Under Armour CEO Relishes Bidding Up Nike’s Durant Deal
Under Armour Inc. (UA) Chief Executive Officer Kevin Plank isn’t deterred from pursuing major endorsement deals after being outbid by Nike Inc. for NBA star Kevin Durant -- quite the opposite.
“We wanted to send a message to every athletic director, to every president of every team club, to every league commissioner,” Plank said in an interview with Bloomberg TV’s Stephanie Ruhle yesterday. “If you have a deal, there’s no deal too big for us.”
With Durant’s previous contract with Nike set to expire, Under Armour made an offer that topped a $200 million proposal from Nike, Plank said in a follow-up interview at Bloomberg’s offices in New York. Nike (NKE) then countered with a $350 million deal, Plank said.
“Do I take pleasure in that they paid $150 million more than they planned on paying?” Plank said. “Absolutely.”
The Oklahoma City Thunder forward and reigning NBA Most Valuable Player re-signed as a Nike endorser with a contract worth $300 million over 10 years, according to a person familiar with the negotiations. Including the retirement package and other elements, the deal could be worth $350 million over 20 years, the person said.
Nike, the world’s largest sporting-goods maker, hasn’t been challenged on many endorsement deals, enabling it to pay below-market rates, Plank said. Under Armour, buoyed by robust sales gains, is now willing to spend more on marketing and go after any team, league or athlete, he said.
The more Nike is bid up on deals like Durant’s, the less it has to deploy somewhere else, which will create more openings for Under Armour, Plank said. While Nike generates about 10 times the sales of Under Armour, in the past 12 months the Baltimore-based retailer has increased revenue at three times its rival’s pace.
Its shares have outperformed, too, surging 92 percent in the 12 months through today, compared with a 23 percent gain for Nike. Under Armour rose 2.3 percent to $71.97 at the close in New York, a record high, while Nike added 1.4 percent to $79.92.
“There will be opportunities created from that $150 million,” Plank said. “We all have a finite amount of money.”
Greg Rossiter, a spokesman for Nike, based in Beaverton, Oregon, didn’t respond to an e-mailed request for comment.
Plank has the goal of expanding the company he founded in 1996 into the largest sports brand in the world, and getting its logo on more of the world’s best-known athletes is a part of that. The company, which originally sold clothes that go under football jerseys, has expanded into shoes, yogawear and bags.
With endorsement deals, Under Armour is now going beyond sports stars. This week, the athletic apparel company signed a multiyear deal with supermodel Gisele Bundchen to promote its products and raise its appeal among women. Bundchen is married to New England Patriots quarterback Tom Brady, also an Under Armour endorser.
Under Armour also made a bid to sponsor the English Premier League’s Manchester United, one of the most popular teams in the world, Plank said. The deal ultimately went to Adidas AG, the world’s second-largest sports brand, for $1.3 billion.
Up to this point, Under Armour has rarely tried to battle Nike or Adidas for the top athletes and teams, instead taking chances on lesser-known players like the NBA’s Brandon Jennings and mid-level clubs like the Premier League’s Tottenham Hotspur.
“Our world has changed,” Plank said. “We are the kids sitting at the Thanksgiving table saying ‘I don’t want sit at the little table anymore. I want a chair at the big table.’”
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