TheStreet: Under Armour Banking On Future Endorsements

Golden State Warriors guard Stephen Curry, left, is guarded by Cleveland Cavaliers forward LeBron James during the second half of Game 5 of basketball's NBA Finals in Oakland, Calif., Sunday, June 14, 2015. (AP Photo/Ben Margot)

It was an incredible 2015 for Under Armour (UA – Get Report) with the ascent of Steph Curry, Cam Newton and Jordan Spieth, all Under Armour-sponsored athletes.

This year is promising much the same. The Carolina Panthers’ Newton reached the Super Bowl, and despite a post-game meltdown, remains one of the NFL’s most marketable players. The Golden State Warriors’ Curry wows fans on a nightly basis with spectacular long-range shooting, ball wizardry and even his warm-up routine. Spieth has become one of golf’s brightest stars.

Under Armour’s success underscores the increasing importance of individual endorsers for helping brands increase their recognition in the public eye. They tie sales to the performance of the athletes with whom they’ve built relationships. Net revenues at Under Armour soared 32% last year.

steph UA
it is not surprising that Adidas last year announced that it would not try to extend a deal to be the official uniform provider for the NBA after the 2016-17 season. The company’s financial results were disappointing. Adidas will focus more on individual sponsorship deals.

The major apparel manufacturers try to strike deals early, betting that certain athletes will excel when they will become nationally if not internationally known later on.  Newton starred at quarterback for Auburn, an Under Armour-sponsored school, and it is common for such athletes to stay with a brand for years.

Youth leagues’ brand affiliations generally determine which colleges those players attend. If a player is part of a Nike team, he will usually attend a Nike-sponsored college program. The tendency for long-term relationships is why companies’ grassroots presence is so important.

Under Armour, a relative newcomer to pro sports, only has a handful of NBA players under contract but it has ramped up its youth basketball initiatives in the U.S.  The company has built an association with one of the country’s best youth leagues, the UA Association. The UA is considered to have the same level or better than Nike’s grassroots circuit, the EYBL, which regularly sends players to the best college basketball programs and the pros.

Under Armour believes that with Curry as a flagship, and its new relationship with the UA, it will draw an increasing number of great youth players.  It is looking to challenge Nike for shoe and apparel supremacy.

Nike has continued to focus on blue chip prospects, and its powerful brand is an attention-getter. But the company’s strategy leaves it open to missing someone like Curry who was a late bloomer. Adidas’ current strategy is to diversify its sponsorships to as many players as possible and see what hits big (Matt Bonner, a little-used center for the San Antonio Spurs is an Adidas Endorser).

Among the standouts in the UA are seven foot-one inch Thon Maker, Trevon Duval, the top point guard in the country according to many experts, Billy Preston and Josh Jackson, who is regarded as the next LeBron James.  UA recently announced a Steph Curry AAU team in the Bay Area, instantly making it one of the country’s most sought-after teams.

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