Nike Takes NFL Apparel Deal From Reebok

(NECN: Peter Howe, Boston) - Thrown for a big loss -- that was the situation at Canton, Mass.,-based Reebok Wednesday after Nike pushed Reebok aside as the official maker of National Football League jerseys, starting in April 2012.

"There's no question in my mind that this is major win for Nike and a significant loss for Reebok,'' said Stephen Greyser, a Harvard Business School professor of marketing emeritus who specializes in sports marketing. "When you're co-branding with the National Football League, one is clearly involved with the most successful sports league in the world.''

Reebok doesn't make the numbers public, but Citigroup estimates they make about $350 million a year selling NFL apparel. Yes, it's a big number -- but it's only about 4 percent of the total annual revenue of parent company Adidas, which bought Reebok in 2006. That may be why Adidas CEO Herbert Hainer told CNBC late last month that losing the NFL contract "won't make or break our company.''

Citi Investment Research & Analysis stock analyst Kate McShane said she thinks the deal could add 2-3 percent to Nike earnings during the first year Nike has apparel rights.

Adidas and Reebok remain the official league uniform providers for the National Basketball Association and National Hockey League.

Nike officials say they have some big plans for reinventing NFL uniforms once they get the contract. Instead of the Reebok symbol now visible on players' sleeves above their team number, there will be the iconic Nike swoosh.

Harvard's Greyser says to most big sports fans, having the big swoosh show up on NFL uniforms will be no big whoop.

"Consumers buy this kind of apparel not because of who makes it but because of a favorite player, a favorite team, a favorite sport,'' Greyser said.

One big question mark hanging over the NFL is labor strife. With owners and the Players' Association struggling to negotiate a new collective bargaining agreement as they fight over everything from rookie salaries and revenue sharing to whether to add two games a season, some league observers say there is a non-trivial risk of a lockout or other impasse that delays or imperils the 2011 season. In that case, owning the rights to NFL uniforms might become worth considerably less. But with the NFL far and away the most popular sports league in America, and the gold standard for corporate sports marketing, when Nike got an opportunity to push aside Reebok, Nike said: Just do it.

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