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SBD/February 15, 2013/Marketing and SponsorshipPrint All
Nike endorser Oscar Pistorius' arrest for alledgedly murdering his girlfriend "isn't the first time some member of the company's stable of galactic star sports figures has been a target of serious allegations,” but can Nike's strategy of putting money behind inspirational stories “succeed indefinitely as the company veers from one catastrophe to the next,” wonders Matthew Futterman of the WALL STREET JOURNAL. Nike-sponsored athletes previously under fire include Lance Armstrong, Tiger Woods, Michael Vick and Marion Jones, as well as late Penn State football coach Joe Paterno. Yet the company through it all “has stayed a course centered on inspiration rather than product.” Pistorius, “after all, doesn't even wear shoes.” In the past it has been noted that “when a Nike athlete falls to earth, the company's fortunes continue to soar.” As major stars are “unmasked, there is a growing sense that the practice of mythmaking may have to stop.” There is a perception that Nike “has somehow changed the rules of athletic success in a crass or craven way,” and some “accuse the company of commoditizing fame.” An element about Nike that “rarely gets acknowledged is that it doesn't sell shoes, or even athletes, as much as it buys and sells stories, narratives, fairy tales.” They “aren't a shoe company as much as a giant abstraction -- a condition of the aspirational mind.” Nike “doesn't make racing bikes,” but it signed Armstrong “because he had survived cancer and come back to win the most grueling race in the world.” Pistorius “fits perfectly into Nike's view of the world: That the most powerful thing one can sell isn't comfortable, stylish performance sportswear, it's the concept of possibility” (WALL STREET JOURNAL, 2/15).
THE TIMES THEY ARE A-CHANGIN: The GLOBE & MAIL’s Bruce Dowbiggin writes these are “hard times for heroes and the people who promote or sponsor them.” In this “media-saturated age, where values sell products, sponsors and charities fall especially hard for athletes such as Pistorius or Armstrong.” Their “virtuous back stories give sponsors the halo effect in addition to marketing push.” Pistorius was one of the “great legends of the 2012 London Olympics, seemingly running against the odds on his blade-like feet.” His sponsors “took it from there, giving him the Lance Armstrong treatment.” But Dowbiggin wonders, “Did Pistorius’s Teflon effect cause the sponsors to miss signs? A cursory look behind the scenes should have raised flags about Pistorius” (GLOBE & MAIL, 2/15). ESPN’s Pablo Torre said the Pistorius story "continues the most brutal stretch of idol-smashing in sports that we’ve ever seen probably in history." Torre: "You start with Joe Paterno, you go to Lance Armstrong to Manti Te’o to now Oscar Pistorius” (“Around The Horn,” ESPN, 2/14).
Basketball HOFer Michael Jordan earned an estimated $80M last year from "corporate partners Nike, Gatorade, Hanes, Upper Deck, 2K Sports, Presbyterian Healthcare and Five Star Fragrances," according to Kurt Badenhausen of FORBES. Other Jordan assets include "six restaurants, a North Carolina car dealership, a motorsports team and his 80% stake" in the Bobcats. Jordan "out-earns almost every member of the world’s highest-paid athletes 10 years after his last NBA game." Jordan Brand is "responsible for the vast majority of MJ’s earnings." Sources said that the terms of Jordan’s current deal with Nike "are a closely guarded secret, but royalties now generate more" than $60M annually for Jordan. Nearly 30 years after he first signed with Nike, the brand "is still a marketing juggernaut." Data from research firm SportsOneSource shows that it "controlled 58% of the U.S. basketball shoe market" in '12. Susquehanna Financial Group analyst Christopher Svezia said Jordan Brand is doing "exceptionally well." He estimates that the brand "grew 25-30% in 2012 and now generates more than $1.75 billion globally, including apparel." SportsOneSource analyst Matt Powell said that the Jordan Brand sneaker business in the U.S. had $1.25B in "wholesale revenue" in '12. Heat F LeBron James is the "top-seller among current NBA players with signature shoe deals, but Jordan outsold James by a 6 to 1 margin in 2012 in the U.S." Jordan still "resonates strongly with consumers." His 22 million Facebook fans "rank fourth among athletes." Jordan has had the "top Q score among sports fans every year" since '87 (FORBES.com, 2/14).
NIFTY FIFTY: Jordan turns 50 years old on Sunday, and several media outlets have taken notice. ESPN has been running a countdown to his birthday, featuring segments on various editions of "SportsCenter" that focus on his legacy as a marketer and collegues expressing their fondness for his impact on the league, among others. Meanwhile, SI this week features Jordan on his 50th cover and devotes a large portion of the issue to him. Stories include memories of Jordan's time in the league and a verbal history of the famed '88 Slam Dunk Contest (THE DAILY).
