Nike Tackles NFL's Apparel Contract
NEW YORK (AdAge.com) -- Nike has come up with a huge interception.
The world's biggest sports-apparel company is throttling its closest competitor when it comes to America's most popular sport, as Nike will replace Adidas AG's Reebok as the official uniform supplier for the National Football League starting in 2012.
The NFL made the announcement this morning in Chicago.
Reebok's 10-year, $250 million deal expires in April of 2012. Executives close to the league say the new five-year deal with Nike is in the $35 million range, annually. Nike will be the official uniform provider and will produce all on-field apparel including game uniforms and base layer, as well as sideline personnel apparel and fan gear.
Both Under Armour and Adidas/Reebok were battling Nike for the coveted game-uniform contract, and while it made sense for Under Armour to try to get in on the deal -- Baltimore-based UA is already heavily associated with the league due to its workout gear and commercials that featured Baltimore Ravens star Ray Lewis -- it probably made more sense for Reebok to get out.
Adidas, which took over the National Basketball Association uniform deal from Reebok after acquiring the company in 2006, has been repositioning Reebok as more of a fitness apparel and shoe company. Canton, Mass.-based Reebok recently made its first foray back into the sneaker-endorsement business by signing University of Kentucky star and Washington Wizards draftee John Wall to a five-year, $25 million deal. And it nearly tripled its market share in women's footwear in the last year with its ZigTech training line and the Easy Tone sneaker brand for women that the company says tones legs and buttocks while walking.
Adidas AG CEO Herbert Hainer told CNBC on Sept. 29 that "If we lose the NFL, it won't make or break our company."
That remains to be seen. Bloomberg News reported that Citigroup analyst Kate McShane wrote in an investor's note that Reebok's NFL license represents about $350 million of its $565 million U.S. apparel revenue.
The league also announced new deals and renewals with six other apparel sponsors.
- New Era will be the official on-field headwear supplier and will produce headwear for the sidelines and for fans.
- Under Armour will continue as the official sponsor of the NFL Scouting Combine. Under Armour will outfit combine participants and also offer combine apparel beginning in 2012.
- GIII will continue as a key apparel partner manufacturing fan gear, including outerwear and lifestyle collections for men and women.
- VF will continue as a key apparel partner manufacturing fan gear, including T-shirts and fleece.
- Outerstuff will continue as the NFL's youth apparel provider.
- And '47 Brand will produce headwear for fans.
"We have spent considerable time the past few years rigorously evaluating our apparel business," Eric Grubman, the NFL's exec VP-ventures and business operations, said in a statement. "The new framework will provide fans with a wider breadth of merchandise from global category leaders in the sports licensed apparel industry."
Nike's stock briefly traded at an all-time high of $83.40 a share this morning following the news.