Nike+to+Replace+Reebok+as+NFLs+Licensed+Apparel+Maker

= Title of Article: Nike to Replace Reebok as N.F.L.’s Licensed-Apparel Maker  = = Source: http://www.nytimes.com/2010/10/13/sports/football/13nike.html?_r=3  = = Date: October 12, 2010  =

= Explanation: In this article, Nike has recently signed a deal with the National Football League (NFL) to replace Reebok as the league’s exclusive maker of licensed apparel. Within the United States, football is an extremely popular sport and every year the Super Bowl is one of the most watched events every year. Thus, it can be seen that the complementary goods that go along with football can generate a huge profit for any sports apparel company and in this case its Nike. The sports apparel that Nike will now supply includes a wide array of products, from NFL players’ uniforms to football equipment and even NFL fan gear. Currently, “nearly half of the NFL’s income from licensed goods comes from apparel and headwear”. Reebok has previously helped to generate this income, but now it has fallen upon Nike’s hands, thus making Nike a monopoly in producing licensed NFL apparel. Now that Reebok is no longer supplying these goods, there has been a huge increase in demand for Nike goods. The supply for Nike goods will increase because they have a whole new area of goods to produce. = =   = =  Vocabulary:  = = · Complementary goods – A good with negative cross elasticity of demand, where a good’s demand is increased when the price of another good is decreased  = = · Profit – The difference of the amount earned and the amount spent on production  = = · Supply – The amount of a good or service that is offered for sale  = = · Demand – The desire of consumers for a certain good or service  = = · Monopoly – Where there is only one business producing the product so the business is basically the whole industry  =
 * Evaluation:** As an economist, I think this change is good for Nike. Nike will have an increase in demand, supply, and profit. In the short term, this may be bad for Reebok because they will see a loss in profit. However in the long term, the money Reebok had previously used on the factors of production for NFL apparel might be switched to other areas of production or even sponsoring a different professional sports league. Not much has changed for the consumers of the NFL apparel as long as Nike continues the same standard of quality Reebok offered.