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[August 21, 2014]
Under Armour makes massive offer to try to pull NBA's Kevin Durant away from Nike, report says [The Baltimore Sun :: ]
(Baltimore Sun (MD) Via Acquire Media NewsEdge) Aug. 21--Under Armour may be close to landing NBA superstar Kevin Durant as a pitch man -- a sponsorship deal that could be one of the largest-ever signed and give the Baltimore company major inroads into the lucrative basketball marketplace.
Signing the Nike-affiliated, Oklahoma City Thunder forward, who grew up playing basketball in Washington and Maryland and still has family in the region, would be a coup for Under Armour as it tries to build its shoe business and boost its stature internationally.
The prospect of such a deal has created a buzz for days, and speculation grew Thursday when ESPN.com reported that Under Armour has offered Durant a package worth as much as $285 million over 10 years. The deal, according to the media outlet, includes Under Armour stock and incentives such as a community center built in his mother's name.
A deal that size "would be one of the biggest ever for an athlete, not just for Under Armour but for sports as well," said Matt Powell, a retail analyst and owner of Princeton Retail Analysis.
The deal would be the lastet salvo in a battle between Under Armour and industry titan Nike, which could have the right to match the offer. Under Armour is "trying to establish a beachhead in basketball," Powell said. Nike controls 96 percent of the basketball market share in the U.S., compared with Under Armour's estimated less than 1 percent share.
Under Armour has declined comment during the negotiations, saying it would be inappropriate to speculate on what might transpire.
Kevin Durant is one of the world's most popular and marketable athletes.
Those who know him say the pull of community is significant to Durant, who played at Montrose Christian School in Rockville and in the American Athletic Union locally. He becomes an NBA free agent in 2016 and there has been speculation that he could return home to play for the Washington Wizards.
"He's always told me has two homes," said Stu Vetter, his Montrose Christian coach. "He loves the atmosphere at Oklahoma City -- he's described it to me as a college atmosphere with the enthusiasm and just having a good time. But obviously he's got the family ties and is from this area. His dad is still here and his mom is in Oklahoma City. With Lebron [James] going home [and signing with the Cleveland Cavaliers] that's fueled the speculation," Vetter said.
In an emotional speech after winning the NBA's most valuable player award in May, he called his mother, Wanda Pratt "the real MVP." She raised him as a single parent in Prince George's County.
"He's the ideal spokesperson," Vetter said. " He's one of the most recognizable people in the world but he also knows how to handle himself on and off the court." "They're looking to try to gain share by signing an important athlete like this." He's one of the premier basketball players in the country. Having him on board would give them additional credibility in their basketball category," Powell said.
Under Armour, which became known for athletic performance apparel, is a relatively new player in footwear and got its start in that category in football and baseball cleats.
But basketball and running, another key focus of the brand, are much bigger markets. Basketball is the second biggest athletic footwear category in the U.S. -- with $4.5 billion in U.S. retail sales last year -- after running, a $7 billion category in the U.S. last year, Powell said.
In basketball, Under Armour signed Golden State Warrior point guard Stephen Curry, also a former Nike athlete.
Under Armour is likely hoping Durant's star power would have the same result as at Nike, where Durant shoe sales brought in an estimated $95 million at wholesale last year, Powell said. That level of sales, plus Under Armour's current basketball sales, would boost the category by five times last year's amount, he said.
The reported amount of the endorsement deal would represent about 10 percent of Under Armour's annual marketing budget.
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