Nike makes more than 10 times the revenue of Under Armour but the brands still frequently find themselves squabbling over endorsement deals and sponsorships.
When NBA player Kevin Durant’s contract with Nike was set to expire, Under Armour flew in and topped Nike’s $200 million re-endorsement deal. Nike eventually won out with a $350 million offer but Under Armour CEO Kevin told Bloomberg reporters, “Do I take pleasure in that they [Nike] paid $150 million more than they planned on paying? Absolutely.”
Plank reportedly refuses to even say the word 'Nike' and recently opened an Under Armour office in Portland, Oregon—just a skip away from Nike’s headquarters.
Under Armour will reportedly pay $90 million to outfit Notre Dame’s football team for 10 years, a deal that used to belong to Adidas.
According to a Sterne Agee report, Under Armour has also grabbed Adidas’ spot as the second-largest sporting brand in the United States. But despite this new rank and a predicted revenue growth of 20% each year for the next five, Under Armour finds its total annual revenue to be the equivalent of Nike’s advertising budget.
“Nike is a data, technology, biotech and distribution business,” says StockTwits co-founder Howard Lindzon. “Under Armour has snuck up and become much of the same through creative advertising and the use of technology to bring down the price of their goods.” Lindzon owns Nike but does not own Under Armour stock.
While the Durant incident is certainly a blow to Nike, the company still has a $71 billion market cap. “Nike can afford to make mistakes,” says Lindzon. They’re willing to make mistakes and risk a lot in order to stay at the top, he claims, and that’s why they’re such a good bet.
Nike’s stock is near all-time highs and has been for more than a year. Under Armour's market cap comes in just under $15 billion, with the stock also approaching highs.
“Nike and Under Armour are investing so much money in technology,” says Lindzon. Both companies are also attempting to find niches where they can dominate. Under Armour is moving into the golf market, for example.
But is there room for both Nike and Under Armour in the sporting goods market?
“Absolutley,” says Lindzon. And while it’s unlikely that Under Armour will surpass Nike in size anytime soon, the company does serve to “keep Nike honest, and it keeps them focused,” he says.
Still, don’t have any qualms about it, “it’s a war,” says Lindzon.