The NBA last night officially announced that Nike has signed an eight-year deal to become the official on-court apparel provider of the NBA, WNBA and NBA D-League beginning with the '17-18 season. The company will become the league's first apparel partner to have its logo appear on NBA uniforms. Nike will also have the global rights to design and manufacture jerseys as well as on-court warm-ups. Furthermore, Nike will have an expanded presence at WNBA events, including the All-Star Game, and the apparel company will engage in season-long marketing activities for the D-League, with a major presence during its All-Star Game. THE DAILY in April reported that Nike was close to finalizing a deal to take over for adidas as the NBA's jersey provider (THE DAILY). In N.Y., Richard Sandomir cites a source as saying that the eight-year deal is worth about $1B, "more than double the value" of adidas’ current deal, which was originally for $400M over 11 years before being "amended over the years to be worth more." Nike as part of its deal "will be able to sell T-shirts, shorts, headwear, sweatshirts and socks, and authentic and Swingman replica jerseys." Licensing consultant Ira Mayer estimated that the deal "probably would bring Nike" about $1.5B annually in retail sales (NYTIMES.com, 6/10). ESPN.com's Darren Rovell noted industry analysts "will be curious to see how much the world's largest shoe and apparel company looks to push the envelope with the NBA, as its deal with the NFL has hardly resulted in much creativity save for a couple of teams" (ESPN.com, 6/10).
NECESSARY MOVE FOR NIKE: BB&T Capital Markets footwear & apparel analyst Corinna Freedman said Nike landing the deal was "largely expected," as the company has "lost a lot of deals and marketing events recently to Under Armour." Freedman said, "They really had to box Under Armour out and paid up significantly for this contract.” But CNBC's Andrew Ross Sorkin asked, “If you're paying $125 million, is there $125 million in merchandise?” Freedman said, “It’s a marketing and merchandising opportunity, but the licensed apparel business is a very tough business as demonstrated by the fact that four or five apparel manufacturers have turned over this contract." Freedman added, “Viewership is up across the NBA. Internationally, viewership is up, so it's a significant marketing coup. But Nike’s not going to be the only logo on the jerseys. It's rumored that they're going to start selling ad space to other brands as well” ("Squawk Box," CNBC, 6/11).
