Under Armour, Parcells, Lacrosse, and Donuts
Barron’s article on Under Armour must have been one of the most influential pieces of journalism in the sports business industry because shares of Under Armour absolutely took a dive yesterday following this weekend’s publication of Barron’s article on the company. For those that missed it, the article pointed out that the stock is trading at more than 80 times its earnings in the past 12 months while Nike’s market value is 14 times greater than Under Armour’s and only trades at 17 times earnings. The folks at Under Armour shouldn’t worry though, Cramer on last night’s “Mad Money” said that the punishing was enough and that the company deserved a rally. Expect shares to climb back a bit today.
Funny thing is if the Barron’s article was that influential, you’d think people might dump Under Armour and go out and buy Nike. Well, that certainly didn’t happen since Nike was down more than 2 percent yesterday -- to its lowest share price of 2007.
The most interesting news for me came out of Nike, where they announced longtime executive Clare Hamill as the new president and CEO of Nike’s Exeter Brands Group. Under the umbrella of Exeter comes the Starter, Asphalt, Shaq and Dunkman.
The cushy jobs at Nike have always been those involved in the high cost business -- the technology, working with the athletes, on the Jordans, etc. -- but this move signals that low cost is no longer low priority. Why is this so important? Because I believe the value market is only going to get bigger and bigger. Exeter exists because Nike doesn’t want its Nike swoosh to be in the Payless and Wal-Marts of the world, so it has the low cost brands to fill the gap.
But the pressure has been put on more now than ever before thanks to all the buzz generated by the quickly growing Steve & Barry’s (Buyout firm TA Associates bought an undisclosed minority stake in the private company in November). The company will hit 200 Wal-Mart-sized sports merchandise stores by March and its $14.98 Starbury brand is really the first low cost shoe to get great buzz. The appointment of Hamill, who has been with the company 26 years, shows that Nike is extremely serious about this space. This spring, Exeter will unveil the Tailwind sub-brand, a low cost stylish women’s performance brand. Sources say that they’ll put women’s soccer star Brandi Chastain on the brand. Exeter is also beginning a relationship with NASCAR’s Joe Gibbs Racing Team for footwear and apparel, though details of the relationship are not clear.
Is It In Him?
Bill Parcells will forever be associated with Gatorade, thanks to the 1986 season, in which his Giants made the Gatorade Bath or Shower famous. Parcells, who retired yesterday, is also at the tail end of a new Gatorade commercial, featuring a high school football team. Parcells is in the closing scene of the commercial, standing at a toll booth, saying, “Do you have what it takes to pay the toll?” Parcells isn’t acting specifically as the Dallas Cowboys coach here so Gatorade can get away with running it, but given that Parcells no longer could “take the toll,” it’s a bit ironic now. Gatorade officials say the ad will still run as is.
Lacrosse Is Hot
For the past couple years, everyone has written that lacrosse is the fastest growing sport in the country story and I’ve followed the fabulous success of the National Lacrosse League and gasped at some of the attendance numbers that I see. So this weekend, I finally decided to take in a National Lacrosse League game after being invited by Ben Sturner of Leverage Agencywhich sells sponsorships for the league. It was the opening game for the expansion New York Titans at Madison Square Garden. There were a couple things that really stood out to me. I couldn’t believe how many kids were there. Double the amount of kids that you’d find at an NBA game. And I also was surprised at how much I enjoyed it. I have watched college lacrosse in person before, but just being inside with music playing and in front of thousands of people really made a difference. The final attendance was 13,127 and trust me, it was totally legit. This league can really fill a nice niche in the next couple years and it will be interesting to watch the battle between NLL and Major League Lacrosse.
No Donuts For You
One of my favorite promotions is gone. After four seasons, the Kansas City Royals are no longer doing their Krispy Kremedonut promotion. Every time the Royals got 12 hits, fans could redeem their ticket stubs for a dozen donuts. Over the course of the promotion, fans had the chance to pick up millions of free donuts. I believe the promotion made some sense. The Royals usually did it about 18 times a season -- let’s call it about a 20 percent "hit" rate -- so that the financial exposure wasn’t that great, but the exposure certainly was. I just hope this isn’t about financials. If it is, the people at Krispy Kreme should just understand that all you have to do is just make it harder to collect. Restrict the amount of places you can collect at and restrict the times you can collect the donuts.
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