SBJ/August 20 - 26, 2007/This Weeks News

Starter says it’s finished with NASCAR

Starter, whose goal was to make its brand synonymous with NASCAR, has decided not to pursue more deals in the sport.

Starter’s only contract in NASCAR was with JGR,
but it accepted orders from other teams.

Starter, Nike’s value brand of footwear and apparel, claims to provide 70 percent of the footwear worn by NASCAR crews. It had pledged to strengthen its position in the sport last January when it signed a three-year contract with Joe Gibbs Racing.

But just seven months into that relationship, Nike executives have decided not to continue seeking business deals in NASCAR. A Nike spokesman said Starter will fulfill the terms of its deal — providing uniforms, footwear and apparel — with Gibbs Racing through 2009. No financial terms were available.

“We’ve decided not to pursue future business opportunities within NASCAR,” Nike spokesman Alan Marks said. “It’s a corporate decision based on our long-term growth strategy.” No other specifics were available.

Gibbs Racing was informed of the decision last week, as was Motorsports Authentics, which provided a trackside sales trailer for Starter gear. Starter did not have any other contracts in NASCAR, either at the team or league level, but it had proclaimed last January that the Gibbs Racing relationship “signaled a deepening of the company’s commitment to the sport.”

Marks said that Starter had gained its 70 percent penetration in NASCAR through orders from teams throughout the sport, which it will continue to accept. Even though Starter has a contract with JGR, Starter accepted orders from any team through its team services division.

Starter, with JGR, and Puma, with Gillett Evernham Racing, are the two known athletic brands that have team contracts for race-specific footwear and apparel, while Adidas will make its entry with Dale Earnhardt Jr. in 2008.

Simpson also is a significant provider of firesuits and racing footwear through team orders. It has an associate sponsorship deal with Hendrick Motorsports, although it’s not an exclusive deal. Hendrick, like many other teams, buys from a variety of outfitters, including Alpine Stars and Impact.

Starter had explored a deal with NASCAR’s licensing office, but it never came about.

Lee Bird, president of Nike subsidiaries, said in January that Starter would “create innovative new products … and maintain strong consumer appeal.” The ultimate goal was for Starter to establish itself as the footwear and apparel brand of NASCAR, Bird said.

Industry insiders at the team level say that Starter had attempted to work out more deals with NASCAR teams, including Hendrick Motorsports, in order to aggregate the apparel and footwear rights and take them to retail in major sporting goods stores.

“It’s disappointing that they couldn’t work out any other deals,” said Dave Alpern, JGR’s vice president of marketing. “They had been encouraged to talk to other teams and expand into retail.”

It’s uncertain why Starter was unable to secure agreements with other teams. Nike’s spokesman denied that Adidas’ recent deal with Earnhardt, which effectively took NASCAR’s most prolific pitchman off the market for footwear and apparel, played a part in the decision.

“There’s no connection at all,” Marks said.

Others in the sport had different opinions. Most industry insiders said the lack of Earnhardt’s availability made a NASCAR play significantly less attractive for Starter, which is a brand within Exeter Brand Groups, a subsidiary of Nike.

Unlike other properties, such as the NFL or NBA, which act as licensing and merchandising agents for their leagues, licensees in NASCAR must go team to team to buy licensing rights. Licensees with NASCAR gain access to the NASCAR mark, although NASCAR often works with teams on cross-licensing deals.

“I think it was difficult for them to put the necessary rights together to execute the program they wanted,” said Mark Dyer, president and CEO of Motorsports Authentics. “They were trying to reach a distribution channel that’s still unproven in the NASCAR world. They spent a lot of time working on it and it just didn’t work out.”

Adidas’ deal with Earnhardt will yield signature athletic and lifestyle apparel and footwear that’s expected to be distributed in major sporting goods retailers, such as The Sports Authority and Adidas’ own retailers. An Adidas spokeswoman said the brand would consider deals with other drivers, but that its focus going into 2008 was strictly on Earnhardt.

“If the other athletes want to race in our product, we would certainly explore those opportunities,” said Adidas’ Andrea Corso, who added that the Earnhardt line hitting stores in February will range from $10 T-shirts to $2,000 authentic driver suits, as well as footwear and other apparel that he will help design.

Corso also said that Adidas has had conversations about some form of sponsorship on Earnhardt’s new car at Hendrick Motorsports, but those details are incomplete.

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