SBJ/20090921/This Week's News

K-Swiss eyes key endorser to drive business

K-Swiss is looking to make a splash with a major tennis endorsement, having already made a run at Andy Murray and continuing to talk with Novak Djokovic, whose contract with Adidas expires at the end of this year.

The company, whose revenue fell 33 percent to $340 million from the end of 2005 to the close of last year, is switching gears and wants to add a signature endorser to drive its performance business. That sector accounts for just 16 percent of K-Swiss’ sneaker sales; 83 percent comes from the lifestyle category that has been the company’s focus, with the balance from other categories.

“We are looking for a brand changer, one that will move the needle,” said Erik Vervloet, K-Swiss director of sports marketing. “We went down the road with Murray, and our pursuit of him proves our brand is serious.”

Several tennis agents and sneaker executives agreed that they had never seen K-Swiss so serious about signing top players.

Tommy Haas is on the roster of K-Swiss
endorsers, but the company wants a mega-star.

Murray, the No. 3-ranked player in the world, will command at least $5 million annually when his deal with Fred Perry expires later this year. He is expected to sign with Adidas, sources said, though no deal has been struck.

Terms for a deal with a Djokovic, the world’s No. 4-ranked player, could be far different. Djokovic is from Serbia, a smaller global market than Murray’s Great Britain. In addition, Djokovic’s image has taken a hit over the last year for his comments at the 2008 U.S. Open criticizing crowd favorite Andy Roddick, as well as for pulling out of matches for assorted maladies.

Still, Djokovic would likely get a guarantee of around $1.5 million to $2 million annually in a deal, sources said. To put that figure into context for K-Swiss, the California-based company at the end of 2008 had $1.9 million in total endorsement obligations stretched out over the next three years, according to the company’s annual report.

Djokovic’s agent at CAA Sports, Allon Khakshouri, did not reply for comment.

K-Swiss is perhaps best known for its endorsement with Anna Kournikova, a deal that is unlikely to be extended, a well-placed source said, because the company is now focused more on performance than lifestyle. That deal, which expires in February, was signed in 2007, after Kournikova had retired from competition.

Other players signed include Tommy Haas, Vera Zvonareva and Mardy Fish. None of them, however, gives the company a mega-star.

Vervloet, a former tennis coach, grew up a mile from Nike’s Oregon campus. K-Swiss hired him three years ago to build the company’s tennis and running business. He said the company is also expanding into skateboarding shoes, an area expected to launch in 2011, and that there may be another sport the company will tap soon for endorsers, though he declined to provide details. The company has a number of triathlete endorsers and sponsors the Ironman events, as well.

The majority of publicly traded K-Swiss is controlled by Steven Nichols, who holds 70 percent of the total voting power of the company. Nichols, the company’s president and chairman, has signed off on the endorsement spending, Vervloet said.

The company earned $21 million last year.

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