How Roger Federer Made Millions by Ditching Nike

In the world of sports business, we've seen countless brand deals come and go. But once in a generation, a partnership emerges that transcends mere endorsement. Jordan and Nike, a collaboration that redefined sports marketing forever. Lionel Messi and Adidas created football magic for two decades. Dr. Dre and Beats transformed headphones into a fashion statement. These rare unions don't just move products, they move culture. And for 24 years, Roger Federer and Nike seemed destined to join that immortal list. The Swiss maestro won 20 Grand Slams wearing the iconic swoosh. His grace on court, matched with Nike's marketing brilliance, created a brand that was nothing short of perfection. Nike had made Federer one of the highest paid athletes in history. But in business, just like in tennis, timing is everything, and Federer's next move would prove to be his smartest one yet. In 2018, Federer stepped onto Wimbledon's center court wearing pristine white. But something was different. The iconic swoosh was gone. And in its place was an unfamiliar logo, one that would spark the most audacious power play in tennis history. The game's greatest champion wasn't just changing sponsors, he was laying the groundwork for a billion dollar empire. To understand how one of the most powerful partnerships in sports unraveled, and how it ultimately led to Federer's biggest business triumph, we need to go back to where it all started in 1994. Following its explosive growth in the 80s and early 90s, Nike had become one of the biggest sports brand in the world, and is looking for new talent to endorse. At just 13 years old, Federer is quite the character. Restless, feisty, and with an attitude. Yeah, he was restless. I mean, he actually always wanted to play, wanted to run around. But the kid is good. Former French tennis player and Nike marketing expert Regis Brunet sees Federer playing in an under-14 tournament in Miami, and is immediately impressed. He has all the qualities of a future champion. Seeing Roger's talent, Nike knows that they can't miss this opportunity, so they quickly make a call to Roger's parents to ask for Roger's signature. This is the first contract between Federer and Nike. Half a million dollars in five years, plus added bonuses if he manages to break through. Once again, the king of endorsements strikes gold. As Federer's talent continues to shine brighter, the improvement in character also takes a huge jump. Before the first Nike deal expires, Federer has already become world number one junior player in the world, winning the boys singles title at Wimbledon, and the Orange Bowl title in 1998. Fast forward to 2001, a 19-year-old Federer truly announces himself on the big stage with a fourth-round win over four-time defending champion Pete Sampras at Wimbledon. Federer takes down the number one seed in five sets to snap Sampras' 31-match win streak at Wimbledon. Federer is on his way to the top, and nothing can stop him. The mature investment from Nike is now beginning to pay big dividends. On top of that, Federer is now becoming well-known for his fashion and style. In no time, Federer becomes the best player in the world and has a stranglehold on the number one spot from 2004 to 2008. He accumulates a truckload of major sponsors over the years, but Roger's partnership with Nike is the most valuable. The best player in the world endorsing the biggest sports brand on the planet. It's a match made in heaven, and the flashy campaigns come one after the other. The main inspiration is to give Roger an advantage on the tennis court. It's brand new, and it's so well thought through. So I think there's key components that make this shoe the best right now in the business, I think. Federer embodies Nike's ideals, excellence, authenticity, and inspiration. His partnership with Nike sees him break into the world of high-end fashion, and the photo shoots have really just become countless at this point. The contracts keep getting upgraded, and in the last 10 years of the partnership, Federer now makes about $10 million a year. Plus, he also has his unique RF logo, which we'll talk about later. So why then did Federer, at the very tail end of his career, decide to switch sides and ditch Nike for Uniqlo? We're now in 2018, and Federer has just won his 20th Grand Slam at the Australian Open to extend his Grand Slam record. It's a historical moment on the court. But off the court, his Nike deal is up for renewal. Renewing the contract seems like an easy thing to do. Like, who wouldn't? Nike's tennis division, Nike Court, has reigned supreme in pro tennis for the last two decades. This clip from 2015 shows four of the very best tennis players in the world on a superstar roster for the brand. Roger, Rafa, Serena, and Sharapova. However, two of these players have now experienced career-changing moments, and now the sports company is about to let one of their biggest assets slip away. It seems like the sport