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SBD/April 16, 2015/Marketing and Sponsorship
Nike Close To Taking Over NBA Apparel Rights From Adidas With Long-Term Deal
Published April 16, 2015
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OVERSEAS MARKET A BIG FACTOR: Since adidas dropped out of renewal discussions with the NBA last month, a "bake off" between Nike and Under Armour has seen Nike triumph on the basis of superior distribution capabilities, especially overseas, and a related vision of how to grow the NBA around the world. "Money is important, but compared to their TV (rights fees) this is a rounding error," said the industry source. “It’s about which brand can help the NBA grow overseas. Having (Nike lead NBA endorser) LeBron James in an NBA uniform when he's marketed in China is just a more powerful means of growing the league." Aside from James, Nike’s stable of NBA endorsers includes Thunder F Kevin Durant, Knicks F Carmelo Anthony, Thunder G Russell Westbrook, Clippers G Chris Paul and hundreds of others. It has more than 75% of NBA players wearing its shoes on court, and its share of the domestic basketball shoe market is more than 90%.
A WANT MORE THAN A NEED: The question of why Nike would need or want NBA uniform rights is intriguing. Industry experts noted that NBA rights will afford Nike a more cohesive presentation at basketball-centric retailers, like the "House of Hoops" stores it operates with Foot Locker. NBA rights also allow Nike to continue overseas expansion, where the majority of its revenue is derived. “These are two global brands looking to get more so,’’ said Jeff Bliss, a former New Balance and Olympics marketer who now heads Virginia-based consultancy The Javelin Group. “It’s a powerful combination of media and marketing expertise that blunts the competition (Under Armour) as they look to get significant share outside of the U.S." “Nike further legitimizes its claim to the throne by adding NBA on-court product," said Gene Goldberg, an NFL licensing executive for 29 years who now heads licensing consultancy G Squared. “With the NBA's growing global presence, global players and games overseas, what better way to reinforce the swoosh?” The pending Nike deal continues a remarkable run for the NBA, which rolled out a new sponsorship with Pepsi earlier this week and set a regular season-attendance record this season. “Perception is a game of momentum," said Dave Grant, a former NBA marketer, now a principal at sponsorship marketing agency Team Epic. “Adam Silver came in with a lot of fanfare and handled the TV negotiations, the Clippers and other issues well, so there’s a lot of energy surrounding the NBA, which clearly has extended to marketing and sponsorship."
Staff Writer John Lombardo contributed to this report.