French soccer phenom Kylian Mbappé signed his new endorsement deal with On after Nike chose not to renew its deal with the international superstar, a person familiar with the matter told CNBC.
Earlier Friday, the Swiss sportswear company On said it reached an agreement with Mbappé, marking the brand's first signing in football. The company also announced it named retired French star Thierry Henry as director of football.
As Mbappé's contract ended in July, Nike felt it had benefitted from the prime years of his career and decided to use its endorsement money elsewhere, said the person, who asked not to be named because the discussions were private. The 27-year-old will be 31 when the 2030 World Cup kicks off.
The move is another major change for Nike, which is trying to rebuild brand loyalty and product innovation under CEO Elliott Hill. The company's sluggish sales, particularly its struggles in China, have contributed to its stock falling about 50% in the past year.
Meanwhile, it's a coup for On, which has branched more outside of its core running segment.
Mbappé joined the swoosh in 2006, when he was still a child, and has since emerged as one of the sport's highest-profile stars. The Real Madrid star is the all-time leading scorer for Paris Saint-Germain, the French national team and the FIFA World Cup, and he won the tournament with France in 2018.
In a statement, Mbappé said he was drawn to On by the opportunity to build something entirely new.
"I want to bring my experience and perspective into what we create, push what's possible through innovation, and always stay true to the joy of football. We have a shared dream, and this is only the beginning," he said.
On said it wants to bring a "fresh perspective" to the sport.
"Football doesn't need another sportswear brand to do more of the same," said David Allemann, founder and co-CEO of On, in a statement. "Football needs new ideas and a challenge to what is possible.
For years, Nike has represented many of the top soccer stars in the world, including Erling Haaland, Vinicius Junior, Alexia Putellas and Sam Kerr.
"Over nearly two decades, we've shared moments that shaped the game and he has been an important part of Nike Football," the company said. "We are proud of what we achieved together on and off the pitch. As he moves into the next phase of his career, we wish him continued success for what comes next."
In an analyst note assessing On's ambitions in the sport, Jefferies warned that football is one of the most expensive categories to enter and that "performance credibility cannot simply be bought."
"We see parallels to [Under Armour's past partnership with Stephen Curry]: a star athlete who failed to establish the brand as a dominant player in the sport."