Adidas is prioritizing wisely
Here’s just one example of Adidas reordering its priorities in America for the better. In 2015, when Adidas’s 11-year jersey sponsorship of the NBA was coming to an end, the brand chose not to even bid for the new contract. After all, it had spent $400 million for the deal and didn’t have much to show for it at the end: still less than 5% market share in basketball shoes. So it bowed out and let Nike have it (and arguably, overpay for it). Nike spent a reported $1 billion for the new contract, which is only for 8 years.
Having its logo on NBA jerseys didn’t do much for Adidas, so it exited. And it exited at just the time when performance basketball sneakers are in decline anyway: the category is down 23% this year so far. Kids aren’t buying basketball sneakers anymore because they aren’t wearing basketball sneakers for everyday fashion. (That role goes to running shoes these days, but overall, “There is not a single performance category that is trending positively right now,” Powell says. “We are 100% in an athletic fashion trend.”)
Mark King, the US CEO of Adidas, says it’s about picking and choosing the right moves in the NBA, rather than overspending on one big contract. “Is any one thing a catalyst for success? No,” he says. “It’s a combination of doing a lot of right things. Having the NBA doesn’t hurt you, but what we’ve seen is that having it also doesn’t guarantee it will help you. We’ve walked away from the NBA in terms of league sponsorship, but not from a player standpoint. We still love the NBA. We’re not doing as well in basketball as we need to, but we believe that 2018 will be a great year for us, because of the [Adidas-sponsored Houston Rockets star James] Harden Effect and new product.”
That last part is the key: new product. It’s Adidas’s product that has made it cool again in the eyes of American kids and sneakerheads. And if it can keep the product pipeline fresh, that market share number will keep ticking up.