is no longer a priority for Nike. We don't know the exact ins and outs of the conversation between Roger and Nike, but it ends with both parties going their separate ways. Why? Nike only spends a fraction of its revenue on athlete sponsorship. Roger was on $10 million a year and was now the oldest number one player in the world in tennis history. With all of his achievements, Federer had since transcended the sport. And being a living legend, Federer knew that his global image was now far more valuable to sponsors than his talent on the court. He knew he deserved more than Nike was willing to cough up. Federer was in a strong position to renegotiate a deal, but Nike didn't think so. They wanted to keep things as they were, and there was no indication that the contract would include lucrative post-retirement guarantees. This opened the door for the lesser-known Japanese outfit Uniqlo, a brand focused on trendy, affordable, and functional clothing. Before partnering with Uniqlo, Federer's team reached out to Nike with the same terms for Uniqlo, a $300 million contract over a decade with no retirement clauses. This essentially meant that Federer would still get his $30 million a year And effectively, this was three times the value of what Nike was already paying. Apart from offering to expand his RF clothing lineup, Nike refused to budge. Choosing Uniqlo was then a no-brainer for Federer and his team, and the company was offering a long-term, high-value contract that was almost unheard of, especially for an athlete who was almost 37 years old. For Nike, it was the end of a 24-year partnership with one of the greatest athletes of all time. Nike's former tennis director, Mike Nakajima, said that losing Federer Nakajima then added that On Nike's part, the decision from their end also seemed logical because its tennis merchandise sales had always paled in comparison to the pricier apparel promoted by other athletes like LeBron and CR7, so they couldn't just do it anymore. Excuse the pun. In contrast, the Japanese outfit Uniqlo was looking to break into the European and North American markets with their clothing lineup. Uniqlo knew the Roger Federer effect better than anyone else. Federer was the definition of excellence, and Uniqlo were confident that they could leverage Federer's image for a long time, even after his retirement. But a storm was brewing. But before we talk about that, make sure to subscribe to our weekly newsletter It's a one-stop shop for news and analysis covering both the ATP and WTA tours, and a lot of the stuff that we don't have time to make videos about here on the channel. I'll leave the link in the description for you down below. Unlike Nike, Uniqlo didn't make tennis shoes, so the deal didn't cover Roger's footwear. Secondly, Nike still owned the rights to the iconic RF logo, which meant that it couldn't be used on any Uniqlo gear. When Federer showed up in his Uniqlo gear for the first time at Wimbledon in 2018, we noticed that he was still rocking his Nike courtsuit vapors. In a post-match press conference, he revealed that he would continue wearing Nike shoes for the foreseeable future, because the company showed interest in having a shoe deal with him. Dealing with the second problem, the RF trademark, which Nike had registered in 2009, Federer hoped that Nike would grant him the right to use his logo. Nike can be nice and helpful in the process to bring it over to me. Intellectual property disputes quickly reached center stage for Federer and his former sponsor. According to the trademark law, Federer knew that if he used the mark still registered to Nike, he could risk being accused of trademark infringement. However, if Nike also continued to sell merchandise adorned with the fan-favorite logo without striking a deal with Federer, there would be a risk of infringing the trademarks in Federer's name and signature and being subjected to accusations of misleading the public into believing that there was still a partnership between Nike and Federer. Long story short, both sides needed to come to an amicable conclusion. Fortunately for Federer, his company, Tenro AG, which holds his other trademarks, was able to purchase the RF logo from Nike in early 2020. Federer was quick to inform fans on social media that the RF trademark was back in his possession. On December 8th, 2020, Uniqlo released eight color combinations for the RF cap, all of which sold out within 10 minutes. With more credibility from strategic partnerships and innovative moves, Uniqlo has experienced unprecedented growth in recent years. Here's what the annual revenues have looked like. Looking at the revenue by region, you would notice that although the Asian markets still contribute a large percentage, there has been an uptrend in revenues from Europe since 2017. Federer never won a Grand Slam with Uniqlo and would eventually retire in 2022 with over $130 million in prize money. Coupled with that $300 million deal with Uniqlo and adding other