The NBA Finals are more than just a showdown between the Golden State Warriors and the Cleveland Cavaliers. It’s a chance for Under Armour and star Stephen Curry to challenge Nike’s decades of basketball dominance.
Under Armour is about a 10th the size of Nike in sales, and it’s up against a company that sponsored Michael Jordan, Kobe Bryant and LeBron James – players with a combined total of 13 titles. But Under Armour took a chance on Curry, signing him away from Nike before last season. And when the guard brought the Warriors to their first finals in four decades, that bet paid off.
“This is a huge opportunity for us,” said Adam Peake, Under Armour’s executive vice president of global marketing. To capitalize on the moment, the company may air television commercials during the games, he said. It also plans to release Curry-themed videos and other content through social media.
If there ever was a match-up that embodied the David-versus-Goliath state of the basketball-shoe market, this is it. Curry faced long odds to reach this stage. He played at Davidson College, a fringe program, and was often deemed too small to excel in the National Basketball Association. But Curry has made up for his skinny frame with record-breaking shooting, earning him a most valuable player award this season.
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He'll be taking on the Cavaliers’ James, a Nike-sponsored athlete who was anointed “The Chosen One” on the cover of Sports Illustrated in high school.
Like Curry, Under Armour is an underdog in its battle with Nike – the world’s largest sports brand, with about $30 billion in sales. In basketball, the odds are especially stacked in Nike’s favor. It controls about 95 percent of the basketball- shoe market in the U.S., according to research firm SportsOneSource. Under Armour registers in the low-single digits, putting it in third place behind Adidas AG.
Nike dominates globally too. The Jordan brand rules the fashion side of the industry, more than a decade after Michael Jordan’s retirement, and Nike’s other footwear leads in the performance category. Under Armour, based in Baltimore, only started making basketball shoes in 2010.
“Nike can’t even see them in the rear-view mirror at the moment, but they are there, just far back,” said Neil Schwartz, vice president of market insights at SportsOneSource. “You aren’t going to slay the dragon with one basketball shoe.”
The Curry One, Under Armour’s first shoe named after a basketball player, was released in February. The product has helped the company’s basketball-shoe sales triple this year in the U.S., according to SportsOneSource. Nike, based in Beaverton, Ore., didn’t have an immediate comment.
The Curry shoe sold out, thanks in part to limited supply, Schwartz said. Under Armour kept inventories low – a strategy Nike has used for decades to drive demand – and it worked, he said.
But even when a shoe company is blessed with a red-hot athlete, it can be hard to capitalize on it. Just ask Reebok. The company had Allen Iverson – another sensational shooting guard – when he was arguably the most popular player in the league. He did little to chip away at Nike’s empire. Even several versions of Nike’s signature shoe for James didn’t sell well, said Matt Powell, an analyst at research firm NPD Group Inc.
“They have to be very careful,” Powell said. “The immediate reaction will be to make a gajillion pairs of shoes and squeeze everything out of this. That’s not the way to grow a shoe business. You want them to sell out and for people to be hungry for the next one.”
Under Armour has been proving skeptics wrong since Chief Executive Officer Kevin Plank founded it as a workout-shirt maker almost 20 years ago. Now it makes all manner of sporting goods, and sales have doubled in the past three years to more than $3 billion.