Adidas Won’t Renew Its NBA Contract: Analysts React

After the 2016-17 NBA season, Adidas will no longer be the league’s apparel sponsor. The company announced that it will not renew its agreement with the NBA. Instead, Adidas will focus on expanding its roster of sponsored athletes.

“We are reimagining and reshaping our business and have evolved our strategy to look at new, cutting-edge ways to drive our brand and support our business over the long term,” the company said in a statement.

Industry analysts believe the increased focus on sponsored athletes could be good for the company.

“I think if you look at Nike and their dominance, they did it all in just shoes,” said Matt Powell, sports industry analyst for NPD Group. “They dominate basketball market share, and they did it with just footwear. I think Adidas can win that way as well.”

In the statement, Adidas said it will look to double its roster of professional athletes. Currently, the company has deals with NBA standouts Derrick Rose, Damian Lillard and John Wall.

With the NBA contract open after the 2016-17 season, analysts believe Nike and Under Armour are the favorites to take Adidas’ place, with Nike having an edge over its Baltimore-based competitor.

“Nike is set to do $28 billion-plus this year in revenue. Under Armour’s total volume is just over $3 billion. The scale difference is huge. I don’t know if Under Armour is willing to spend that much money over that much time for the NBA,” said Sam Poser, an analyst with Sterne Agee.

Poser believes a marriage between Nike and the NBA is inevitable, and not just for financial reasons.

“Nike and Jordan have a huge amount of shoes, and they’re much more geared up for the basketball business, so I would think they would be very good for the NBA,” he said.

The potential to have advertising on jerseys, according to analysts, could have an impact on bidding. NBA Commissioner Adam Silver has publicly stated that advertising on jerseys will happen eventually.

“I also wonder whether we will see advertising come onto the jerseys when they change over the contract,” Powell said. “This would be a logical time to do it. That may complicate the conversation a little bit, and maybe some of these brands don’t want to be associated with other brands. We’ll have to see how that plays out.”

 

 

 

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