BrandDunk

Branding the World of Sports

Posts Tagged ‘Under Armour’

Nike looking to gobble up competition

Posted by ZA on May 6, 2010

Nike announced that they have targeted annual revenue of $27 billion by 2015.  Nike plans to achieve that growth through expansion into developing markets (China & Eastern Europe), by expanding their existing line of products and by pursuing “acquisitions and partnerships”.  That target is a big increase (near 50%) from Nike’s 2010 revenue projection of $19 billion, so to achieve their goal the Swoosh is going to have to be very aggressive.

This announcement only solidifies my opinion that Nike will try to acquire rival Under Armour.  Under Armour reported 2009 revenue of just under $900 million dollars, which should put UA in the $1 billion annual revenue range in 2010.  So Nike not only gobbles up a strong competitor and gains ground in the performance sportswear category, they would also be adding $1 billion plus dollars in revenue towards their bottom line.  That billion plus in extra revenue is more than Nike is receiving from their current subsidiaries; Cole Haan, Converse, Hurley and Umbro.  So Under Armour has to look attractive and I think Nike buys them this year.

Posted in Nike | Tagged: , | 2 Comments »

Under Armour signs Michael Phelps

Posted by ZA on February 19, 2010

Michael Phelps will need to be strong to haul around all of the checks from sponsors

Under Armour has signed swimmer Michael Phelps to an multiyear endorsement deal.  The deal will have Phelps endorse Under Armour products that he wears to train “outside-the-pool”.  It was structured that way because Phelps already has a lucrative endorsement deal with Speedo, whose swimsuits he wears during competitions.

This is a bold move for Phelps and Under Armour and appears to be a win-win.  Under Armour picks up one of the most marketable, young athletes in the World for a pretty fair price (note: figures on the deal were not disclosed, but one expert estimated the deal at $5 million).  Phelps insures that Under Armour will get plenty of coverage at the Summer Olympics, an event that has traditionally been dominated by Nike, Adidas and even Puma.  This deal is also a great move for Phelps who already has the richest swimwear contract that Speedo has ever signed.  It is like Phelps gets to double dip, by having two sponsors in the same genre.

[Assist: Sports Business Daily]

Posted in Endorsement Deals, Olympics, Under Armour | Tagged: , , , , | Leave a Comment »

Evaluating my 2009 Sports Marketing predictions

Posted by ZA on January 3, 2010

Time to take a look back and evaluate how I did on my 2009 predictions for the world of Sports Marketing. I posted my “bold predictions” on January 2, 2009 as a wide ranging look at some of the big moves I thought would happen in the industry.  I made seven predictions and wind up getting almost half of them correct.

Prediction: Tiger Woods will sign with Mercedes or BMW.

Result: This one did not happen, but who could have predicted the implosion that would happen to Tiger Woods the endorsement star in 2009.  Tiger is currently losing endorsements by the week, but I still think this prediction will eventually come true.  Companies will stay away from Woods for awhile, but when they do come back I expect Tiger to pickup a luxury car endorsement deal.

Prediction: Wrigley Field gets a new name.

Result: This one didn’t happen, although the Cubs were finally sold at the end of the year so it could be on-tap for 2010.

Prediction: AIG will end uniform sponsorship with Manchester United.
Result: I got this one right.  Shortly after writing these predictions word came out that AIG would discontinue their deal with Man U.  AIG actually just chose not to renew their deal, but close enough I got this one right.

Prediction: NASCAR will cut races.

Result: It was a tough year for Nascar with a tough economy and huge losses in the auto industry both hurting the sport.  The end result was that some races were not return to the schedule (e.g.- Milwaukee Mile in 2010).

Prediction: Reebok will be folded by Adidas.

Result: This did not happen, and with parent company, Adidas’ stock up 20% in 2009, the Reebok brand might be safe for awhile.  That said, I still think we’re still headed towards an Adidas versus Nike world, so at some point Adidas is going to put Reebok down.

Prediction: Under Armour will be acquired by Nike.

Result: This did not happen, but I still feel it’s one that could happen soon.  Under Armour’s stock is only up slightly since beginning of ’09 and UA stock took a pounding in October when they missed the mark with their expansion into running shoes.  Nike is still flying high and has a $30 billion market cap, so I think they eventually make this acquisition to eliminate a big competitor.

Prediction: David Beckham goes back to Europe.
Result: Nailed this prediction.  Becks came, he played a little bit and created a sensation.  Then David high tailed it back to the Spanish Premiere League.  I think Beckham likes the idea of playing in America, but isn’t really interested in doing it just yet.

Posted in Adidas, Apparel & Shoes, Golf, Nascar, Nike, Sports Brands, Sports Marketing, Under Armour, Venue Naming Rights | Tagged: , , , , , , , | 1 Comment »

Under Armour too aggressive in footwear?

Posted by ZA on November 3, 2009

Under Armour has been a favorite brand in the sports world for over a decade.  The Under Armour story has been a case study in success; a tiny company that makes good competing against the giants in their space (i.e.- Nike & Adidas).  They’ve grown up a lot from those early days in founder Kevin Plank’s basement; Under Armour is now a publicly traded company (NYSE: UA) with almost a billion dollars in revenue.

One of the characteristics that has made Under Armour successful is their aggressive attitude towards growth.  They quickly diversified from an innovative apparel company into many other facets of the sportswear industry, including athletic footwear.  With each new expansion of their business they seemed to thumb their nose at the established players in that space and set their sights on domination.  Under Armour’s bravado was never more obvious then when they used the tagline “The future is ours” during their 2008 Super Bowl spot.  But these days Under Armour is discovering that being one of the biggest brands in their space, a successful publicly traded company, has some downside.

Under Armour expansion into footwear has not gone as smoothly as planned, which has caused analysts and investors to loudly criticize UA’s moves thereby pummeling their stock price.  This AdAge article says that analysts have characterized Under Armour’s moves as “weak”; particularly the decision by the company to pull back on how aggressively they plan to expand their shoe line.    The negative attention has caused Under Armour’s stock price to drop dramatically to $26 per share from its previous 52-week high of $33 per share (Source: Yahoo Finance).  It also means that Under Armour has some tough sledding ahead if it wants to continue to live up to its aggressive brand image.

Their are still big opportunities available to Under Armour in the athletic footwear category, but they might need to be a little more conservative.  Perhaps they should follow the advice one expert said and grow things a little slower.  Try to develop their niche in the shoe market organically, rather than forcing their way with a big media blitz (i.e.- Super Bowl commercial).  There is a lot of established competition in shoes and Under Armour isn’t entering the space with anything revolutionary like they did in sports apparel with their moisture wicking shirts.  If I was Under Armour I would try to focus on a certain niche in shoes, like: football cleats, workout shoes or casual shoes.  Once successful in that space, then I would grow their product line into the more competitive categories like running shoes.  Sometimes bigger isn’t better, even for big brands like Under Armour.

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Under Armour

Posted in Adidas, Apparel & Shoes, Nike, Sports Brands, Under Armour | Tagged: , , , , , | 3 Comments »