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Old 10-28-2012, 04:49 PM   #96
BauerAlmeida's Avatar
Join Date: Jul 2012
Location: Argentina
Posts: 566

Originally Posted by BreakPoint View Post
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.
Obviously they study all this stuff before offering a contract to somebody. If they pay someone a certain amount of money, it's because he generates it.
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