While they lost out on Kevin Durant to Nike, Under Armours mega-offer for the NBA superstar should mark that UA is committed to being a bigger player in the endorsement game. We wanted to really make a statement, I think, to the world, as much as anything, said Kevin Plank, Under Armours chairman and CEO, last week at Goldman Sachs Global Retailing Conference. And really, we wanted to let every athletic director, every conference commissioner, every league commissioner, every president of every club around the world in the world of sport that Under Armour is someone that you should speak to.
He added that there is no deal in sports that were not capable of being a part of, noting that UA earlier this year was also an early bidder for Manchester before Adidas wound up snagging the soccer franchise from Nike. Said Plank, Well be a part of the process with every great asset that comes available in sports.
The offer-reportedly covering 10-years at $265-285 million-also sent a message to Nike, which reportedly initially offered $20 million annually over ten years. According to the Wall Street Journal, the upped offer is for as much as $350 million over 20 years.
Durant would have been the centerpiece of its basketball push. A move to Under Armour would be brought Durant, the NBAs reigning MVP, back to his roots. He grew up in Prince George’s County, MD and played high school basketball in Rockville. Among active basketball players with a signature shoe line, Durant is second in sales only to Lebron James, according to SportsScanInfo, a division of SportsOneSource.
Plank said UA sent out a full-market offer and we placed that offer on Day 1, which was well north of where our competitors were.
He half-joked, Frankly, for me, as being someone from Maryland, and seeing him with — what was it, $200 million offer turn into a $350 million contract, is something that I hope and — well, I cant wait to see the good things that he does back in his old neighborhood in Seat Pleasant, Maryland, to make a difference.
Finally, Plank said that with or without the deal, UA still expects to grow at a rate greater than 20 percent in 2015. He added, So none of our business has changed and we continue to march on.
The end of the Durant push, however, came with the signing of Giselle Bundchen, the worlds highest-paid supermodel and wife of Tom Brady, to drive the second installment of its I Will What I Want womens campaign.
Plank said UAs current endorsement partnership with Brady helped land Bundchen. Her commercial, which launched last week, has people maybe thinking a little bit differently about the idea that they had about what Under Armour was and what kind of a brand we were, maybe any limitations that we had.
Bundchen and Lindsey Vonn, the famed skier whos also in the campaign, visited Good Morning America last Thursday to promote the campaign. The first installment featuring stark images of Misty Copeland, who is the lead soloist at the American Ballet, with an inspirational message drew a resounding response, generating over 6 million YouTube views.
Overall, Plank said the two installments shows that after 12 years of making womens product, Under Armour is getting better at developing product not just for the female athlete but for the athletic female. Reaching $500 million in womens sales last year, he said UA is still just getting started.
Plank also noted that he remains incredibly excited still about what Under Armour’s going to do in the sport of basketball although Durant wont be around to jumpstart the category. Last year, Under Armour signed Stephen Curry away from Nike and is its biggest NBA star. Other NBA endorsers include Brandon Jennings, Greivis Vasquez and Kemba Walker.
Plank cautioned that UA still plans to keep its marketing budget at 11 percent of sales, the same rate as Nikes. But it plans to be opportunistic and benefit from what it believes is a more flexible organization than its larger competitors. For instance, the company only began talking to Notre Dame on Dec. 1 and closed the deal by the end of the year.
Said Plank, We understand who we are and we understand the opportunity, and I think the good news is that weve got growth coming from a lot of different places that allows us to be a little more thoughtful and maybe take a little more time than being forced into any one model.
Overall, the last quarter marked its 17th consecutive quarter of 20-plus percent top line growth; along with its 19th consecutive quarter of 20-plus percent apparel growth.
Asked about the string of quarterly results outperforming guidance, Plank said the upside to plan includes some initially conservative projections on some relatively unproven areas, particularly footwear and international. The upside to guidance also reflects direct-to-consumer, which has consistently been over-performing to our plans over the last few years.
I Will What I Want, its first advertising push dedicated to women, is also expected to boost revenues in the second half. Brad Dickerson, UAs CFO, noted that in the fourth quarter last year, weather was a big help for us and the back-half projections dont any similar weather benefit. But the company is seeing healthy momentum across its six drivers: men’s and women’s apparel, footwear, international, direct consumer, and its connected fitness platform (MapMyFitness).
Said Plank, We believe that our business is firing very well. Were not, of course, perfect across all fronts, but we like our momentum, we like our direction, and we think there’s a pretty terrific opportunity in front of us.
