales — and as women's basketball becomes increasingly popular.

The sportswear giant announced in October that it signed a 12-year agreement with the NBA, WNBA, and NBA G League to be the exclusive uniform and apparel provider for each league.

The deal comes across as Nike attempts to stem a sales slowdown and save $2 billion over the next three years. Its revenue for fiscal 2024 was $51.4 billion — up only slightly compared to its 2023 numbers. The company has replaced its CEO John Donahoe; on October 14, Nike veteran Elliott Hill returned to the company in a new role as CEO to help drive innovation and set Nike apart from sportswear competitors.

While Nike started as a running brand, its business has historically been linked with basketball after a 1984 collaboration with Michael Jordan. The success of the shoes ultimately led to the Jordan Brand, which brought in approximately $6.9 billion in revenue for fiscal 2024 — about 14% of Nike's total sales.

Basketball is hot right now

The new contract comes during the same year as the Paris Olympics and a record-breaking NCAA women's championship that peaked at 24.1 million viewers — the largest audience in women's college basketball history, according to data from Nielsen. The WNBA Finals averaged 1.6 million viewers on ESPN, up 115% from 2023.

It also comes at a time when the WNBA said it plans to expand from 12 teams to 15 by the 2026 season. The league said franchises are planned in California, Portland, Oregon, and Toronto.

"We all see the potential of the game," Nike CEO Hill said during a panel interview at an event announcing the new deal and celebrating the expansion of the WNBA at Nike headquarters on October 21. NBA and WNBA stars like Sue Bird, Kevin Durant, and Jayson Tatum joined commissioners from both leagues and Nike execs to discuss the cultural impact of basketball.

It's not Nike's first basketball sponsorship. It has partnered with the NBA since 1992 and had a marketing deal with the WNBA since its inception. In 2015, Nike scored an 8-year apparel deal with the NBA, WNBA, and the G League for $1 billion after Adidas decided not to renew its contract, Bloomberg reported.

"We know that when we invest in women's sports, we invest in the future of all sports," Nike said in a statement.

Nike said its sights are set on "growing the game's culture and creating opportunities for every kid who dreams of stepping onto the court."

The WNBA's expansion will help Nike

"It's an opportunity for Nike to capitalize on the WNBA's growing popularity and viewership, which could lead to a recovery in its lifestyle business — assuming it can deliver on innovation and design," analyst Rachel Wolff at EMARKETER, a sister company to Business Insider, said.

Softening demand in the lifestyle category has led Nike to reduce its attention to that division, according to a Goldman Sachs research note published in June. Nike execs have previously said the company will be focused on getting back to its sports roots.

"For the last 50 years, Nike's been very much about putting the athlete at the center of the conversation and growing sport around the world," Hill said during the panel in October.

Part of Nike's approach to growing its basketball franchise has been focusing on popular WNBA players as their fame grows. Rookie Caitlin Clark, who bounced into the public eye as the all-time leading scorer across NCAA Division-I basketball, signed an 8-year contract for as much as $28 million with the sports giant, The Wall Street Journal reported in April.

"It's absolutely important that they embrace WNBA," Simeon Siegel, senior retail and e-commerce analyst at BMO Capital Markets, said. Siegel said Nike has to "win everywhere" if it wants to maintain its place as a company that's both big and special, which is difficult to do.

Other speakers at Nike's October panel, which included execs and NBA Commissioner Adam Silver, talked about the connection between basketball and lifestyle apparel. Siegel told BI that Nike "has to be everything for everyone," which means pivots between sportswear and lifestyle wear are inevitable.

"It's Nike's job to create demand via their product and their storytelling, and to then allocate that demand across their portfolio," Siegel said. BMO maintains a "buy" rating for Nike.

While EMARKETER's Wolff said the new 12-year deal "makes perfect sense," Nike will need more than a partnership with the NBA and WNBA to pull off the comeback it's attempting.

And if the company wants to beat out competitors like Adidas and New Balance, Nike will have to "protect its competitive advantage" in basketball and capitalize on fashion trends faster, Wolff said.