Nike, Not Under Armour To Become MLB’s Official Uniform and Apparel Provider


Sports Business Daily reported that Nike, not Under Armour, will be the official on-field uniform and apparel provider of MLB come 2020. Back in December 2016, Under Armour announced it had made a 10-year commitment to replace Majestic Athletic (since acquired by Fanatics) as the league’s supplier of game-day outerwear, base layer undershirts and year-round training apparel. It now appears they’ve asked out of the deal, looking to reduce overhead amidst declining U.S. sales (down -1% in Q1 ‘18, forecasting a mid single digit net revenue decline in ‘18); a decision that will save the company +/- $50 million. Fanatics, which acquired the rights to make and sell fan gear at retail as part of UAA’s 10-year pact, is expected to retain those rights; the company announced a similar product licensing agreement with the NFL earlier this week.

Howie Long-ShortUAA has openly spoken about its intention to simplify operations and run leaner, so the decision to cut back on what equates to a brand marketing expenditure aligns with that philosophy. Investors were pleased to see the talk wasn’t just lip service, as shares closed +2.5% on Thursday; at their highest level since July ’17 ($20.58).

That’s not to say that being the official outfitter of a pro sports league doesn’t bear returns. Analysts suggest long-term agreements could boost sales by “hundreds of millions per year.” That should bode well for Nike shareholders as the company also holds NFL and NBA uniform and apparel licensing agreements through the middle of the next decade. Adidas is the official supplier of NHL team uniforms.

For reference purposes, on May 1 UAA reported a $30 million loss for Q1 ’18 on revenue of $1.19 billion; the company’s second straight losing quarter. Looking for some reasons to believe the company is headed in the right direction? Total revenue grew +6%, apparel was up +7% (to $766 million), international sales rose +27% (now roughly 25% of total revenue) and DTC sales grew +17% (to $352 million, now 30% of total sales) during the latest quarter.

Fan Marino: Did you know that Puma, not Under Armour, is now third in sales among athletic apparel brands? Nike and Adidas hold the first and second spots, respectively.

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Author: John Wall Street

At the intersection of sports & finance.

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