Tuesday, October 12, 2010

Reebok loses NFL apparel rights to Nike

The National Football League has announced a new sports apparel rights deal and like most things associated with the NFL, it's big news.  Staring in April 2012, current exclusive rights holder Reebok is out, punted away in favor of a better deal from rival Nike.

NFL owners, meeting in Chicago, voted Tuesday to award the Swoosh a five-year contract to produce on-field team uniforms, sideline personnel apparel and fan gear. Numbers aren't circulating, but in 2001, Reebok agreed to pay $300 million over ten years and, according to a Citigroup analyst,  generates about $350 million in annual revenue for the company.  I'm not very good with business math but that appears to be an 1166% return on investment.  The marketing power of the NFL.

Think about it.  The NFL makes the major networks sweat bullets when it comes time to renew television rights.  And, the NFL is the most valuable exclusive offering DirecTV has for customers.  Of all the professional sports subscription packages, NFL Sunday Ticket is the only one that can only be purchased through the satellite service provider.  DirecTV paid $700 million a year to maintain the exclusive contract through the 2014-15 season.  The marketing power of the NFL.  Kind of makes you wonder why Reebok let their deal slip away.

Adidas Group CEO
Herbert Hainer
Interestingly enough, Adidas Group CEO Herbert Hainer seemed to hint two weeks ago that his company might walk away from the deal.  “If we lose the NFL it won’t make or break our company," Hainer told CNBC sports business reporter Darren Rovell.  "We decided how much we were willing to pay. We think it’s reasonable and our intention is to try to keep the NFL as a property. But if somebody bids higher than us then we’ll accept that."  Adidas Group is the parent company of Reebok.

"Reebok has enjoyed a long and very successful NFL partnership," the company said in a statement released on Tuesday morning.  "Over the last decade, we have revolutionized and modernized the sports licensing business, introducing new fan categories, retail formats and new uniform technologies, en route to more than doubling the size of the NFL’s former licensed sales."

A polite way to concede defeat.  I have to believe Hainer and other executives at the Adidas Group and Reebok are screaming a few choice words right now having lost out on the deal that has accounted for 62-percent of their annual apparel sales revenue.  How do you say #&*! in German?

It will be interesting to see how the numbers shake out.  Nike jumps back into the pro sports apparel arena with-- to date, the hottest partner-- while Adidas Group shifts focus to its other pro sports partners-- including NBA, NHL, MLB, MLS-- none of which seem to carry the same weight with fans as their favorite pigskin league.

What do you think?  Chime In!