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Boston-Based New Balance Launches Football Business To Increase Exposure

Boston-based footwear firm New Balance "is jumping into the world’s biggest sport with the launch of a soccer business under the New Balance name," according to Kurt Badenhausen of FORBES. New Balance "has been firing on all cylinders in recent years with sales up 17% annually" since '10 to reach $3.3B last year. Much of the growth "has taken place outside the U.S." with int'l revenues up more than 25% a year. The New Balance "brand is bigger than ever." New Balance announced plans to enter the football market "in simultaneous star-studded events in New York and London." New Balance’s move "has been rumored for months." New Balance "is hardly starting from scratch," as it started a football business three years ago under its Warrior subsidiary. Warrior’s entry into the football market "was highlighted" by its $40M-a-year jersey deal with Liverpool starting with the '12-13 season. Liverpool "has one of the best-selling kits in the world." Warrior "also sponsored Stoke City, Sevilla and Porto and a handful of other clubs." New Balance Product Exec Joe Preston: "Given the global reach we have with the New Balance brand, we are better served to move those assets over. We want to take it to the next level." Football is still a small fraction of New Balance’s $3.3B in revenue "with running providing the bulk of the business." New Balance’s entry into the foootball market "is about generating revenue" from football, but also "exposing the brand to a bigger audience to benefit its other product categories, most notably running" (FORBES, 2/4).

THE BEST FEET: BLOOMBERG's Kyle Stock reported New Balance "has a strategy: to make really good shoes, put them on a few of the best players in the game" (including former Everton and N.Y. Red Bulls player Tim Cahill and Man City captain Vincent Kompany) and "charge quite a lot for them." New Balance said that when it unveils its new line of football cleats sometime in the middle of this year, the footwear "will be on a par with the most expensive offerings in the market, which currently cost around $300." They "will also be stocked exclusively in specialty shops, not big-box retailers." New Balance "knows it is a second-tier player." Its goal in football, according to New Balance CEO Robert DeMartini, is not "to be bigger than its massive rivals," just to carve out 10% of the market, or roughly $600M in annual sales. Despite this ambition, it "has no immediate plans to make soccer cleats for women who make up a huge slice of the market" (BLOOMBERG, 2/4).

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