This year's NBA Finals pit Nike against Under Armour
Although Las Vegas oddsmakers consider the Golden State Warriors the favorite to win against the Cleveland Cavaliers in the best-of-seven NBA Finals that begin tonight, the battle for sneaker supremacy between the team's biggest stars is shaping up much differently.
In that closely watched battle, the Under Armour (UA) basketball shoes of Golden State's Stephen Curry are the underdog against Cavaliers star Lebron James and his business partners at Nike (NKE), which has dominated the basketball shoe market since Michael Jordan's heyday in the 1980s. Sales of Nike's Jordan-branded footwear hit $2.5 billion in 2013, more than the next four players combined. That's more than 10 times the forecasted 2016 sales of Curry ($160 million) and James ($150 million).
The 28-year-old Curry, a two-time MVP and fan favorite, has made inroads with his line of footwear this year. Morgan Stanley analyst Jay Sole estimates it has taken 900 basis points of market share from Nike.
"We think this shift may slow in 2017, but for now, UA continues to aggressively pursue market share, and the strategy is working," wrote Sole, who rates Under Armour as "underweight" and Nike as "equal weight," in a recent note sent to clients.
Shares of Under Armour and Nike fell on Wednesday after Under Armour raised concerns about the liquidation of Sports Authority. Some analysts also cited heightened competition between the companies. Even so, observers say Under Armour has plenty of momentum on its side, thanks to its partnerships with Curry and other high-profile athletes such as golfer Jordan Spieth, quarterback Tom Brady and baseball player Bryce Harper.
"The momentum is in Under Armour's court right now and has been for the past year or so," said Bob Dorfman, a sports marketing expert at San Francisco's Baker Street Advertising. " "They seem to have landed -- I don't know if it was a little bit of luck or a little bit of skill -- the preeminent player in every sport."
Curry stands 6-feet, 3-inches, which is shorter than many NBA players and gives Under Armour an edge over Nike in the critical China market. That's because the NBA has legions of fans there that relate more easily to shorter players, according to sports marketing expert Jimmy Lynch, who teaches at Georgetown University.
Officials from Under Armour and Nike didn't immediately respond to a request for comment about this story. Nor did the National Basketball Association.
According to Sponsorship.com, corporations spent $739 million with the NBA and its 30 teams in the 2014-2015 season, an increase of about 9 percent on a year-over-year basis. The NBA will begin selling advertising on players' jerseys next season, the first professional U.S. sports league to do so. Competition remains fierce among companies eager to be associated with the league.
PepsiCo (PEP), for instance, became the league's official food and beverage sponsor last year, ending a nearly three-decade run by rival Coca-Cola (KO). Kia Motors extended its partnership with the NBA in 2014 and had a separate deal with James to pitch its K900 luxury sedan. Neither PepsiCo nor Kia could be reached for comment.
"The league is doing great," said Dorfman, adding that the battle between Curry and James may spur "record-setting" viewership. "It's the matchup everyone wanted to see. ... It's a good time to have your shoes on an NBA player."