Adidas Out, Nike, New Era In As NFL Redesigns Its $2B Apparel Category

October 12, 2010: In a move that will have a profound effect on the way companies, fans and consumers do business with the National Football League, the league said it would not renew its deal with Reebok as its official apparel uniform supplier, naming rival Nike to fill that lucrative spot beginning in 2012. The NFL said it would also have six other "major apparel partners" beginning in April 2012, each under five-year deals, as it moves to "evolve its apparel business."

The NFL unveiled its apparel category plans in Chicago at the annual fall league meeting, where clubs approved the new structure. Analysts said the league's licensed apparel business at retail was nearly $2 billion in 2009.

Nike previously had official apparel status with the NFL in 2001. Also joining the category roster is New Era, which will become the official on-field headwear supplier and will produce headwear for the sidelines and for fans. New Era's current deals include Major League Baseball, the NBA and the NHL.

"We believe our agreement with the NFL enhances the Nike brand, and provides a significant opportunity to drive growth across the business — both in our performance products and sportswear," Charlie Denson, president of Nike Brand, told the Associated Press.

Reebok, a division of adidas, and the NFL signed a 10-year deal in 2001, valued at $300 million. Reebok will continue to be the NFL’s official outfitter for the remainder of the 2010 season and the 2011 season. Although financial terms were not disclosed, analysts estimate that the total of the new deals could easily triple the value of the Reebok deal.

Adidas will still have a presence in the NFL as players are able to make their own shoe deals. Among those currently under contract to the company are Reggie Bush, Mario Williams, Lawrence Timmons, Adam Carriker and rookies C.J. Spiller and Eric Berry, according to adidas. Those players would be free to change shoes when their current respective alliances expire.

"The new framework will provide fans with a wider breadth of merchandise from global category leaders in the sports licensed apparel industry.”

Changes in the NFL's apparel category were set in motion in 2004 when its alliance with Reebok was challenged by American Needle, a former apparel supplier to the league. The company's lawsuit claimed that the NFL-Reebok deal was a monopoly that prevented American Needle from selling logo caps and hats. The league successfully fought the lawsuit in District Court, but the ruling was overturned by the Supreme Court this past May, returning it to a lower court.

“We have spent considerable time the past few years rigorously evaluating our apparel business,” Eric Grubman, the league’s evp-NFL ventures and business operations, said in a statement. “The new framework will provide fans with a wider breadth of merchandise from global category leaders in the sports licensed apparel industry.”
Beginning in April 2012, the NFL will have seven major apparel partners:
Nike will be the official uniform provider and will produce all on-field apparel including game uniforms and base layer, as well as sideline personnel apparel and fan gear.
New Era, which has an official deal with MLB, will be the official on-field headwear supplier and will produce headwear for the sidelines and for fans.
Under Armour will continue as the official sponsor of the NFL Scouting Combine. Under Armour will outfit Combine participants and also offer Combine apparel beginning in 2012.
G-III will continue as a key apparel partner manufacturing fan gear, including outerwear and lifestyle collections for men and women.
VF will continue as a key apparel partner manufacturing fan gear, including T-shirts and fleece.
Outerstuff will continue as the NFL’s youth apparel provider.
•  ’47 Brand will produce headwear for fans, replacing Reebok.
The NFL said that "there may be additional niche licenses awarded in the future."´╗┐

NFL Loses Battle But Looks To Win MultiBillion-Dollar Licensing War

Supreme Court To Review, Rule On Apparel Deal Between NFL-Reebok

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Reader Comments (6)

How can this be a $2 billion apparel business when Reebok, which had an exclusive apparel and headwear license for the past 10 years reportedly earned an estimated $350 million last year? Where does the other $650 million in sales come from? The on-field licensee is always the #1 apparel seller when it comes to league deals. Either the NFL is inflating their figures (which leagues always seem to do) or that $2 billion represents apparel and everything else.

This is more of a brand advertising opportunity for Nike than a retail one. First, the cost of this deal likely makes it difficult to make a profit considering licensing fees, guarantees, high royalties, grassroots expenditures, and required advertising. the fact that Nike can't turn things quickly and doesn't sell in certain channels, the NFL will see less apparel revenue business with Nike, but a big boost in brand support, as Nike will use its relationship with the NFL to drive demand for Nike-branded, NFL and more importantly, non-NFL footwear and apparel, especially in the performance category.

October 13, 2010 | Unregistered CommenterDave

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