Adidas is close to signing expected No. 1 NFL draft pick Reggie Bush and is in talks with the league to allow players to wear its shoes on the field. The moves come as the company is preparing to introduce the U.S. strategy for its Adidas and newly acquired Reebok brands.
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Adidas is close to signing Reggie Bush to the
biggest shoe contract for a football player. |
Since Adidas announced the $3.8 billion deal for Reebok last summer, speculation has swirled about the new company’s intentions and which brand it would favor. That’s led both the NFL and NBA, which also licenses Reebok gear, into negotiations with the German company about its plans.
These developments are proceeding as Adidas has scheduled a news conference and analyst presentation next Tuesday to reveal “how they are going to differentiate Reebok from Adidas,” said John Shanley, senior footwear analyst with Susquehanna Financial Group in New York.
Adidas CEO Herbert Hainer maintains the principal reason it acquired Reebok “was to have greater leverage to attack Nike in the U.S.,” Shanley said.
Despite strenuous efforts to make a dent in the U.S. market and frequent management shuffles, Adidas remains mired in third place behind Reebok and No. 1 Nike. It’s a different tale overseas, where Adidas is second to Nike and a power in the world’s No. 1 sport, soccer.
But American football is the top sport in the United States, so when Adidas bought Reebok, talk instantly emerged that it would seek to replace the vector with the stripes on NFL playing fields.
Adidas has not told the NFL it wants to replace Reebok on the apparel front, though several league and team executives said they would not be surprised if at some time in the future that request is made.
“You have to assume that is one reason they bought Reebok,” said one NFL team executive.
Adidas declined to comment.
While Adidas may not now be gunning for apparel rights, it is pushing into the NFL on two fronts. First is its pursuit of Bush, the projected No. 1 pick in this month’s draft.
Nike made a big play for Bush earlier this year, flying the former USC running back to its Beaverton, Ore., headquarters on a company jet to meet with Nike endorser Michael Jordan. But sources said that Adidas, not Nike, is now close to signing Bush in a deal industry sources said is worth about $1 million a year, which would be the biggest shoe contract for a football player.
Reebok, for its part, said it doesn’t believe running backs have significant marketing value.
The interest in Bush by Adidas puzzled some in the football world because the company does not have on-field rights, which would allow its endorsers to wear Adidas shoes in NFL games. Only Reebok and Nike have those rights.
But Roger Goodell, the NFL’s chief operating officer, said the league is in talks with Adidas about obtaining rights to let players wear the firm’s footwear in competition. That would allow Bush to wear Adidas shoes on the field, and for the company to use the NFL logo when placing him in advertising.
In 2000, the NFL and Reebok announced a 10-year, $300 million contract for Reebok to manufacture and sell NFL-licensed merchandise, including an NFL-branded apparel line. That deal bumped Adidas and Nike out of the NFL apparel business, though Nike retained footwear rights.
At the time, the league assigned teams apparel providers. Adidas began outfitting teams in 1998, and at the time of the Reebok announcement it had five clubs, while Nike had 13.
In 2001, Reebok announced that it had signed a 10-year, $200 million deal with the NBA to manufacture and sell licensed merchandise, including apparel for the NBA, WNBA and NBDL, now the D-League.
“We are still discussing how their merger will impact our relationship, if at all,” said NBA spokesman Mike Bass.
Shanley said that he asked Adidas officials if the change of ownership would preclude the merged company from having full rights to the NBA and NFL. “They said, no, they were not restricted in terms of change in ownership,” Shanley said.
Football sources, however, said that the league has a difference of opinion. First, if Adidas wants to replace the Reebok logo, that requires NFL permission. And technically, because there has been a change of control, the whole contract is now up for review. While the league does not appear to be threatening to bid it out, that is always on the table until the two sides reach some agreement on how the relationship proceeds.
The NFL has been pleased with how Reebok has handled the apparel business, so it wants to be certain that Adidas, in whatever route it takes, will continue that success.
Since Reebok launched its NBA and NFL apparel lines, “they have done very well,” Shanley said. “It’s a very profitable business for them.”
