Colts' Release of Manning Could Be Boon for Nike

All-Star Quarterback Likely to Land at New Team as Nike Takes Over NFL Apparel Contract

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Peyton Manning
Peyton Manning Credit: AP
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Peyton Manning's change of address is good news for Nike , which will replace Reebok International next month as the maker of National Football League-branded apparel and uniforms.

Mr. Manning, whose No. 18 jersey has been among the NFL's top 10 sellers since 2004, was released today by the Indianapolis Colts. The move ends a record-setting era that resulted in a Super Bowl championship, four Most Valuable Player awards and at least three neck surgeries.

Having a player of Mr. Manning's ability and popularity changing uniforms is a boon for Nike , which not only will sell a lot of jerseys but will utilize the offseason news to remind consumers of its relationship with the most popular sports league in the U.S., according to Matt Arnold , an analyst at Edward Jones & Co. in Des Peres, Mo.

"It can't hurt that the league is getting attention in the offseason in light of Manning's move," said Mr. Arnold , who recommends buying the shares, which he doesn't own. "It's a very, very popular league, and he's a very, very popular player."

Financial terms of the league's five-year apparel contract with Beaverton, Ore.-based Nike weren't disclosed when it was announced in 2010. Executives close to the NFL said the agreement is worth about $35 million a year. Nike 's 2011 revenue was $22 .7 billion through November.

Matt Powell, an analyst with SportsOneSource, a Charlotte, N.C.-based research firm focused on the sporting goods industry, says Nike will reap about $500 million this year on the sale of NFL merchandise because retailers drew down their Reebok inventory in anticipation of the switch.

"This is a big deal for Nike because retailers are going to have to fill up their racks again," Mr. Powell said. "Add on top of that a player like Manning changing teams -- that 'll help also."

Mr. Manning, now 35, joined the Colts in 1998, blossoming into one of the league's best and most marketable players. Last year, consumers rated New Orleans Saints quarterback Drew Brees and Mr. Manning the NFL's most marketable players, according to the Marketing Arm's Celebrity DBI, an index that quantifies consumer perceptions of more than 2,800 celebrities. Mr. Manning, whose passing yards, completions and touchdowns rank No. 3 on the NFL career list, was rated the league's most recognizable player.

Mr. Manning has a 19% chance of signing with the Arizona Cardinals, according to the Cal Neva Resort's sports book in Reno, Nev. The Miami Dolphins are second, ahead of the Washington Redskins.

Elite players who switch teams usually sell a lot of jerseys. Brett Favre, whose jersey was the No. 1 seller from April 2008 to March 2009 after his move to the New York Jets from the Green Bay Packers, had been No. 3 the previous year, according to the NFL.

Mr. Manning's jersey ranked No. 18 from April 2001 to February 2012, even though he was recovering from neck surgery last season and didn't play.

"It's going to be exciting as a company-watcher and consumer to see what Nike brings to the NFL in terms of merchandise," Mr. Arnold said.

Reebok, which was acquired by Adidas AG in 2006, held the NFL license since 2001.

The Nike contract doesn't include hats, which was part of the Reebok agreement. NFL-branded hats will be made by New Era Cap Co.

Interestingly, Mr. Manning is a Reebok endorser.

--Bloomberg News

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