Nike is the official sponsor of the US Olympic Committee for 2016, and also the official supplier of Team USA. This title however only gives them exclusive rights to Americans' uniforms for track and field events, and strictly excludes swimming - which is why Phelps can wear his own branded swimming cap. Despite this condition, all athletes were given Nike sweatpants, jackets and shoes to wear during medal ceremonies and at press conferences.
According to Bloomberg, the photoshoot for the SI cover followed an official press conference, which would explain why Phelps was still wearing his official Team USA sweatpants. Of the 40 or so people who attended the shoot, nobody commented on the Nike pants.
The cover comes as a huge blow to Under Armour, which like Nike, is not allowed to broadcast advertisements featuring its Olympians during Rio that in any way refer to the Games. As neither brand is an "official" Olympic sponsor, their opportunities for brand promotion during the largest sporting event in the world are limited.
Nike, however, has inadvertently been handed a marketing gem, after it was estimated that the Oregon-based brand will get about $453,000 worth of exposure from the cover.
Yeah, someone's definitely getting sacked over this.
"Somebody fell down, especially when you're the most decorated athlete in Olympic history," said Howe Burch, a former marketing executive for Reebok and Fila.
"This will go on the wall at Nike," Rick Burton, a former US Olympic Committee chief marketing officer, said. "Under Armour must be going wild behind closed doors."
The slip-up is likely to undo some of the solid promotional work done by Under Armour in the lead up to Rio.
The brand ran an ad in the US showing Phelps training rigorously in and out of the pool. While it does not mention the Olympics, it's clear what he's training for. After receiving a heap of praise for the promotion, which launched in March this year, the Sports Illustrated shoot is a significant blow.