investments and assets, Federer was already worth $700 million. But something was missing. Remember, we said that unlike Nike, Uniqlo didn't have a head-to-toe apparel deal. Federer actually wore Nike shoes for the time being, but at the same time, he was smart enough to look elsewhere. He set his sights on a much smaller footwear brand with whom he had a personal connection. Founded in 2010, On, or better known as On Running, is a Swiss performance company known for their proprietary cushioning technology. The company was focused on global expansion while remaining true to their Swiss roots. One of its founders, Olivier Bernhard, was an athlete and competitive runner. As a former Nike athlete too, Bernhard was a visionary. After retiring as a pro, he embarked on a quest to develop a running shoe that would A former runner himself, he understood what was needed, so Bernhard began experimenting with various designs and materials. In 2005, Bernhard pitched an ugly garden hose design to Nike, but the company naturally rejected it. The reception was also poor when he showed his friends the shoes. But that didn't stop him from working on them. With the help of experts and his other partners, David Aleman and Kasper Kolpetty, On Running was founded in 2010, and the company soon developed a cult-like following among runners over the years. How did they do it? On fostered brand loyalty through unconventional techniques, mainly through three ways. First, On was able to gain better margins on its shoes because it skipped the middlemen. You see, retailers can get up to 50% of sales, and this reduces the profit margins for the producers. On decided to sell directly to consumers online and through flagship stores. The D2C sales meant that On would have more margins on its shoes compared to Nike and Adidas. Secondly, On Running focused on strong branding. If they were to stand out in a crowded market, they needed to think outside the box. On became selective with their retail presence and only opened stores in premium shopping locations in major cities. Basically, they're all about the high quality for high-value markets, and they leveraged the positive image of Swiss engineering and put it on their shoes with Swiss flags. By keeping supply relatively low to create scarcity like Rolex does with their watches, On set itself up to become a prestigious brand despite not having the history of any of the other legacy sneakers. The third thing that contributed to On's appeal was its unique cloud tech cushioning technology developed at the Federal Institute of Technology in Zurich. The technology made users feel like they were running on clouds. And to keep consumers coming back, the company even developed a subscription model for its shoes. Being Swiss himself and seeing the success of another Swiss company, Federer was sold on the idea of partnering with On. Federer had seen his friends wear On shoes. Even his wife had rocked the shoes. Everyone around him was associated with the brand. Kind of reminds me of when I first came across Sucker Punch's hydration shooters. I needed to try them for myself to figure out just how good they really were. At first, I was a bit skeptical. I'd only heard about pickle juice being able to do magical things for your recovery and endurance on court. But over time, I realized that the nutritional benefits actually did have a tangible impact of my play on court. And I'm super excited to share this with you. If you use the link in my description, use courtside-punch at checkout on the Sucker Punch website to get 25% off your order. Try the shooters and let me know how they're working for you. Federer's flexible deal with Uniqlo meant that he could choose whoever he wanted to for his footwear. After some dinner dates and friendly chats, Federer decided to make the powerful move. He already liked the shoes, and now he also connected with the founders. Instead of being paid to wear the shoes, though, Federer wanted a stake in the company that would allow him to play an active role in product development, marketing, and fan experience. Federer got a 3% stake at On for an undisclosed sum of money. Speaking on the Business of Fashion podcast, Federer took us through his thought process when reaching out to On. I believe the company has huge potential. I really do think the guys are great. And it's a Swiss company that wants to grow worldwide. They've already, you know, taken big strides. And maybe I can help them with the final push. And I'm really, really excited to do that if they believe I'm the right guy for it. And I said, to show you how much I care, I'd be happy to invest and become a partner. With Federer's enduring marketability and appeal, he was able to sign the deal with On in 2019. The partnership was kickstarted with the rolling out of his signature Roger shoe. It was initially designed to be a lifestyle shoe meant to be optimized for lightweight movement. However, thanks to the boom in the running and outdoor sector caused