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CHANGING OF THE GUARD

The NBA could be in swooshes soon

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AP Photo/Rick Bowmer
It’s a Nike world. We just live in it.
By Marc Bain
Published Last updated This article is more than 2 years old.

Adidas could be facing yet another threat from its rivals. Both Nike and Under Armour are in a good position to steal Adidas’ NBA sponsorship contract when that deal expires in 2017, say Citigroup analysts Kate McShane and Corinna Van der Ghinst. 

What’s at stake is a sport with millions of viewers and a key foothold in the US sportswear market. It’s by far the largest in the world, valued at more than three times the next largest market, China. Basketball sneakers make up a significant part of that. According to market researcherNPD Group, the US basketball sneaker category is worth about $1.8 billion and continues to grow.

Nike, which between its own brand and its subsidiary Jordan brand completely controls that market, could seek to secure that dominance with a pre-emptive bid, say McShane and Van der Ghinst. (Nike already sponsors by far the most NBA players. Why not just sponsor the whole league?)

Under Armour, however, has been stepping up its game against Nike, launching the Curry One sneaker with NBA star Stephen Curry. It may want to make an all-out push into basketball sneakers by adding its name to the list of league sponsors. And as McShane and Van der Ghinst note, the “NBA’s fairly well-developed international business would also be good timing for Under Armour’s accelerating international expansion plans.”

It’s doubtful Adidas would willingly let go of its NBA sponsorship, which it has held since 2006. As its position in the US sportswear market overall has slipped, leaving it behind Nike and Under Armour, the company has pledged to spend more money signing US athletes. Its focus will be on baseball and football—Adidas already started by giving out $100,000 a piece to select NFL prospects—but it’s unlikely to ignore basketball entirely. According to McShane and Van der Ghinst, Adidas sees the sponsorship as “vital to its North American business.” Last time around it reportedly spent upwards of $400 million to win it.

Yet Adidas’ current CEO, Herbert Hainer, is scheduled to step down in 2017, and the company is already working with him on a “generation change.”

Perhaps it won’t be the only change for Adidas.

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