Wimbledon is happening now, and for the first time in his long career, top player Roger Federer is not decked out in Nike (NYSE: NKE) gear. Uniqlo, the leading subsidiary of Japan's Fast Retailing Co., has inked a remarkable 10-year sponsorship deal with the 36-year-old athlete that isn't even predicated on his continuing to play.
In this segment of the MarketFoolery podcast -- an all-mailbag episode -- host Chris Hill and Motley Fool senior analyst Bill Barker discuss the deal, why Nike didn't try to match it, and shouldn't have. They also talk a bit of tennis history and speculate about this year's tournament.
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A full transcript follows the video.
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This video was recorded on July 2, 2018.
Chris Hill: The World Cup is going on. Wimbledon is now underway. From a business standpoint, you mentioned something -- you're a big tennis fan -- that's pretty surprising in the sports business world, which is Rodger Federer, still one of the best, if not the best tennis players in the world, despite the fact that he's 36 -- which is not old in real terms, but it's old for a tennis player. He's been associated with Nike for basically his entire professional career. He took the court at Wimbledon, was not decked out in Nike gear. Instead, he's wearing a Japanese brand called Uniqlo. Sources say the deal is worth more than $300 million guaranteed over ten years.
That's astonishing, given his age. It would be one thing if Rodger Federer were 26 or 30. The fact that he has this reportedly 10-year, $300 million deal with this apparel company in Japan, that's a bold move.
Bill Barker: Uniqlo is, I guess, the best-known of the brands under Fast Retailing, which is the parent company that you can invest in. It's a remarkable deal, $300 million. Federer has no obligation to even play. I think there's a clause in there that he gets paid even if he doesn't play. And I don't think he'll be playing for ten years, at least not in the main draws. Whether he ends up going into the senior circuit at some point, I don't know if that would have any interest to him.
In his life, he's made $116 million on court. $300 million for wearing these clothes, and this is just one of the brands that he endorses. I can easily understand why Nike did not attempt to match this offer. They have too many people in house, too many people that would look at that and say, "Well, now I would like a contract like that, too."
He is, more or less, unique for Uniqlo. He's getting their name in the press today, and will continue to do so for at least as long as he's a great competitor in the draws of the Grand Slams, which I think has got ... I don't know. It's hard to say when the end of that would be, but it's not ten years.
Hill: Do you have a prediction for this year's Wimbledon tournament?
Barker: Federer's draw is looking awfully good. Certainly, nobody is guaranteed to win any of their matches, but he looks about as strong to get through the early rounds as anybody, just based on who his competition is going to be. A lot of interesting players coming off of injuries still. I'm hoping Zverev finally puts together a decent Grand Slam. Everybody likes Juan Martín del Potro, and he's pretty healthy right now. It'll be interesting to see if Djokovic can finally string together a full tournament of top-level play. The prediction, I would predict Federer to get into the semi, I'll go that far.
Hill: Have you ever been to Wimbledon?
Barker: I have.
Hill: For the tournament?
Barker: Yeah. Not playing.
Hill: No. No. There was not 1/1000 of 1% that suggested that I thought that you played in even an opening round of Wimbledon. That's not a knock on you.
Barker: My dad almost played in Wimbledon.
Barker: Yeah. He could have if he'd had the money to get over there.
Hill: Didn't want to make the trip? That was back when --
Barker: Yeah, it was back when there was no money in it. He was just out of college. He played in what now is the U.S. Open, at the time was the U.S. Nationals, when they were all amateur events. But it was basically the same quality of competition at that as Wimbledon is, closed to amateurs. He would have been able to play.
Hill: When would this have been?
Hill: I remember you telling me years ago, I think we were talking about, who's the greatest of all time, and any time in tennis that discussion comes up, it almost immediately centers around, here's how many Grand Slam titles this person has won. And one of the people who's high on that list is Rob Laver from Australia. You pointed out to me, the thing you didn't know about the Australian Open is that there was a good stretch of time where a lot of really great players didn't make the trip, because you need so much time to adjust your body clock and that kind of thing. Laver, being native to the country, kind of had that tournament to himself. Still a great player, but it's a little skewed.
Barker: In Laver's case, he won the Grand Slam twice, the only person to ever do that. The data point that Roy Emerson won the Australian Open many times, and that was at a time where he maintained his amateur status, while Laver went pro and was no longer able to play in the Australian and other tournaments until they became open in '68, '69.
So, Emerson piled up a number of his Grand Slam wins and had the record on the men's side for the most Grand Slam wins until Sampras broke it. But it was not considered the standard by which you would judge the greatest of all time, because of the mechanisms there, the Australian being a great tournament but not one that everybody could get to easily, and also his length of time on the amateur side.
On the women's side, another prediction ... boy, always hard to predict. A lot of different winners of the women's Grand Slam tournaments over the last three years. I think Muguruza is interesting. If anybody can predict how Serena is going to do and how her body is going to hold up after having to retire from the French, I don't know.
Hill: The tune-up tournaments, Caroline Wozniacki won, right?
Barker: I guess. I missed that one.
Hill: I think that's right. If that's not an indicator of who's going to win, it's often an indicator of who's going to advance pretty far.
Barker: She has her Grand Slam victory, Halep does, a lot of different players have one or two, and then Serena and Venus have all the rest.
Bill Barker has no position in any of the stocks mentioned. Chris Hill has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Nike. The Motley Fool has a disclosure policy.