Spalding's Non-Disaster; Did Adidas Kill Reebok; and more

Spalding's Total Non-Disaster:

You might remember, after plenty of the complaints, that NBA commissioner David Stern decided to can the new composite ball made by Spalding and bring back the old leather basketball. So the folks at Spalding did the right thing by giving fans the right to return their new composite basketball for a full $115 refund. I wasn't sure what the response would be, but I did know that -- despite all the controversy -- I was getting reports from retailers that the ball was having no trouble selling. Well, either the fans thought they would be pretty cool collectors items or they actually had no problems with the composite ball. How do I know? Because sources tell CNBC that after nine weeks of allowing fans to return the balls for a full refund -- the return period ended in mid-February -- less than .5 percent of fans returned the balls. The ball might have been perceived as a public relations nightmare for the brand, which is owned by Warren Buffett's Berkshire Hathaway, but it certainly wasn't a financial disaster. We heard Spalding sold about 40,000 balls. So that means that less than 200 balls were returned and the ball refunds cost the company less than $22,000 -- a drop in the bucket (pun intended).

Did Adidas Kill Reebok?
I absolutely love what Adidas is doing in basketball. They’ve leveraged their partnership with

the NBA to the hilt and absolutely destroyed Nike in terms of presence at the NBA All-Star Game. They’ve also come out with amazing basketball product. I don’t stop talking to my friends about the Gil Zeros and the T-Mac 6 Millionaires. But I have to tell you, they’ve really failed at doing anything with Reebok, the brand that they bought for $3.8 billion last year. Adidas AG reported from Germany today that outstanding orders at the end of December were down 18 percent for the Reebok brand as compared to the year before. Company officials said that, in 2007, one of the highest priorities is to get Reebok back on its feet. But I’m not sure that can happen in this year after the brand basically died aside from the branding on NFL jerseys. I walked into a Modell’s in New Jersey yesterday and the most amazing thing I spotted was the lack of Reebok product. It had to make up less than five percent of the store -- an anemic amount by anyone's standards.

The Most Refreshing Voice In Sports Marketing

Gilbert Arenas
Gilbert Arenas

I’m sure that Dwyane Wade and LeBron James are more marketable, but Gilbert Arenas is an extremely good spokesman. The guy has obviously garnered a ridiculous amount of attention for himself thanks to his play on the court, his “Hibachi” legend and the birthday party that he invited the world to. I first spoke to Arenas last year when I had heard that he was really unhappy with his Adidas deal . He told me something I’ve never heard an athlete say, “I want to be in their advertising, have a commercial, be in a print campaign. I'll even pay for the commercial to be made." I honestly thought it was a bit strange and in a way felt that Arenas didn’t deserve his own commercial and shoe at the time. Luckily, the folks at Adidas firmed up their partnership with Arenas and gave him his own shoe and his advertising campaign. They look smart now that Arenas is one of the most talked about players in the league. And he’s definitely among the most marketable. His jersey is the eighth best selling jersey in the league, according the NBA’s rankings that were released in January and kids all over the place are wearing the number “0.” Arenas is part of Adidas’ campaign called “What’s Your Impossible?” and he’s a perfect spokesman.

“I had a great story from not getting recruited that much out of high school and people saying I was going to play zero minutes (at the University of Arizona),” Arenas said. “Getting picked 31 (in the 2001 NBA Draft). Everyone said I wasn’t going to be anything and I believed in myself and that’s why I say ‘Impossible Is Nothing’ because I am what the campaign is. I came from zero to hero.”

Arenas, who also has an endorsement with Glaceau’s Vitaminwater, has also made a name for himself by guaranteeing he’ll score a certain number of points -- specifically 50 against the Blazers and Suns.

“People are looking for entertainment,” Arenas said. “You can’t have the same old cliché about ‘I’m an NBA. I can’t do certain things. I’m watching my image.’ I look at it like this, I don’t really have an image to watch, so I can actually do what I feel like doing.”

The only thing I was really concerned about was the confusion of nicknames -- with some calling him “Agent Zero” and others calling him “Hibachi.” We’re happy Arenas cleared things up for us. Said Arenas: “I’m Agent Zero. My arm is the hibachi grill.”

The Sporting Goods Industry:
I had great fun poring over data given to me that came from the Sporting Goods Manufacturers Association's 2nd Industry Leaders Summit, which is taking place in Washington, D.C., this week. Here are some of the best stats:

  • The U.S. sporting goods industry is a $66 billion wholesale business. It grew at 5.8 percent in 2006 compared to the U.S. GDP, which only grew 3.6 percent.
  • Sports apparel -- fueled by compression fabrics -- grew 8 percent to $28.8 billion in 2006.
  • Athletic footwear sales were up 3 percent to $12.3 billion, which only increased because the average price of shoes sold increased. This was after this segment experienced a 19 percent gain in 2005.
  • Retail sales of sports licensed products were up 4 percent last year to an all-time high of $13.9 billion, according to The Licensing Letter.
  • High school data suggests that the number of women athletes is now increasing no faster than the number of boy athletes.
  • Despite what you might have heard, the paintball business seems to be quite static. Sales of paintball equipment were $340 million in 2006, the same that they were in 2005 and less than the $417 million the industry clocked in at in 2004.

Questions? Comments?