Photo: AP Photo/Charles Rex Arbogast
Negotiations between the National Basketball Association have stalled again with less than a week before the first games of the 2011-12 season were supposed to start.Research firm Detwiler Fenton & Co. sees more than just disappointed fans waiting court side if the lockout continues. Footwear brands like Nike and Reebok have rich deals with star players like Lebron James, Kobe Bryant, and Allen Iverson. The limited exposure is pushing both firms to expand running shoe and athletic wear offerings to protect sales. Nike controls close to 75% of the basketball footwear market, which will be pressured by other segments trying to make inroads.
Retailers like Foot Locker and Finish Line are more dependent on basketball season, Detwiler Fenton says. Finish Line is expected to shift into a feminine mix — a demographic it performs well with — while Foot Locker will have difficulty as its base takes a rugged slant.
Some others to consider:
These retailers’ ability to circumvent a basketball business downturn will be largely dependent in both foresight and execution with regard to their contingency plans, but we suspect that there will be some negative impact unless planets align. We also wouldn’t leave out more traditional sporting goods retailers like Dick’s (DKS) or Hibbett’s (HIBB) and see HIBB as having more concentration in the category than some of its peers. While the business is relatively diversified, sports are seasonal and each season is important.
Media divisions of Walt Disney and Time Warner are not immune either. ESPN generates significant ratings power from NBA games each winter. Variety reports that the networks could lose a combined $1.25 billion in revenue if the 2011-12 season never takes off.