Kicks Inc.: Background Information

7 Pages Posted: 2 Jun 2017

See all articles by Sherwood C. Frey

Sherwood C. Frey

University of Virginia - Darden School of Business

Lucien L. Bass

University of Virginia

L. Summers Nelson

University of Virginia - Darden School of Business

Abstract

Kicks Inc., a manufacturer and distributor of athletic apparel and shoes, had plans to launch a new tennis shoe line within the year and was seeking an up-and-coming young athlete to be its spokesperson. Sebastian Martinez had emerged as an ideal candidate, and contract discussions were underway. Six issues need to be resolved to the satisfaction of the six parties involved—the athlete, the athlete's mother, the athlete's father, the athlete's agent, the Kicks brand manager, and an International Tennis Federation representative. This case provides the general information regarding the nature of the issues and the broad interests of the various parties involved. This general background case is supported by individual role cases for each of the six parties. This case and its supporting role cases can be used to (1) develop an understanding of the underlying bases upon which coalitions can be formed; (2) develop an appreciation for the added dimensionality of preparation in multiparty situations; (3) develop an appreciation for the process choices that need to be made; and (4) compare and contrast appropriate approaches to bilateral versus multilateral negotiations.

Excerpt

UVA-QA-0739

Rev. Nov. 19, 2010

Background Information

The Tennis Shoe Industry

Kicks Inc. had plans to launch a new tennis shoe line within the year and was searching for an up-and-coming athlete to be the face of its marketing campaign. Kicks, a manufacturer and distributor of athletic apparel and shoes, had had success in other sport-specific shoes, but this was the first time it had produced a tennis shoe. In the tennis shoe industry, Kicks competed against multi-billion-dollar companies, including Nike and Adidas, and traditional tennis-focused companies, including Prince and Wilson. Nike tended to win endorsement deals with the world's top-10 players, although they came at a high price, well beyond Kicks's financial means.

In 2009, Roger Federer (number one in the world at the time and 15-time Grand Slam champion), had 10-year deals with Nike, Rolex, Wilson, Gillette, and Mercedes. The appearance fees and sponsorships from these companies added $ 28 million to Federer's yearly earnings; the contract with Nike alone provided Federer with more than $ 10 million annually. These endorsements were a significant portion of a professional tennis player's income. Almost all players had clauses in their endorsement contracts, particularly with apparel, shoe, and racket deals, which outlined bonuses based on year-end rankings and tournament wins. In 2009, the top-10 earners in tennis made an aggregate $ 165 million; prize money from tournament wins only accounted for $ 38 million, and corporate money provided the remaining $ 127 million. Although Kicks was looking for a younger athlete—not necessarily with the statistics of Federer, who was considered an all-time tennis great—the company still had to be prepared to offer its chosen athlete an enticing compensation package if it were to sign with a future star and market its shoe well.

. . .

Keywords: negotiating multi-party multiparty negotiations

Suggested Citation

Frey, Sherwood C. and Bass, Lucien L. and Nelson, L. Summers, Kicks Inc.: Background Information. Darden Case No. UVA-QA-0739. Available at SSRN: https://ssrn.com/abstract=2975113

Sherwood C. Frey (Contact Author)

University of Virginia - Darden School of Business ( email )

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

HOME PAGE: http://www.darden.virginia.edu/faculty/frey.htm

Lucien L. Bass

University of Virginia ( email )

1400 University Ave
Charlottesville, VA 22903
United States

L. Summers Nelson

University of Virginia - Darden School of Business

P.O. Box 6550
Charlottesville, VA 22906-6550
United States

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