Lockout: Bad for Biz?

Lockout: Bad for Biz?
Dwight Howard on tour in Italy earlier this summer

NEW YORK — Despite an NBA lockout, most major footwear executives do not expect to lose basketball sales.

Even if the lockout bites into all or part of the season, they said, increased international interest in the sport and broad-based category strength will help keep business healthy.

“We’re going to have contingencies, so if [there is no NBA season], we will minimize the impact,” said Foot Locker Inc. CEO Ken Hicks.

Hicks declined to share specific details of the firm’s backup plans, but noted that Foot Locker is working with its key vendors on tactics that could involve more in-store appearances by basketball players or a shift in marketing focus from the NBA to college teams. He added that reducing the amount of basketball merchandise in the stores could be a possibility down the line, but that is something Foot Locker is seeking to avoid.

Indianapolis-based Finish Line Inc. is less concerned about a prolonged NBA lockout.

President and Chief Merchandising Officer Sam Sato said the company is confident the category will continue to grow this year, regardless of the status of the league.

“Kids are still playing ball, and the marquee players behind the brands are such iconic figures in our culture that their appeal will continue to motivate purchases,” Sato said.

The NBA’s official partner, Adidas, is well-poised even in the case of a canceled season, according to VP of global basketball Lawrence Norman.

“Adidas basketball will carry out business as usual,” Norman said, noting that the brand will move ahead with plans to roll out signature shoes and marketing plans for pro endorsers Dwight Howard and Derrick Rose this fall as scheduled.

Norman added that Adidas could also leverage its relationships within the NCAA and Euroleague basketball to make up for lost NBA television time. “We have several top-tier collegiate partnerships that give our brand premium on-court exposure throughout the basketball season,” he said. Adidas has affiliations with basketball programs at the University of Kansas, University of Louisville and the University of California, Los Angeles, among others, whose games should be nationally televised throughout the next year.

On the global front, the brand also sponsors 22 international basketball teams and will showcase athletes Howard and Rose on an extended tour of China at the end of this month.

“We know these kids are buying shoes regardless of the NBA situation,” Norman said. “We have a multitude of global basketball programs throughout the season.”

Experts noted that one major difference between this year’s lockout and the one in 1999 is that some NBA athletes have already made plans to play in Europe and Asia, which presents an opportunity for brands to grab attention overseas and in the U.S.

SportsOneSource analyst Matt Powell said professional basketball overseas could translate to the American market if the games are broadcast on U.S. television networks. “Brands could get some decent exposure in the U.S. if sports shows start airing games or video highlights from different countries because there is no NBA,” Powell said.

He also predicted minimal fallout on basketball footwear in the case of a prolonged lockout. “The fashion piece of the business and the performance piece of the business are relatively intact,” Powell said. “I don’t expect to see a major impact on sales.”

However, category leaders Foot Locker and Nike would have the most at stake if the NBA season is canceled, according to Powell.

“Nike and Jordan Brand have the largest share of basketball, so they’re probably more vulnerable on the brand side,” he said. “Foot Locker, obviously, has the biggest basketball franchise of any of the [retail] chains, so they would be the most in jeopardy.”

Susquehanna Financial estimated a low-single-digit sales decline for both Foot Locker and Nike in the case of a shortened pro season.

The two athletic giants felt the pain the last time the league had a labor dispute, in the late 1990s, which resulted in a 50-game season instead of the standard 82.

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