For 12 years, the NBA Store in Manhattan has had prime real estate on Fifth Avenue, but now sources tell CNBC that it’s the value of the real estate that has led the league to not renew its lease.
Sal LaRocca, the NBA's executive vice president of global merchandising, acknowledged that the store would close in late February and the league is currently looking for a new location in New York City.
One source told CNBC that the leasing agent for the space, Cushman & Wakefield,was asking for at least five times the amount for a yearly lease as the NBA currently pays for its 35,000 square feet (only 16,000 square feet is actually retail space)
Prices were thrown out of whack when Japanese clothing retailer Uniqlo agreed in April to pay a reported record $300 million over 15 years to lease a space in the same building as the league’s store.
LaRocca told CNBC that he's currently looking at pop-up store locations, places that can be rented by the month instead of the year, so that the league can bridge the gap between having a new permanent location and when the current NBA store closes.
LaRocca emphasized that the moving of the store had nothing to do with NBA merchandise sales. In fact, after record merchandise sales last year, LaRocca said sales are up 25 percent this year.
When the new store opens, it will be run by adidas, which runs thousands of stores throughout the world and some in New York City. The current product mix in the store of roughly 65 percent adidas items is expected to continue. The league will control the lease.
The point of the NBA leasing the space in 1998 was to serve as a retail outlet, but also to serve as an advertisement for the league among the city’s ritziest shopping areas.
Questions? Comments? SportsBiz@cnbc.com