Why Uniqlo is spending big money on Roger Federer

The king of tennis has left Nike for Uniqlo.

Japanese fast-fashion apparel brand Uniqlo signed Swiss tennis star Roger Federer to an endorsement deal reportedly worth $300 million over 10 years.

That’s $30 million a year for the athlete who has won the most men’s singles Majors of any tennis player ever (20), but turns 37 next month, and will certainly not be competing 10 years from now. For Federer, the price is right: his Nike contract was worth around $10 million a year.

But why does forking over so much money for Federer make sense for Uniqlo?

Uniqlo is owned by Tokyo conglomerate Fast Retailing (FRCOY), which also owns fashion labels J Brand and Theory. Fast Retailing brought in about $17 billion (USD) in revenue last year, and more than 75% of it came from Uniqlo. Tadashi Yanai, the ambitious founder and CEO of Fast Retailing, has been saying for years that he wants to get Uniqlo to $10 billion in US sales by 2020. It isn’t there yet. (Uniqlo did nearly $14 billion in global revenue in 2017, and more than half of it was in Japan, though in the final quarter of the year Uniqlo for the first time did more revenue outside Japan than in Japan.)

Uniqlo doesn’t do many athlete endorsements. That’s because unlike Nike, Adidas, or Under Armour, it isn’t a sports apparel brand. It is a fast-fashion brand, a la H&M, that makes performance athletic apparel along with all the rest of its apparel.

The few athlete signings Uniqlo has made were all in tennis or golf. That’s why Federer makes sense as the brand’s new sports face—especially after Uniqlo lost Novak Djokovic last year to Lacoste. Djokovic had been Uniqlo’s most prominent athlete ambassador. Federer is a massive upgrade, a bigger global face for the brand.

Federer is also almost certainly one of the select few athletes who will continue to be marketable past the time when he retires from his sport. Michael Jordan, Peyton Manning, Shaquille O’Neal, Charles Barkley, Gary Player, Serena Williams, and perhaps Danica Patrick are other examples. That means Uniqlo is banking on using Federer in brand advertising even when he’s no longer competing on the court.

“Mr. Federer is one of the greatest champions in history; my respect for him goes beyond sport,” Tadashi Yanai said in a press release. “Our partnership will be about innovation on and off court… Uniqlo will help Mr. Federer continue taking tennis to new places, while exploring innovations in a number of areas including technology and design with him.”

Federer will wear Uniqlo at all major tennis tournaments during the year, and will wear Uniqlo LifeWear (basically the company’s athleisure line) off the court, a company spokesperson tells Yahoo Finance. Uniqlo will also “combine Roger’s expert professional insight with our most advanced proprietary technologies” to create performance apparel.

Uniqlo does not make tennis shoes, so when Federer showed up at Wimbledon on Monday in a Uniqlo polo and headband, he still wore Nike sneakers. Still, Nike shares dipped 2% on Monday on the Federer news. “We don’t comment on athlete contracts,” a Nike spokesperson says. “However, we’re thankful and proud to have been a part of Roger’s incredible journey and wish him the best in the future.”

There is also the question of the “RF” logo that adorns Nike tennis merchandise. Nike owns the logo, but Federer said at Wimbledon on Monday that he expects Uniqlo to make a deal with Nike to buy the logo. “It will come to me at some point,” he said. “I hope rather sooner than later, that Nike can be nice and helpful in the process to bring it over to me.”

Uniqlo’s portfolio of athlete ambassadors now includes Federer, Japanese tennis player Kei Nishkori, Japanese wheelchair tennis player Shingo Kunieda, British wheelchair tennis player Gordon Reid, and Australian golfer Adam Scott.

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Daniel Roberts is the sports business writer at Yahoo Finance. He hosts the podcast Sportsbook and the video series Business + Coffee. Follow him on Twitter at @readDanwrite.

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