Under Armour on Saturday is opening a new 8,000-square-foot retail store in Baltimore, and it is part of the brand's "effort to get past adolescence,” according to CNBC's Brian Shactman, who reported live from the store. There are "two issues to deal with when you talk about UA, which is an incredibly successful company, but it's still very much an apparel company.” Seventy-five percent of revenues come from apparel, while the shoe business generates less than 15%. Shactman noted, “That's growing pain No. 1. They need to get more traction with shoes." To help with that, shoes are "pretty prominently displayed" at the Baltimore store. The second issue is that UA is "American centric." Shactman: "Less than 10% of revenue comes from outside North America, and that could be the subtle test of this Baltimore store. ... If this store does well, perhaps it's a template for stores beyond our borders." Despite those shortcomings and a "stock that frankly has underperformed the broader market in this recent rally, this company is still growing revenue about 20%-plus every quarter, and it's also getting the youth of America totally hooked." Shactman: "This is the key: the shoes. You see a collection here you won't see in any other store that they have in North America. They want people to see from head-to-toe how you can wear Under Armour” (“Squawk Box,” CNBC, 2/15). UA President, Chair & CEO Kevin Plank said, “This is the type of store we you’d typically put in warehouse somewhere. But here in our town, we need the retail presentation, so we wanted to see how consumers would react to it and get real-time feedback." He added it will give the company a "chance to really accentuate products that we want.” Plank: “Footwear anchors this store. Footwear is going to anchor our company as well. Our long-term vision is someday that our women’s apparel business will be larger than our men’s apparel business and that footwear someday too will be larger than our apparel business” ("Squawk On The Street," CNBC, 2/15).
ETCH-A-SKECHERS: Fox Business’ Liz Claman reported Skechers' stock “is skyrocketing … after the company absolutely crushed expectations for its fourth quarter, blowing away sales and earnings estimates.” Skechers CEO Robert Greenberg said the company has a “very talented staff of 40 designers and great factories around the world that make the product." Greenberg: "A lot of shopping, a lot of trending and seeing what people are wearing, and we interpret everything and give it our little touches and that makes our product unique.” Silver medal-winning U.S. marathoner Meb Keflezighi is a Skechers endorser, and Greenberg said, “We’ve learned how to make all sorts of great products and different technologies, and running is the last frontier. It's the biggest piece of the entire footwear industry." He added of Skechers going into the apparel business, “We’re not doing that directly. We have licensees for that that are in the apparel industry” (“Countdown to the Closing Bell,” Fox Business, 2/14).
BBVA Compass Friday announced the introduction of NBA Banking, the company's NBA-branded checking and saving accounts. As part of the effort, the bank has signed multiyear endorsement deals with Thunder F Kevin Durant and Rockets G James Harden, who will begin appearing in ads this weekend. BBVA, which is the official bank of the NBA, has begun using #Realfan and encouraging fans to post photos on Twitter and Instagram to display their "fandom" and promote the bank's products (BBVA Compass). In N.Y., Tanzina Vega notes the effort is meant to "help BBVA expand its presence in the United States beyond the 716 brick and mortar locations it has ... while targeting younger, tech savvy basketball fans." BBVA Compass CEO Manolo Sanchez said that it was "important to connect the brand with values like teamwork and fair play" (NYTIMES.com, 2/15). In Houston, Collin Eaton notes it is "no coincidence that the announcement comes on the same weekend" as the All-Star Game. Sanchez said, "It’s like the World Cup of basketball, if you will, and everybody on the whole planet is watching. We’ve been working on the NBA sponsorship for a few years. It was originally our parent company that had the vision to sponsor a global competition" (BIZJOURNALS.com, 2/15).
NASCAR, Swan Racing and driver/team owner Michael Waltrip on Thursday announced plans for a tribute to raise funds and awareness for the Sandy Hook School Support Fund. Swan's Sprint Cup Series entry driven by Waltrip during the Daytona 500 will become the Sandy Hook School Support Fund No. 26 Toyota instead of the Lean1 No. 30. The car will display a call to action to donate $10 to the fund via text message. The "text NEWTOWN to 80888" decal also will appear on all three Michael Waltrip Racing entries in the Daytona 500 (THE DAILY). ESPN.com's David Newton reported NASCAR Chair & CEO Brian France and his wife, Amy, already have "donated $50,000 to show industry support." That amount will be "matched by The NASCAR Foundation." The idea was "born from a conversation NASCAR president Mike Helton had with Daytona Beach businessman Hans Reelick, who is from the Newtown area and still owns a business there with his son." Reelick said, "I asked him if there was a chance we could get the father who lost a daughter (in the shooting) and his son maybe a half-an-hour tour and show them the (Daytona 500) facilities. Two days later, I got a call from Mike, who said, 'Hey, we're going to paint a car for this'" (ESPN.com, 2/14).