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Is Nike Unpatriotic?

Written by Briton Ryle
Posted September 4, 2018 at 8:00PM

Most people will give a hornet's nest a pretty wide berth. Cuz, you know, hornets. Me? I have to walk right up to it and whack it with a stick. I might not even run away. 

I don't know why. Life would sure be simpler if I didn't act like this. Fortunately (I guess), I am not beguiled by the simple pleasures of an uncomplicated life.

So I'm gonna talk about Nike's ad campaign featuring Colin Kaepernick. Not only that, but I'm gonna tell you why throwing in with such a polarizing Kaepernick (polar Kap?) is a good idea for Nike.

And to hammer the final nail into my coffin, I'm going to tell you where I stand on the whole anthem protest thing. I know what you're thinking: what a dumbass. 

Yesterday morning, Twitter was ablaze with short videos of people setting expensive shoes on fire. And really, I can't think of a better way to voice my displeasure with something than to burn a pair of shoes. Wait, yes I can...

When a company does something I don't like, I stop exchanging my currency for their product/service. Like with Jose Cuervo. One time when I was 22, I drank a lot of Cuervo Gold and puked. I didn't like the fact that Jose Cuervo made me sick, so I don't buy their tequila anymore. 

The hashtag #NikeBoycott was trending on Twitter, which is great. Really. As consumers, we talk with our dollars. It's one of the few powers for change we have, and it speaks loudly. That's why the NFL freaked out last year and tried to prevent football players from protesting. The NFL was terrified that a percentage of fans would turn off football games and never turn them back on. 

And the NFL has every right not to hire Kaepernick to play quarterback. One, he's not that good. And two, they don't want to lose ticket sales over controversy. 

But Nike isn't worried about that at all. In fact, I'd say the board started the high-fives and fist-bumps the minute they saw #NikeBoycott on Twitter...

Bad Publicity? 

Brand loyalty is a very big deal for consumer discretionary companies. If Speed Stick is your deodorant, it will stay your deodorant. You might buy 70–100 units in your life.

Colgate-Palmolive knows this. Lifetime value of their customers is the cornerstone of the business. It's why companies like Colgate-Palmolive, Procter & Gamble, and J&J are called consumer STAPLES instead of consumer DISCRETIONARY. It's also why they are considered recession-proof. We have to buy toothpaste, diapers, and deodorant. And we aren't just gonna not buy toothpaste when the economy tanks. 

Consumer discretionary companies are a little different. These companies sell products or services that have a "cool" factor, something you're comfortable with, that you identify with. 

So when Nike goes out and courts a controversial figure like Colin Kaepernick, you have to ask what it is trying to accomplish. 

Kaepernick was an NFL quarterback who is more famous for kneeling during the national anthem than for getting beaten by my Baltimore Ravens in Super Bowl XLVII. 

Some people believe kneeling during the “Star Spangled Banner” is disrespectful to the flag, to the military, and to America. Other people say he has every right to voice his displeasure by kneeling. 

I'll tell you straight out: I don't watch Meet the Press on Sundays. I get more politics than I want as it is. So I watch football on Sundays. If a player wants to kneel, I don't see it as disrespectful or unpatriotic. I see it as a person calling attention to some aspect of America that they are not happy with. 

In Kaepernick's case, he's calling attention to the numbers of African-American men who get shot by police. Yes, this cause has gotten a lot of publicity. And it's not enough.

Look, I'm an old white guy. I yessir/yesma'am officers. It would be easy to say that's what everyone should do. But I've watched every police shooting video I can on YouTube because I feel like, as an American, I owe it to Americans to understand how they get along in this great country.

I watched the African-American man in North Charleston try to run away from a traffic stop because he had a suspended license. The cop chases him to a field where he unloads into the man's back, then plants his Taser on him and says the man took it...

I watched Philando Castile tell the cop he is licensed and has a gun in the car. When he goes to open the glove box, the cop shoots him, and he bleeds out right there...

I live in Baltimore. Last year, a group of cops was busted for running basically an organized crime gang in uniform. They sold drugs. They took protection money from businesses. They robbed drug dealers. 

If you don't think there are problems in our police departments, you're not paying attention. And I know the Major of our Northeast District (he would tell you the same thing I just did) — I know the stats and very much understand the stress and fear cops face. 

And if you don't think racism is alive and well in America, you're also not paying attention. These are uncomfortable truths.

As an old white guy, I understand that the America I live in is not the same as the America that some minorities live in. If they want to call attention to this, to say what it is about America they don't like and ask for change, I have no problem listening.

Letting someone take their five minutes of fame to get on a soapbox and say what they want is literally the least I can do. And it's exactly what makes America great, and why I think it will be greater in the future. 

I don't think Kaepernick has made the best use of his five minutes. I think all this attention actually obscures the issue. I think it all snowballed on him and he didn't really have a plan. 

OK, let's get back to Nike...

Nike Plays the Long Game

As an old white guy, my shoe-buying days are numbered. This Nike/Kaepernick thing is not about me. It's about my kids, 18 and 16 years old.  

My daughter went back to college yesterday. I bet she's wearing a pair of Adidas right now. They've been the cool kids’ shoe for a while now. Any thoughts on Adidas’s politics? CEO’s view on race? Nope. It's a faceless German company. And that lets the kids decide the image.

Nike is betting that the cool kids will identify with this message. And I bet they are right. Nike is a great company. Great management, solid growth. No way would I sell the stock here. This move will lead to more sales and more loyalty among the millennials and whatever the generation behind them is called. That's the very epitome of long-term thinking. 

OK, nest, consider yourself whacked.

Until next time,

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Briton Ryle

follow basic@BritonRyle on Twitter

A 21-year veteran of the newsletter business, Briton Ryle is the editor of The Wealth Advisory income stock newsletter, with a focus on top-quality dividend growth stocks and REITs. Briton also manages the Real Income Trader advisory service, where his readers take regular cash payouts using a low-risk covered call option strategy. He also contributes a weekly column to the Wealth Daily e-letter. To learn more about Briton, click here.

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