Market Overview

Are Athletic Endorsements Worth It Anymore?

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Are Athletic Endorsements Worth It Anymore?
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With the height of signature athletes’ influence in decline, the question becomes: Are high paid athletic endorsements really worth it anymore?

Basketball shoe sales are declining and may not come back anytime soon, yet brands continue to pony up big money to secure key basketball endorsements and may even overpay to make sure they don’t end up with direct competition.

Basketball Remains Crucial Despite Decline

Basketball is arguably the most important sport when it comes to athletic endorsements for apparel brands; the sport remains one of the most influential segments in athletic apparel and accounts for a significant amount of overall revenue. Football and baseball simply do not have the crossover appeal and, in turn, do not see the types of endorsement deals NBA stars do.

Related Links: Big Baller Brands Scale Back Endorsement Deals While Basketball Slows

“Endorsement return as marketing is dubious at best. There is no way the brands can make money on these deals, especially at the depressed levels of sales,” Matt Powell of NPD Group told Benzinga.

Sales of endorsed basketball shoes are down sharply in 2017, and 2016 they showed a big decline from 2015, which could be considered the height of the endorser influence, with Steph Curry single-handedly building a notable basketball footwear presence for the company. Adidas AG (ADR) (OTC: ADDYY) the hottest brand over the last two years, has completely rebuilt itself, but it didn’t have much of a presence in basketball.

Despite the decline in sales, brands have shown their commitment to basketball, but there have not been too many major deals signed since. Even though the return may not be there, brands still may be willing to bid up deals against each other in an effort to not lose their athlete endorsers to their competitors.

“We're as committed to basketball as we ever have been. We are because we have to be. It's one of, if not the most important category to succeed in. So, I think you'll see us get better at basketball over the next few years,” Mark King, president of Adidas North America told Benzinga earlier in the year.

Crossover Marketing Strategy

A better strategy may be to utilize athletes for crossover categories that are performing well, like Adidas did with James Harden, using the Rockets’ guard to highlight a new sportswear line. Under Armour Inc (NYSE: UAA) has yet to do so with Curry.

Sports lawyer, Darren Heitner, told Benzinga that while it is very difficult to gauge the impact players have on sales, brands remain committed to an endorsement strategy.

Athletic Endorsers Fail To Drive Sales To Women

Using athletic endorsers to drive sales isn’t a strategy that works for women the way it has in the past for men. Female athletes fail to be the style influencers that male athletes have proven to be over the years. It is worth noting that no current WNBA player has a signature shoe named after her, even with Maya Moore being the first female basketball player signed to Jordan brand's roster. 

Furthermore, brands looking to snag female audiences — like Under Armour, which has struggled in this demographic — may be better off going for online style influencers and bloggers, a strategy that Adidas has used to itsadvantage. The investment is minimal and the payoff could be substantial, shifting brand sentiment toward the internet and away from athlete endorsements by planting seeds in the fashion world.

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Image Credit: Used with permission.

Posted-In: Adidas Darren HeitnerPsychology Sports Economics Exclusives Interview General Best of Benzinga

 

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