Losing Its Grip In the U.S. Market, Adidas Discontinues Relationship With the NBA
Reported by Victor Ochieng
Adidas has been the outfitter for the NBA since 2006 when the two entities signed an 11-year contract reportedly worth $400 million at the time. However, the sports gear and shoemaking company revealed on Monday that it won’t be renewing its contract with the NBA beyond the 2016-17 season.
The revelation came after the NBA informed the German company that it was set to open bidding for its next contract. Once the bidding process is finalized, the NBA Board of Governors will meet in April before unveiling the new company that won the deal.
Adidas had, however, made it clear that it wouldn’t be bidding to continue its partnership with the NBA.
Through a statement, the company said, “While we have enjoyed a successful long-term relationship with the league, we continually review our partner agreements to ensure they are meeting out investment and delivering on our brand and business needs.”
One of the reasons that may have triggered the company to review its contract with the NBA is its performance in the U.S. market, where it has so far slipped to No.3 among the top-selling sports gears, trailing Nike and Under Armour.
There are speculations that the Herzogenaurach, Germany-based company could be considering working with another sports league to reignite its performance in the U.S.
Adidas is said to have developed a strategy for the market and is expected to roll it out beginning March 27. The new strategy will include its current contract with the NBA, which is expected to run until the end of the 2016-17 season. Even though the contract is still in operation, it won’t stop the NBA from announcing its next partner once the board decides.
Since Adidas and the NBA entered into the deal, Adidas has been the exclusive outfitter for the NBA, WNBA, and NBA Development League. In return, Adidas gained rights to all NBA-branded items globally for the entire contract period.
Companies that have been flouted as possible winners of the new deal are Nike and Under Armour. Nike had initially worked with the NBA. On the other hand, Under Armour has had great performance in its basketball business.
Adidas hasn’t had it easy in its leadership. Last year, the global brands head, Erich Stamminger, left the company. Recently, the company’s chairman and CEO, Herbert Hainer, revealed his plan to quit his position. These are reasons that may have triggered the changes in the company’s business strategy.