New details have emerged regarding Nike’s expected on-court apparel deal with the NBA, but coming with those particulars are questions about the contract that, once finalized, would take effect with the league’s 2017-18 season.
NBA owners were briefed on the deal at their board of governors meeting earlier this month.
First among the developments: The length of the contract likely will be tied in with the NBA’s nine-year, $24 billion media deal that begins in the 2016-17 season — a year earlier than the new apparel deal — and runs through the 2024-25 season. While specific financial details have not yet been determined, sources said they expect the NBA to see a significant increase from the current 11-year, $400 million deal it has with Adidas.
Second, while Under Armour lost a two-horse race for the league’s on-court apparel rights, sources said the company is in talks to end up with a second-prize of sorts: an apparel license that would allow it to sell performance apparel and fan wear with NBA logos, likely within limited distribution — such as its own retail locations and team shops.
Another variable still to be worked through is the possible inclusion of advertising on NBA uniforms. NBA Commissioner Adam Silver has termed such ads “inevitable,” but it is unclear whether Nike shares that viewpoint. Under the expected new deal, Nike is likely to have its logo on NBA jerseys, a first for the league.
Currently, Adidas’ logo appears only on NBA warm-ups.
“As an enhancement to Under Armour’s performance apparel, an NBA license would be valuable,” said Milt Arenson, president and CEO of venue merchandising specialist Facility Merchandising Inc. “But what they really need more is some hit footwear.”
Under Armour’s largest collegiate licenses include Notre Dame, Auburn and Maryland, and it has limited apparel rights with MLB, which allow sales at UA.com, MLB.com, Under Armour stores and MLB team shops. Less than a handful of NHL teams sell Under Armour product locally, and the brand’s NFL deal allows its cleats and gloves on NFL fields and rights to the NFL combine, for which it markets an apparel line.
The NFL earlier this year renewed its massive Nike on-field apparel rights contract, adding three years to the five-year deal that took effect in the 2012 NFL season.
The NBA could take a similar approach in structuring its Nike deal, creating an apparel license with Under Armour giving it rights to the growing NBA Summer League in Las Vegas and the league’s predraft combine.
There’s also the question of what will happen to the Adidas-branded stores in NBA arenas as the league’s on-court rights change from Adidas to Nike. In 2006, when Adidas began its NBA contract, the agreement included rights for the company to have 15 team sponsorship deals, some of which included in-arena Adidas-branded stores. Among teams having such stores are the Brooklyn Nets and Golden State Warriors.
Golden State this year opened its third Adidas-branded store within Oracle Arena.
How Adidas and Nike will support the NBA Store set to open this fall in midtown Manhattan is a matter still to be ironed out in the expected Nike deal, as well.
The framework of the NBA’s agreement with Nike comes just weeks after Adidas’ mid-March announcement that it would not negotiate a new NBA deal upon expiration of its current contract. Negotiations regarding the new deal continued late last week.
