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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

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Nike is close to securing a long-term NBA uniform rights deal. Sources said the framework for a deal has been reached, the outline of which will be presented to ownership today in N.Y. during a meeting of the Exec Committee and tomorrow before the full NBA BOG. Multiple sources said that while the two sides have an agreement in principle, they are still some distance from a signed deal. However, Nike's new on-court rights will not begin for more than another two years. Nike and the NBA still have "a million I's to dot and T's to cross," said a senior industry source, "but it's at that stage, as opposed to getting to the right number." The new deal will take effect in time for the '17-18 NBA season, after the rights held by 11-year incumbent uniform rights-holder adidas expire. After adidas dropped out, the NBA said it hoped to announce a new uniform deal this spring. adidas’ current agreement is valued at $400M over 11 years, and a Nike deal is certainly expected to surpass that in value. Sources said that for the first time, the deal will include the rights to put a manufacturer's logo on NBA jerseys. Currently, adidias’ logo only appears on NBA warm-ups. One source said that both Nike's swoosh and its Jordan Brand Jumpman logo could appear on NBA jerseys. Those details will not be finalized for some time, the source added. NBA Exec VP/Communications Mike Bass would not comment on a possible agreement.

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.
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