Arizona governor yanks Nike grant over flag shoe flap

FILE - In this Sept. 5, 2018, file photo, a large billboard stands on top of a Nike store showing former San Francisco 49ers quarterback Colin Kaepernick, at Union Square in San Francisco. Nike is pulling a flag-themed tennis shoe after Kaepernick complained to the shoemaker, according to the Wall Street Journal. (AP Photo/Eric Risberg, File)

PHOENIX — Arizona Gov. Doug Ducey said Tuesday that Nike cannot get state money for a planned factory in a Phoenix suburb after the athletic company pulled an American flag-themed shoe from the market.

It was not immediately clear if the move, which Ducey announced on Twitter at 2 a.m., would derail Nike’s plans for a $185 million factory in Goodyear. Ducey’s tweets were published hours after the Goodyear City Council approved more than $2 million in tax breaks over five years, but the governor has no control over those incentives.

Nike pulled a shoe with a colonial-era U.S. flag with 13 white stars in a circle, known as the Betsy Ross flag, “based on concerns that it could unintentionally offend and detract from the nation’s patriotic holiday,” spokesman Greg Rossiter said in a statement Tuesday, two days before the U.S. Independence Day.

The Wall Street Journal reported that former NFL quarterback Colin Kaepernick, who has a major endorsement deal with Nike, told the company he and others found the flag symbol offensive because of its connection to the slavery era.

A wave of protests by NFL players began in 2016 after Kaepernick kneeled during the national anthem to call attention to police brutality and racial inequality. The protests grew into one of the most polarizing issues in sports, with President Donald Trump loudly urging the league to suspend or fire players who demonstrate during “The Star-Spangled Banner.”

Kaepernick, who has not played in the NFL since the 2016 season, later appeared in a TV advertisement for Nike.

The company planned a $185 million factory to build mid-sole cushioning for athletic shoes in the fast-growing Phoenix suburb, according to Goodyear city documents. The company agreed to hire at least 505 full-time employees making an average of more than $48,000 a year plus benefits.

“Arizona’s economy is doing just fine without Nike,” Ducey wrote on Twitter. “We don’t need to suck up to companies that consciously denigrate our nation’s history.”

He said he’s “embarrassed for Nike” and called its decision “a shameful retreat.”

Ducey ordered the Arizona Commerce Authority to withdraw a grant of “up to” $1 million, said Susan Marie, executive vice president of the state’s economic development agency. No money had changed hands, she said.

Goodyear Mayor Georgia Lord said in a statement that the city stands by its tax breaks.

Rossiter, the Nike spokesman, said the company is proud of its American heritage and remains committed to creating 500 jobs at a new U.S. factory, but he declined to say whether that factory would be in Arizona.

The move was an unusual dive into a contentious cultural fight for the second-term Republican governor and former chief executive of ColdStone Creamery who prides himself on a pro-business agenda and regularly boasts about the growth of jobs during his tenure. A giant banner hangs outside the nine-story executive tower that houses his offices saying Arizona is “open for opportunity.”

“A cornerstone of his governorship has been making Arizona open for business and luring businesses away from the left coast,” said Doug Cole, a longtime Republican political consultant who has not worked for Ducey.

Ducey’s announcement in the middle of the night in Arizona suggests he wanted it to make a splash on the East Coast, where it landed as morning show producers would be preparing for their broadcasts, Cole said.

New Mexico Gov. Michelle Lujan Grisham, a Democrat, looked to capitalize. She quoted Ducey’s tweet and wrote, “Hey @Nike, let’s talk.”

“We want those jobs,” said Tripp Stelnicki, a spokesman for Lujan Grisham, who said the administration has reached out to Nike about getting them. “It’s wild that anyone would jeopardize viable employment for hundreds of state residents over some political virtue-signaling.”

The grant program Ducey targeted, called Arizona Competes, gives the Commerce Authority broad discretion to give money to companies looking to expand or remain in Arizona. As of June 30, 2018, the state had awarded 123 grants worth nearly $73 million, with just over $39 million paid out, according to a summary released in November. The Commerce Authority says that money has led to the creation of about 11,000 jobs with an average wage of about $72,000.