Nike Delivers the (Kobe) Beef

On Tuesday, CNBC reported that Nike (NYSE: NKE) had re-signed NBA star Kobe Bryant to a multiyear endorsement deal. Unlike fellow icons Coca-Cola (NYSE: KO) and McDonald's (NYSE: MCD), Nike, which has a strong relationship with Bryant, passed on bailing out on its endoresement relationship with the embattled star during his legal troubles in 2003. Nike co-founder and chairman Phil Knight has long been known as a revolutionary in the industry and built the company around charismatic figures such as Steve Prefontaine, Andre Agassi, Charles Barkley, and His Airness, Michael Jordan.

Coming off a quarter in which the company made $351 million in profits on $3.9 billion in revenues, this contract renewal is a positive signal for Nike shareholders. It sends the message that the company will continue to pay top dollar for the very best athletes in order to maintain its brand image. The relationship between Nike and its peers has grown ultra-competitive in the bid to secure athletes as endorsers. This week, Nike rival Adidas signed Detroit Pistons' guard Chauncey Billups to a lifetime endorsement contract.

There is no question that kids take after their role models in terms of developing a sense of brand loyalty. With Bryant having the top-selling NBA jersey in both the U.S. and China, it is easy to see why Nike wants him to remain a cornerstone of its basketball enterprise. Bryant's present discontent with the Los Angeles Lakers leaves the slight possibility that he could be traded at some point, whereby Nike might be able to pick up some new sales depending on the market in which Bryant lands.

Nike's stock is currently sitting atop its 52-week high, up about 40% from a year ago. The company is set to announce its fourth-quarter earnings later this month. Those earnings will be due in no small part to Kobe and its stable of other athletes. I believe yesterday's signing will play a significant role in Nike maintaining its image as a premier sports retailer for some time to come.

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Fool contributor Billy Fisher does not own shares of any of the companies mentioned. Coca-Cola is an Inside Value selection. The Fool has a disclosure policy.