These ought to be tough times for Nike.

The U.S. footwear market is stagnant. Traffic at the malls and retailers it relies on has plummeted. And Nike's two largest rivals, Adidas and Reebok, are three years into a merger that ought to transform them into a more imposing threat.

Yet Nike has rarely performed better, with an all-time high market share of nearly 50% that's growing at the expense of its most significant competitors in the largest and most important categories.

Nike's U.S. sales climbed 4% to $6.4 billion in a difficult market environment during the recently completed 2008 fiscal year, while most of its competitors saw declines. Globally, Nike posted gains of at least 19% in every region outside the U.S. Global revenue rose 14% to $18.6 billion...

Nike's major marketing platform for the year was the Beijing Olympics, which it carpet-bombed with deals involving individual sports federations, including 22 of the 28 Chinese teams and the high-profile U.S. basketball teams. This approach gave the Swoosh a constant presence at the games and was thought to be more cost-efficient than Adidas' top-level International Olympic Committee sponsorship. It helped fuel explosive international growth at Nike, led by a market-best $1 billion revenue in China that's doubled in two years. And it often leads to massive exposure for the brand when its athletes dominate the games, as sprinter Michael Johnson so famously did in 1996.

The latter benefit didn't pay off this year, however, as swimmer Michael Phelps-a Speedo endorser-and Puma-wearing Jamaican sprinter Usain Bolt dominated the Summer Olympics, while many of Nike's top athletes disappointed due either to injury or underperformance.

Speedo's LZR Racer suit so ruled the pool, in fact, that Nike actually gave its own swimmer-endorsers permission to wear them during the games. Nike, which declined to comment for this article, is widely expected to offer Mr. Phelps an eight-figure endorsement deal when his arrangement with Speedo expires next year. That would follow a footprint Nike used successfully in golf with Tiger Woods, a bigger-than-his-sport athlete who turned Nike into a huge force in the category immediately.

``They will view Phelps as the Tiger Woods of swimming,'' says Paul Swangard, president of the University of Oregon's Warsaw Sports Management Center. ``If you have Michael Phelps, you have a big presence in swimming, just like with Tiger in golf.''

Indeed, going back to Michael Jordan in basketball, few marketers have so reliably been able to identify and sign athletes who transcend their sports to such great effect. The 2008 Wimbledon tennis championship match between stars Roger Federer and Rafael Nadal, each cloaked in Nike, was in essence a five-hour Nike commercial. The sponsorship evaluation firm Joyce Julius & Associates estimated that the Nike Swoosh received 35 minutes of airtime during the riveting five-set match, valued at about $10.6 million-more than three full-price Super Bowl ads at prices for this year's game.

In skateboarding, Nike entered the category four years ago as an outsider. Skateboarding has been long dominated by insular players such as Vans, DC Brands and Etnies. But thanks to a steady drumbeat of key athlete endorsements, advertising in niche magazines and websites, key event sponsorships and promotions, and-of course-the rollout of a credible product, Nike now has 8.5% of this fast-growing market.

Nike's only significant disappointment this year came in the cross-training category, which it tried to revive with a campaign starring athletes such as football star LaDainian Tomlinson. The campaign was linked to a larger, Nike-endorsed training regimen. Its launch drew notice because it competed with Under Armour's first non-cleated shoe, the Prototype, and Under Armour's launch fared better...