Up for grabs: NBA uniform and apparel contract

A big sponsorship deal is up for grabs as Adidas announced Monday that it will not be renewing its partnership with the NBA when its contract expires after the 2016-2017 season.

A shopper walks past Adidas AG merchandise in Beijing, China, on Sunday, Feb. 26, 2012. Adidas, the exclusive maker of National Basketball Association (NBA) uniforms.
Nelson Ching | Bloomberg | Getty Images
A shopper walks past Adidas AG merchandise in Beijing, China, on Sunday, Feb. 26, 2012. Adidas, the exclusive maker of National Basketball Association (NBA) uniforms.

Adidas has been the league's official apparel and uniform sponsor since 2006, when it signed an 11-year deal with the league valued at $400 million.

"We will invest more in telling stories that matter to our consumer, building category-disrupting innovative products, reinvigorating youth basketball with our new Next Generation programs and doubling our roster of professional athletes to authenticate our brand on-court," the German company said in a statement Monday.

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The NBA declined to comment, but sources familiar with the matter told CNBC that market leaders Nike and Under Armour are both in serious discussions with the league on the contract, and it could be a matter of weeks when a new deal is announced.

Nike and Under Armour declined to comment as well.

Despite Monday's announcement by Adidas, a report out last week from Citigroup's Kate McShane suggested that it was actually the league that may have been uneasy about renewing with Adidas.

"While the brand has invested in a handful of key NBA players and college teams, our industry contacts note that these are not assets that sporting goods retailers need to drive sales, making the NBA contract a critical part of its U.S. strategy," McShane's analysis said.

Adidas announced last month that it would look for a new CEO to succeed Herbert Hainer, when his contract expires in 2017. That follows months of declining U.S. market share that saw Adidas fall to the No. 3 spot in U.S. athletic apparel sales.

"The NBA will likely be more comfortable if they knew his successor," the Citigroup report said.

While Adidas throttles back on its efforts in the league, the change represents new opportunity for both Nike and Under Armour.

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Nike basketball together with its Jordan Brand currently makes up 96 percent of the basketball shoe business, according to data compiled by SportScanInfo. The Jordan Brand brought in more than $2.5 billion in footwear sales last year—making an NBA apparel contract a natural fit for the Beaverton, Oregon, company. Adidas Basketball market share for 2014 was just 2.6 percent.

According to HoopsHype, the Nike and Jordan brands are worn by 322 of the 440 NBA players.

"Nike understands the North American and international market," said Sam Poser, an analyst and managing director at Sterne Agee. "If Nike got the contract, it would be very good for retailers."

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While Under Armour has been gaining share, surpassing Adidas to take the No. 2 spot in U.S. athletic apparel sales, an apparel deal with the NBA would be far costlier for a company that is a fraction the size of Nike.

However, the Baltimore-based company has been making a push into basketball, recently signing Golden State Warriors star Stephen Curry. The sponsorship opening could be a big opportunity for Under Armour to delve further into the sport.

Analysts expect the new contract to go for considerably more than $400 million.