Under Armour’s underdog strategy has scored yet again, this time on the golf course. Jordan Spieth surged to a surprise Masters win on Sunday clad head to toe in UA logos. Meanwhile, Rory McIlroy, Nike’s golden boy, finished fourth. And Tiger Woods, a longtime Nike athlete, tied for 17th and badly injured his wrist.
"Thanks to Jordan, our company grew up today," Chief Executive Kevin Plank told ESPN. Indeed, Under Amour shares spiked about 2 percent in trading this morning. Meanwhile, the company's Web store is selling four of Spieth's Masters outfits — one for each day of the tournament.
The coup was a strategic masterstroke for Under Armour, which invests in athletes the way value investors pick stocks. The company is not afraid to spend vast amounts of money, but it's also prone to bidding up a top prospect before walking away from the negotiating table. It then backs a cheaper talent, while getting its sportswear rivals to pay more than they wanted for the top prospect.
The gamesmanship played out most recently in basketball, when Under Armour put on a full-court press for Kevin Durant only to watch Nike re-sign the star to a 10-year deal worth about $275 million. "Do I take pleasure in that they paid $150 million more than they planned on paying?" Plank told Bloomberg at the time. "Absolutely." Meanwhile, Stephen Curry, who has been in Under Armour’s stable since late 2013, continues to make a case for himself as the best shooter of all time.
In golf, Under Armour took a run at McIlroy, a Northern Irishman who became the youngest player to amass $10 million in PGA Tour winnings. When McIlroy, 25, signed with Nike in early 2013, Under Armour signed Spieth. At the time, he was 19 and had just turned pro. Early this year, the apparel company doubled down, tearing up its old contract and signing Spieth to a 10-year deal that keeps him from flashing any Nike or Adidas logos while playing. Three months later, Spieth has picked up a natty green jacket to go with all his high-tech golf shirts.
Spieth is no slouch. He’s both very good and very young, just 21 years old. But if Spieth were a company, he’d be a small-cap darling, beyond the startup stage but with plenty of growth potential. He’s … well … he’s Under Armour to McIlroy’s Nike — or at least he was until last week.
There are just two problems with the Under Armour coup. For one, the company doesn’t make much golf gear. There’s a smattering of polos and pants. And Under Armour only recently released its first golf shoe, a $180 model that has sold out quickly since Spieth’s triumph.
The celebration in Baltimore should also be somewhat muted because golf hasn’t exactly been a growth market of late. In 2013, U.S. courses hosted only 462 million rounds, the fewest they’ve logged in almost 20 years, according to the National Golf Foundation. That slump has played out across the sporting goods business. Last year, sales at TaylorMade, an Adidas unit, slid 28 percent. In July, Dick's Sporting Goods laid off almost all of its 500 or so in-store golf pros and started folding its stand-alone Golf Galaxy stores into its other locations.
The long game for any company in the golf business is far from the links. Under Armour is likely glad that it doesn’t make clubs or tees. Also fortuitous, its golf gear doesn’t look that different from the summer duds a lot of people wear to a barbecue. The shirts have some extra vents and more sun protection, while the pants have stretchier waistbands. Most consumers don’t need to leave the couch to get behind features like that.