Under Armour recently lost a bidding war to Nike for an endorsement deal with basketball star Kevin Durant.
But the Baltimore company’s CEO says he’s thrilled with the way things turned out.
“Do I take pleasure in that [Nike] paid $US150 million more than they planned on paying?” Plank told Bloomberg TV’s Stephanie Ruhle. “Absolutely.”
Under Armour had reportedly offered the Oklahoma City Thunder forward, who had long been loyal to Nike, between $US265 million and $US285 million, which would have been company’s biggest endorsement deal ever.
Nike, exercising its right to match the offer, countered with a $US350 million deal, Plank told Bloomberg.
Forcing Nike to pay more for Durant means it will have less money to spend on other endorsements, Plank reasoned.
“There will be opportunities created from that $US150 million,” he said. “We all have a finite amount of money.”
Under Armour’s offer to Durant was never really about winning his endorsement. It was about strengthening Under Armour’s image as a major player in the sportswear market.
“We’re going to grow 20%-plus next year with or without the deal,” Plank said. “We wanted to send a message to every athletic director, to every president of every team club, to every league commissioner, that if you have a deal, there’s no deal too big for us.”
Under Armour has experienced massive growth over the past two decades, but its sales are still only a tiny fraction of Nike’s.
When Under Armour was founded in 1996, it had $US17,000 in revenue. This year, it is expected to bring in $US3 billion. By comparison, Nike is expected to bring in about $US28 billion this year.
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