2015 was an incredible year for Under Armour (UA) with Steph Curry and Jordan Spieth's breakout performances. Under Armour is continuing this momentum right into 2016 with the Golden State Warriors looking for back-to-back titles, and Jordan Spieth winning the first golf tournament of the year in record fashion. Cam Newton has emerged as another key endorsement for UA as he led the Panthers to their second superbowl and won the regular season MVP award. Newton is a highly marketable athlete, he has the 2nd most endorsements in the NFL behind Peyton Manning. Cam Newton was a star QB at Auburn (an Under Armour Sponsored school) and seamlessly transitioned to the brand after college. It is very common for players to stay in same athletic apparel brands pipeline from a young age.
As individual player endorsements are becoming a more popular route for athletic apparel companies, Adidas (ADDYY) let its NBA Jersey deal lapse to focus more on individual endorsers, the battle for future endorsements will play a key role in Under Armour's future success. Right now, the company is dominating in this arena. So much so that Adidas has just announced it was replacing in its longtime CEO Herbert Hainer for Kasper Rorsted. Shares of ADDYY were up over 10% after the announcement.
UA Association = Future Endorsement Pipeline
The key to finding key future endorsers is to start at the youth level. While Under Armour sponsors just a handful of NBA players, it is sure to change with its UA Association. The company has gained a significant grassroots basketball presence with its Under Armour Association in the last 3 years. UA has recently announced a Steph Curry AAU team in the Bay Area, instantly making it one of the most sought-after teams in the country.
UA Association is now considered on the same talent level if not better than Nike's Grassroots circuit EYBL. Just like how Cam Newton transitioned from a UA college to a UA endorser, this is an increasing trend in the basketball world as well. This is what makes a company's grassroots presence so important; what company Top Youth AAU players play on often determines what college they go to. Nike (NYSE:NKE) players often go to Nike schools etc. Players often stay in the same pipeline all the way up to pros. UA already has some of the highest regarded players in the country in its AAU pipeline, including 7-1 Thon Maker, #1 PG recruit Trevon Duval, and Josh Jackson who has been regarded as the next LeBron James. The battle for the basketball shoe market is critical to the future success of Under Armour.
