Will Nike Take a Hit from Penn State Scandal?

In wake of child sex abuse scandal at Penn State, Nike is taking some heat for its connection with the team.
In addition to being the footwear and apparel sponsor for the university, the athletic giant runs an on-site daycare in Beaverton, Ore., called the Joe Paterno Child Development Center. Paterno, the Penn State football coach, was fired last week in connection with a child sex-abuse scandal involving Jerry Sandusky, former defensive coordinator at the college.
Now, some observers are pressuring Nike to change the name of the daycare center, but the athletic giant said it plans to keep it intact.
“Our relationship with Penn State remains unchanged,” Nike said in a statement. “We are deeply disturbed by the claims brought forth in the indictments. We will continue to monitor the situation closely.”
Russ Napolitano, COO at branding firm Core Brand, said that while the situation will likely create some negative feedback on Twitter and in the press, he doesn’t see any larger repercussions for the brand.
“I don’t think in the long term it will hurt Nike or impact sales,” he said. “They are doing the right thing by taking their time on the decision [regarding the center]. For a while it will be high profile, and then it will wane.”
Meanwhile, Lester Wasserman, owner of New York-based West, said that he doesn’t anticipate change regarding in-store sales.
“Penn State has [ties] to Nike, but Paterno’s involvement in the scandal will mean nothing for the footwear piece,” Wasserman said. “Licensed apparel, on the other hand, has more to lose in reference to this situation.”
But, he said, this won’t be the first time the brand has found itself in this position. “They had bigger problems with Tiger [Woods] and Kobe [Bryant],” he said.
And Sterne Agee analyst Sam Poser also anticipates that Nike’s sales will remain strong. “I can’t imagine it’s going to do anything to the brand,” he said.

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