Originally Posted by RollTrackTake
according to a relative of mine who works in the athletic shoe field it costs most large shoemakers (nike included) somewhere between $5-7 USD to make a pair of sneakers (ie. Vapors). Without getting into the details of what nike charges retailers for the shoes, varying prices, marketing amortizations etc.... if nike clears a profit of $50 per shoe Nike needs to sell 200,000 shoes per year to break even. I'm willing to bet Nike clears that in the US market alone. Count the rest of the world and they double their money on their 100 mil investment in Aggassi
I can GUARANTEE you that Nike does not make a profit of $50 per shoe. The retail mark-up is well over 2X the wholesale price. That's how retailers can put things on sale for 50% off and still make a profit.
Don't forget all the development, engineering, transportation, marketing, sales, advertising, and overhead costs that need to be included into the cost of a pair of shoes. The cost of materials for a shoe may be $7, but add in labor costs, equipment costs, factory overhead, and profit for the factory that Nike contracts to make the shoes. Add in all of these costs and I'd be surprised if Nike makes more than $15 in profit on a pair of shoes after accounting for returns, seconds, discounting after season, etc.
Besides, it's not like nobody would buy Nike shoes if Agassi didn't wear them. So you have to estimate only the INCREMENTAL sales that would not have occurred without Agassi. Was it an incremental $100 million in profits (not sales)? I doubt it.