partly by the pandemic, On's running profile had also become robust and sales skyrocketed. The timing couldn't have been any better. On went public on September 14, 2021, and the company raised $746 million through the sale of more than 31 million shares at $24 each. As of 2021, the company was now valued at $11 billion. Federer's 3% ownership stake was now worth $330 million, effectively pushing Federer way past the billion dollar mark. And the value is even higher today. Before now, On was big in the European markets, but today, most of On's revenue from sales is coming from the American markets. Federer has two signature sneakers with On, the Roger, which is a lifestyle street sneaker, and the Roger Pro, which is a performance tennis shoe featuring a design that Federer was thoroughly involved in. The sneakers have gained steam in the sneakerhead market, and On is now the head-to-toe sponsor of the number two female player Iga Sviantek and one of the most exciting American talents, Ben Shelton. In addition to those big names, On also has deals with Joao Fonseca, Flavio Caboli, and a few other tennis players too. Signing an American was especially important for On because 60% of their revenue comes from the American market, so it only made sense to do so. By starting off with specialty retail first and then leveraging the trusted voice of Roger Federer, among other factors, On has managed to stand out in a crowded market and has now become mainstream. We've even seen collabs with Zendaya and a few other stars recently. But what about Nike? Nike parting ways with Federer in 2018 was a sign of things to come. The brand didn't seem interested in tennis like it once did, and gradually, Nike began to lose its grip on the sport. The team solely responsible for tennis was dissolved, and events such as doping scandals and the retirement of several top players changed things for the brand. On top of that, Nike's clumsy handling of players seemed out of step from the company. The decision to quietly step back from the scene seemed intentional for the most part, though. Nike still sells millions of Jordan shoes, but they didn't seem keen on committing to the RF logo when they had it. Think of a Nadal cage, an Agassi Airtek Challenge 2, or a Nike Corts Serena Flair. None of them are exactly stamped in the Nike's history books. Nike has a history of not working with a number of players once they're past their prime, and their decision to part ways with the 36-year-old Federer is a case in point. Although Nike still sponsors the highest number of top players on both tours, the brand isn't the dominant force it was between 2005 and 2015, when most of the top players were signed on. And although they still sponsor Alcaraz, it's hard to say if there will be any shoe line dedicated to the future GOAT. Let's also remember that not too long ago, there was a mass exodus of top players from Nike. Andrei Rublev, Marta Kostiuk, Von Drusheva, Sloane Stephens, Ayla Tomyanovic, Alina Svitolina, Leila Fernandez, and Donna Vekic. All for multiple reasons. It seems like Nike has been streamlining operations in tennis over the last couple of years, and there seems to be many layers as to why they're doing that. But what we know for sure is this. Federer's financial success off the court shows just how an athlete's marketing appeal and potential can exceed talent alone. Federer was tennis. On top of being the best player in the world, he was stylish, well-spoken, elegant, and a family man too. Federer's international appeal and overwhelming superstardom saw him transcend the sport. Everyone wanted to be like him, act like him, the whole nine yards. The first step was usually to dress like him. This was the Roger Federer effect. So powerful was his legacy and brand that it made him more money than he could have ever made from playing tennis alone. Federer sported Nike's iconic swoosh in all 20 Grand Slams, and although he never won a Grand Slam with Uniqlo and on, he did something bigger and arguably better. He joined the exclusive club of billionaire athletes and became a stakeholder at one of the fastest growing shoe brands on the planet. Roger's transition from an active player to an entrepreneur, brand ambassador, and successful businessman teaches you the importance of knowing your worth. Never settle for less, regardless of the situation. Even when Roger didn't play a single ATP Tour event, he was estimated by Forbes to have made pre-tax gross earnings of $90.7 million, and he was still the highest paid player in the world. The recovery of the RF trademark also teaches athletes the importance of protecting your personal brand. Though generous contracts and high-profile partnerships are appealing to young athletes looking to break through, they must be aware of the implications of contracting over the major parts of their personal identities. Federer might have retired now a long time ago, but his ambitious business decisions will remain a lesson for the ages.