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Nike Awarded NFL Apparel License, Replacing Reebok

Oct. 12 (Bloomberg) -- Nike Inc., the world’s largest sporting-goods provider, will replace Reebok as the maker of National Football League-branded apparel and uniforms in a bid to drive sales growth in its largest market.

NFL owners approved a licensing deal with Nike that will begin in 2012, the league said in an e-mailed statement today. Reebok, which was acquired by Adidas AG in 2006, has held the license since 2001. The agreement will last five seasons, Brian McCarthy, a spokesman for the NFL, said in an e-mail.

Nike continues to rely on growth from emerging markets and China after revenue from Europe and the U.S., its largest market, slowed during the recession. Sales of the Nike brand in North America have rebounded in the past three quarters and the deal with the NFL will give it a boost, said Charlie Denson, president of the Nike brand.

“Partnering with the NFL really puts us in a position where we can continue to fuel the growth in the United States,” Denson said in an interview. “We’re very, very happy with the dominant position we’ll have on the field.”

Nike, based in Beaverton, Oregon, dropped 9 cents to $81.89 at 4 p.m. in New York Stock Exchange composite trading. Adidas, based in Herzogenaurach, Germany, fell 1.3 percent in Frankfurt trading.

Superhero Look

Denson declined to comment on the financial terms of the deal. Nike already has a license to provide football cleats and gloves to NFL players and that will continue under the new agreement, Denson said. Nike doesn’t breakout sales of football products.

The company also plans to bring to the NFL its Pro Combat uniforms, which it now provides to college teams, Denson said. The uniforms are lightweight with a fitted, superhero look, the company said in a statement last month.

Reebok’s NFL license represents about $350 million of its $565 million in U.S. apparel revenue, Kate McShane, an analyst at Citigroup Inc. in New York, wrote in a note to investors yesterday. The license may increase Nike’s earnings per share by as much as 3 percent in 2012, said McShane, who is based in New York and has a “buy” rating on the shares.

Nike had the resources and is willing to pay for it, Chris Svezia, an analyst for Susquehanna Financial Group in New York, said in an interview. “Is it game-changing for them? No. $300 million to $500 million is 2 percent to 3 percent of global revenue. That’s small.” Svezia has a “neutral” rating on the shares.

“Reebok has enjoyed a long and very successful NFL partnership,” the company said in a statement today. The sports licensing division will focus on other league partners such as the National Hockey League, the company said.

The NFL’s agreement with Nike doesn’t include headwear, which was part of the Reebok deal. NFL-branded hats will be made by New Era Cap Co., based in Buffalo, New York, and the ‘47 Brand from Boston-based Twins Enterprise Inc.

Related News and Information: Consumer & Retail headlines: {RTOP <GO>} Peer comparison: {NKE US <Equity> PPC <GO>} Relative value: {NKI US <Equity> RV <GO>}

To contact the reporter on this story: Matt Townsend in New York at mtownsend9@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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