Under Armour took on Nike and Adidas — and won.
Beating out much bigger rivals to partner with the University of Notre Dame and its athletic teams catapulted the Baltimore-based sports brand onto an elite playing field, marketing experts say. The endorsement deal, announced Tuesday, signals how far fast-growing Under Armour plans to go and how it plans to get there.
"It's a signal to their competitors, to the stock market, to the consumer, that they're in this for the long run," said Amna Kirmani, a professor of marketing at the University of Maryland's Robert H. Smith School of Business. "They're not going to be satisfied being a small niche player. They want to be national and have a huge potential to be international."
For Under Armour, she said, "this is part of their ongoing strategy to grow and get bigger, and they're willing to spend a lot of money to do that."
In the largest such deal ever in college football, Under Armour will design and supply apparel, footwear, uniforms and equipment for Notre Dame's men's and women's varsity teams for 10 years. Five days earlier, Under Armour had announced a similar deal with the Naval Academy, to outfit all varsity teams starting in the 2014-15 season with chances for marketing and promotional opportunities.
Adidas paid $60 million for its 10-year deal with Notre Dame, which expires at the end of June. Under Armour did not reveal the terms of its agreement, which included Under Armour stock, but it is more than the recent $82 million deal between Adidas and the University of Michigan.
Both institutions — the 12th and 13th Division I schools for Under Armour — offer an appeal and fan base that stretches far beyond local residents, students and alumni, which makes them highly sought after by sports outfitters.
"It's been two enormous weeks for us," said Matt Mirchin, Under Armour's executive vice president of global marketing. "It is just a testament to how far the Under Armour brand has come in the last 18 years."
Notre Dame's broad national following makes it one of the top-selling programs, Mirchin said.
"Notre Dame is unique in the fact they have supporters across the U.S. and ... outside the U.S. who have an affinity for the university and for the brand," he said.
During the news conference announcing the deal, Notre Dame Athletics Director Jack Swarbrick and Under Armour CEO Kevin Plank highlighted the Fighting Irish's appeal among Roman Catholics and those of Irish descent.
The school also offers "the ability to be on national television every week of the football season through Notre Dame's deal with NBC, and having our logo [affiliated with] the university will give us tremendous brand exposure," Mirchin said.
Because Nike outfits NFL teams, "Nike owns Sundays, but this will give Under Armour an opportunity to own Saturdays with college [football] and particularly with a program like Notre Dame," said Howe Burch, executive vice president and managing director of Baltimore advertising agency TBC.
Exposure from outfitting Notre Dame will extend to the sale of co-branded replica game uniforms and a line of football and basketball jerseys and graphic T-shirts highlighting some of the teams. The new merchandise will be rolled out in July on the campus as well as in Under Armour and other stores across the United States.
Under Armour will explore marketing campaigns with the university, both on TV and online, that likely would launch next year, Mirchin said.
The company's partnership with the Naval Academy also offers opportunities to sell to a broad affinity group, in this case, naval personnel around the globe.
"We sell a lot of products to service men and women, and having the ability to outfit our first service academy fits in with our mission," Mirchin said.
Under Armour's commercial business — outfitting teams such as those at the University of Maryland and athletes such as New England Patriots quarterback Tom Brady and Olympic swimming star Michael Phelps — has helped drive sales of its products in stores, said Auburn Bell, an affiliate professor of marketing at Loyola University Maryland's Joseph A. Sellinger School of Business and Management.
Aligning with a Notre Dame-caliber school can mean "tail winds into the retail consumer marketplace in terms of perception of strong brand," Bell said.
"The best part of the strategy is they've never tried to bite off more than they can chew," he said. Under Armour "started at a grass-roots level, with Auburn and Maryland, and expanded it from that standpoint. The way these partnerships are working is, there's more and more on the table each time."
For example, the company is getting feedback from the athletes on the products' performance.
Burch said Under Armour has grown its endorsement deals with "deliberate, disciplined investments. ... This is just another building block for them to become the brand they want to become. You will see more high-impact signings."
Last week, the company sparked a flurry of rumors when it posted signs on its Locust Point campus welcoming Texas A&M quarterback Johnny Manziel, the 2012 Heisman Trophy winner. Manziel, known as "Johnny Football," visited but there's no news about an endorsement deal, Mirchin said.
To get those high-profile contracts means continuing to go up against such sports brand giants as Nike and Adidas.
"Adidas and Nike and a few others have the majority of the market share with long-tenured contracts," Bell said. Under Armour is "stealing that market share, which is a hard thing to do against the likes of those kinds of brands. But they're not afraid to think out of the box or work one on one and get down in the trenches."
Now a $2 billion company that is aiming to grow to $10 billion in sales, Under Armour built its brand on performance apparel, starting with the moisture-wicking T-shirt that Plank developed as a University of Maryland football player seeking a solution to sweat-soaked uniforms.
"They own that space," even after other companies developed similar workout apparel, Burch said. "They've become the Kleenex of their category. You wear Under Armour, you don't wear performance apparel."
Notre Dame was attracted by the prospect of working with Under Armour to improve the performance of the gear and apparel so its student-athletes will have an edge, said John Heisler, senior associate athletics director for Notre Dame. Heisler said he expects coaches and athletes to be actively involved in product research, development and testing.
"The whole business is a lot more than putting a logo on a jersey," Heisler said. "There's a lot at stake, trying to win national championships and trying to win at the highest level with elite athletes. You're looking for every last thing. You're looking for the best possible way to outfit student athletes to give them the best chance for success."
Kirmani said the company needs to continue courting big and small teams, athletes and schools to grow and gain market share from competitors. The recent signings should make it easier to approach both the high-profile and the less-known.
The deals also should help cement Under Armour's "serious performance" image, she said.
"The message that it's serious apparel is resonating," Kirmani said. "They've been able to do that because of the technology and because of innovation. The danger would be if they lost that focus."Copyright © 2015, CT Now