In August, ESPN reported that the NBA would change its rules restricting sneaker colorways to team colors starting in the upcoming regular season—and much has since been said about the space it would open for footwear brands in the league.
But, according to Matt Powell, vice president and senior analyst of the NPD Group, the hype has far outweighed the reality after the rule change, at least when it comes to the traditional players in the sector, like Nike and Adidas.
“Colorways weren’t restricted for athletes off the court, so not much will change there,” Powell told Sourcing Journal. But his hesitancy wasn’t due to the rule change, Powell said athletic endorsements as a whole are less valuable than they were in the past decade. Not one performance shoe category—prime real estate for athletic endorsements—has been trending positively in recent months and Powell said that has been typical for the market over the last four years.
Even Kyrie Irving, Lebron James and Kobe Bryant, the architects behind some of 2018’s best-selling athletic sneakers, are not moving the needle as much as they have been able to in previous years, Powell said. Performance footwear, and the profitability of athletic endorsements, he said, were in a downward spiral that was unlikely to end soon.
However, some brands have begun to position themselves favorably for the eventual market upturn, and it’s those brands that will be most affected by the rule change.
For one, the trend in NBA advertising, even before the downturn, was toward more broad endorsements. Brands have begun to shy away from individual athlete endorsements and now favor larger endorsements from leagues and organizations.
To illustrate, Powell pointed to Derrick Rose, NBA point guard and MVP of the 2010-2011 season. Rose was able to outperform Lebron James that year, the world’s best basketball athlete, and received a bevy of endorsements to go along with his performance. However, he injured his knee during a playoff game shortly afterward and has since missed a great deal of on-court time.
When he returned to the league, Rose was not the same player. The influence brands thought they had purchased amounted to nearly nothing due to one individual’s injury.
But that same risk hasn’t prevented smaller brands from entering into endorsement deals with up-and-comers, hoping to strike gold on young players and solid veterans. Puma made waves at the start of this year’s NBA season when it landed endorsements from four out of the top 15 first round picks at the NBA draft. Previously, Puma had all but exited the space after an unfortunate 10-year endorsement from NBA legend Vince Carter that went defunct two years into the deal.
ESPN reported in June that 70 percent of NBA athletes wore shoes branded by a group of just 15 players. In August, Puma’s global director of brand and marketing, Adam Petrick, called the signature model concept “a little broken” and said it needed to be “challenged a little bit,” according to ESPN.
Powell agreed, suggesting that the rule change may have the side effect of allowing more brands into the athletic sneaker market due to a dearth of “surprise and delight” from the established brands.
Apart from Puma, online sneaker reseller, GOAT—which recently signed a deal with Kyle Kuzma, forward for the Los Angeles Lakers—may also benefit from the rule change. Kuzma will have access to all of GOAT’s stock, which consists of some of the hottest sneaker drops of the present and a large collection of retro sneaker collections that have since gone out of circulation. Kuzma will essentially be able to wear any sneaker he would like on the court and still collect endorsement money from GOAT.
Powell said both Nike and Adidas have seen their sales fall when it comes to athletic footwear. Meanwhile, Vans, Puma, Reebok, Fila and Brooks have all been outperforming the market. This suggests a possibility that the industry may return to the days of several brands sharing the market share of athletic endorsements in the NBA.
“Small is the new big,” Powell said in a recent NPD Group blog post. “I expect these brands will be popular and perform well this holiday.”