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Why the world's top golfer can suddenly leave Adidas for Nike

Australian golfer Jason Day won the PGA Championship last year, has won three more PGA Tour events this year, and has occupied the No. 1 spot in the Official World Golf Rankings for 29 weeks. And now the mega-star is ditching Adidas for Nike. It’s a huge score for the Swoosh.

Day is sponsored by TaylorMade-Adidas, but his contract expires at the end of the year. According to ESPN, Day will re-sign with TaylorMade for his club provider, but sign with Nike for his apparel.

That split is possible because Adidas is exiting the golf equipment business, looking to sell off TaylorMade, Ashworth, and Adams. (See above Yahoo Finance Sportsbook video.) Adidas acquired TaylorMade in 1997 when it bought the ski-maker Salomon. And for years, TaylorMade was the No. 1 clubmaker. But sales have fallen steadily, including a 26% drop in one recent quarter, and so Adidas announced in May it is looking to shed its golf-club albatross. In the past, athletes sponsored by TaylorMade-Adidas would use TaylorMade clubs and wear Adidas apparel and footwear.

But because of two major exits in the golf equipment business—Adidas announcing it will sell TaylorMade and Nike halting its own equipment business—Day can now re-up with TaylorMade for clubs, but switch to Nike for apparel and shoes, at the end of this year. (TaylorMade-Adidas had no comment.)

Losing Jason Day is a big loss for Adidas, but might be an even bigger gain for Nike. Once it sheds TaylorMade, Adidas won’t likely have a very large presence in pro golf. Even though it sponsors three big stars – Day, Dustin Johnson, and Sergio Garcia (among others) – it hasn’t gone to great lengths to market those stars off the course; there is little evidence that golf is a priority for Adidas.

In contrast, Under Armour has aggressively pushed its new golf footwear with star Jordan Spieth, and Nike Golf made its bones with Tiger Woods and has pushed advertising with Rory McIlroy. But Woods missed this entire season, and has not made the cut at a Major since The Masters in April 2014; McIlroy last won a Major that year as well. In other words: Nike Golf needs Day.

The world’s No. 1 golfer will likely become the No. 2 face of Nike Golf (which now entails only apparel and shoes, not clubs) and perhaps, if he continues to win and McIlroy doesn’t, its foremost star. He has shown more consistency, if not marketability, than Woods and McIlroy.

It is unclear whether additional Adidas golfers like Johnson and Garcia will soon leave the three stripes as well. (TaylorMade-Adidas will not share contract details of its other sponsored golfers.)

The golf equipment business is dire right now—there is no positive spin to give it. Nike’s equipment business had its worst year last year since 2011, hence Nike’s instant, surprising exit (though it was a minor player in equipment anyway). It’s unclear what company will even want TaylorMade; Callaway is the only remaining publicly traded equipment maker, and while it was returned to profitability in 2014, in 2015 its profits were down. Golfsmith, the country’s largest golf retail chain (a seller, not maker of equipment) is days away from filing for bankruptcy.

The golf business is ailing, but it is not dead. And many in the sport believe that young stars like Day, as well as McIlroy, Spieth, and Rickie Fowler, are its best hope for a comeback. It’s why golf’s governing bodies, and veteran stars like Jack Nicklaus, believed that the sport’s return to the Olympics was so important. Nike, a leader in golf apparel, can keep its brand name at the forefront of golf fans’ minds even without making clubs, thanks to key deals. Signing Day will be a huge help.

Daniel Roberts is a writer at Yahoo Finance, covering sports business and technology. Follow him on Twitter at @readDanwrite. Sportsbook is our recurring sports business video series.

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