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Arizona Pulls Subsidies for New Nike Factory Over ‘Betsy Ross’ Sneaker Controversy

Just hours after the city council of Goodyear, Ariz. voted on whether or not to approve a new, multimillion-dollar Nike factory, Gov. Doug Ducey, announced that the state would no longer be providing tax subsidies for the new facility as a result of the brand’s controversial release and subsequent pull back of an Independence-Day-themed sneaker.

Nike’s “Air Max 1 Quick Strike Fourth of July,” (also referred to as the “Air Max 1 USA”), adorned at the back with the “Betsy Ross” version of the American flag, originally had a July 1 release date, likely to give consumers time to cop the patriotic sneaker before the holiday.

However, according to reporting from The Wall Street Journal, Nike pulled the sneaker from it’s own e-commerce sites and asked retailers to return the sneaker, without explanation, ahead of the release. So far, Nike has said little about its decision but that it had chosen not to release the sneaker because it contained an “old version” of the American flag.

According to the report, it was Colin Kaepernick—now a key endorser of the Nike brand—who directly intervened in the cancellation of the product, urging the brand to pull the sneaker as the flag, created by Betsy Ross, an upholster known for sewing the first stars and stripes flag in 1776, could be tied to white supremacy movements, and represented a time in which slavery was still condoned by the government.

The move immediately sparked outrage on social media, with some opponents of Nike’s decision suggesting it was anti-American. Ducey, a Republican, tweeted Tuesday morning that his state would no longer be going through with its decision to provide tax assistance for Nike’s new factory.

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“Nike has made its decision, and now we’re making ours,” Doucey said. “I’ve ordered the Arizona Commerce Authority to withdraw all financial incentive dollars under their discretion that the State was providing for the company to locate here.”

Nike hinted during its most recent conference call that it would be building a new factory for the brand’s Air Max sneaker line on American soil but had yet to release details. According to ABC15, the affiliate that initially reported that the factory would be coming to Goodyear, the new facility would have provided more than 500 permanent manufacturing jobs and would have started production in 2020 after Nike made a $184.5 million investment in an existing building in the city.

Shortly after the controversy became public, limited quantities of the Air Max 1 Quick Strike Fourth of July began to appear on sneaker resale platform, StockX, in extremely limited quantities. Unsurprisingly, the cancellation sent the resale price of the $120 sneaker soaring, in some cases going for more than $2,500 during the first few hours after The Wall Street Journal’s report. According to data available from the platform at the time, only 67 sales were made for the model with an average sale price of $575. Some pairs were available as far back as June 26, selling for just over $300 until the product pull became public.

However, following suit with Nike, StockX decided to stop the sale of the controversial sneaker by Tuesday afternoon.

“We have decided to remove the Nike Air Max 1 USA from our site today and prohibit any further sales of this item on StockX as the sale of this product on our platform does not align with our value system,” StockX’s director of public relations Alex Smith, told Sourcing Journal.

Last week, Nike released its latest financial report, showcasing its healthy sales and increased rate of investment in consumer relations via its “Triple-Double” business plan. The brand said fueling “deeper relationships” with consumers from around the world would continue to be a significant part of its business model.