Under Armour's Final Four Road runs through Notre Dame

March 19, 2015

The Under Armour shoes that Notre Dame's men's basketball team debuted during its Atlantic Coast Conference Tournament title run remind senior guard Pat Connaughton of yellow highlighters.

The team loved them, he said, but there was some concern about how they would fly at the history-rich South Bend university.

“At the end of the day, if you’re winning ball games, I’m pretty sure no one on the team or coaching staff cares what’s on your feet,” Connaughton said.

Under Armour Inc., which has a best-in-company-history six schools wearing its shoes and jerseys in the National Collegiate Athletic Association tournament, definitely cares. Founded as a sports-apparel maker and forging a path in a sneaker industry dominated by Nike Inc., the company is gaining traction in basketball — one of footwear’s fastest-growing segments — helped by the devotion of consumers known as sneakerheads.

Under Armour, which sold its first shoe in 2006, last month debuted its first basketball sneaker tied to a specific player, the National Basketball Association’s top All-Star vote-getter, Stephen Curry.

“It’s really important from an athletic credibility point of view to have the teams that win or do well in college sports,” said Matt Powell, an analyst for researcher NPD Group Inc. “It’s a smart move.”

Under Armour endorsers include the tournament teams such as No. 4 seed Maryland, for whom Kevin Plank, the company’s CEO, played football; and No. 3 seed Notre Dame, which in January 2014 signed the richest apparel deal in college sports history. Founded in 1996, Baltimore-based Under Armour outfits 32 basketball programs at the highest level of college play and the entire athletic departments of 15 schools.

Last year, just one of Under Armour's sponsored teams reached the tournament — Stephen F. Austin in Nacogdoches, Texas — while Nike had 40, including eventual champion Connecticut. This year, Nike still will have the most at 48, including undefeated Kentucky. Eleven schools will wear Adidas AG, and three squads will have jerseys from Berkshire Hathaway Inc.’s Russell Athletic, while wearing Nike shoes.

Under Armour got $1.9 million in television exposure from Stephen F. Austin’s two tournament games last year, according to sponsorship evaluation firm Front Row Analytics. The company’s six teams this year will bring at least $3.9 million in exposure, which increases throughout the six-round tournament. The most it could gain by winning every possible remaining game is $83 million, according to Front Row, as Under Armour school Manhattan College already lost to Hampton in a First Four game.

“If you can hit people young and get them to show brand loyalty, you’ve got somebody for life,” Eric Smallwood, senior vice president at Philadelphia-based Front Row, said in an interview. “Hitting the college space is going to be ideal.”

Notre Dame deal

Under Armour’s Notre Dame deal brings the school more than $90 million over 10 years, according to Fighting Irish Athletic Director Jack Swarbrick. The Irish (30-5)  fared well in their first NCAA tournament game in the shoes, outlasting 14th-seeded Northeastern 69-65 Thursday afternoon.

Notre Dame was “careful of not being too tradition-bound” and was drawn to Under Armour’s entrepreneurial energy and youthful culture, Swarbrick said. He polled team captains and top players to get their views on the brand before signing the deal.

“The younger the student athlete I talked to, the more knowledgeable and enthused they were about Under Armour,” Swarbrick said in a phone interview.

The Fighting Irish will continue to wear the new Curry One shoes throughout the tournament, as will Under Armour’s other partners.

Shoe culture

“In the business of basketball, it’s clearly all about the shoes, but it is a culture,” said Adam Peake, Under Armour’s executive vice president of global marketing. “At some level, you have to be invited to that conversation. We’ve been working for a while to be that brand.”

Sneaker culture addresses issues of masculinity and status through dress and has been dominated by Nike since the 1970s, according to Elizabeth Semmelhack, senior curator at the Bata Shoe Museum in Toronto. It dates back to the mid-19th century with lawn-tennis and yachting shoes.

The museum’s “Rise of Sneaker Culture” exhibit will be on loan to the Brooklyn Museum from July 10 to Oct. 4, featuring all 23 Nike Air Jordan models and one Under Armour product, the Speedform Apollo running shoe that debuted in January 2014. Semmelhack said she chose that shoe because of its technology, as Under Armour worked with a bra manufacturer to create a lightweight, form-fitting and virtually seamless heel cup.

“Nike is obviously an incredibly big part of this story and that’s why 55 out of 150 shoes are Nike,” Semmelhack said in a phone interview. “Under Armour is a new player and so they are represented, but with the single shoe.”

Basketball credentials

Under Armour needs to have credibility as a basketball-shoe maker to reach its goal of becoming a global athletic brand, according to Chen Grazutis, an analyst for Bloomberg Intelligence. While running shoes are a bigger category, basketball garners more attention and hype, thanks to the abundance of websites and Twitter handles feeding content to the eager sneakerhead community. This corner of the Web acts as a de facto marketing arm for brands such as Nike and its Jordan Brand.

“All that exposure trickles down to buying the sneakers,” Grazutis said in an interview.

Adidas, which last year was surpassed by Under Armour in total U.S. sales, said on Monday that it won’t continue as the NBA’s official jersey outfitter after the 2016-17 season, setting up a possible bidding war between Nike and Under Armour.

Best record

With Curry, a league MVP candidate, leading the Golden State Warriors to the NBA’s best record, the Curry One has sold well so far, Foot Locker Inc., the largest seller of basketball shoes in the U.S., said earlier this month without being specific.

Basketball is one of the fastest-growing parts of the U.S. sporting goods industry. Sales surged 20 percent in 2014, about four times as fast as the overall athletic-shoe market, according to Port Washington, New York-based NPD, which tracks the U.S. sports and leisure industry.

Nike has controlled more than 90 percent of the U.S. basketball-shoe market for years. Under Armour has almost tripled its U.S. market share so far this year, but still just registers in the low-single digits and trails Adidas, according to industry tracker SportsOneSource.Slowing Growth

Under Armour has been doubling revenue about every three years, although it has forecast sales growth to slow to 22 percent this year, which would be the smallest gain since during the 2009 recession. Apparel made up 74 percent of its $3.08 billion in sales last year. Footwear accounted for 14 percent, but grew the fastest, with purchases gaining 44 percent, to $431 million.

“It’s not necessarily an overnight success,” Under Armour’s Peake said in a phone interview. “We’ve been working on and building this for years, and it’s nice to start seeing it come to life.”

Under Armour’s sales growth helped boost its shares 28 percent over the past year, topping Nike’s gain of 23 percent. Meanwhile Adidas has declined 10 percent during the same period.

Nike is confident in its basketball business because of a robust product pipeline and partnerships with NBA stars such as LeBron James and Kevin Durant, spokesman Greg Rossiter said in an e-mail. Adidas isn't concerned about Under Armour in basketball because it plans to ramp up investment in the business over the next five years, including signing more NBA players, said spokeswoman Lauren Lamkin in an e-mail.

The idea for Under Armour — spelled with a “U” so that as a fledgling company its toll-free number could be (888) 4-ARMOUR — began with Plank seeking moisture-wicking shirts to wear under his football uniform. Almost two decades later, he remains focused on innovation and is heavily involved in all aspects of the business. Swarbrick said Plank’s connection to college athletics and direct involvement in negotiations helped close the Notre Dame deal.

More schools

Other high-profile properties will be available soon. Schools whose apparel contracts expire mid-2016 include Texas, Michigan, Michigan State, Indiana, Wisconsin and Virginia.

As for Notre Dame, Connaughton said he’ll wear the bright- yellow Curry Ones with his navy blue socks as far as they carry him in the tournament.


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