Nike Wins $1 Billion Contract With NBA as Adidas Walks Away

Matthew Townsend, Scott Soshnick
Bloomberg News

Nike Inc. won an eight-year deal to make uniforms for the National Basketball Association, taking over for Adidas AG after that company’s contract runs out in 2017.

Nike will become the first apparel partner to have its logo appear on all on-court uniform designs, according to a statement Wednesday. The company is paying about $1 billion for the contract, according to a person familiar with the deal who asked not to be identified because the terms are private.

“Nike will be instrumental in our collective efforts to grow the game globally while applying the latest in technology to the design of our uniforms and on-court products,” NBA Commissioner Adam Silver said in the statement.

Adidas said in March that it decided not to renew its 11-year NBA partnership. The decision reflected a change of direction by the German company, which is putting more emphasis on developing new products and sponsoring individual players. Last year, Adidas signed deals with four of the top six NBA draft picks, including Andrew Wiggins and Joel Embiid.

Nike will now have the global rights to design and make jerseys, in addition to warm-up outfits and shooting shirts. The Beaverton, Oregon-based company was already the footwear and apparel provider for USA Basketball, the governing body for the country’s Olympic teams. Nike also has some of the NBA’s best-known players as endorsers, including Kobe Bryant and LeBron James. Greg Rossiter, a Nike spokesman, declined to discuss the terms of the deal.

Stock Gains

Shares of Nike rose 0.5 percent to $103.88 at the close in New York on Thursday. The stock has gained 8 percent this year.

The company, which has been a marketing partner of the sports league since 1992, also will make apparel for the WNBA and NBA’s development league.

“Having the Nike logo on the jerseys can help grow the business,” said Brian Yarbrough, an analyst for Edward Jones & Co. “The bigger aspect is it keeps the competitors’ logos off the jerseys.”

In the fiscal year through May 2014, Nike’s basketball-related sales rose 19 percent to $3.1 billion. It’s the company’s second-largest category after running.

This marks the second time Nike, the world’s largest supplier of athletic gear, will replace Adidas as the sponsor of a major U.S. sports league. It also took over the National Football League license for uniforms and apparel in 2012 from Adidas-owned Reebok.

Nike has been on a roll after revamping its struggling China division and benefiting from the trend of consumers wearing fashionable athletic gear as everyday apparel. That’s helped the company generate growth in mature markets including North America, where sales increased 10 percent to $3.25 billion last quarter.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s