- The Washington Times - Thursday, August 2, 2001

Move over, Air Jordans. The NBA is developing its own branded basketball shoe to shake up the $15 billion athletic footwear industry.

Athletic footwear giant Reebok Corp. yesterday announced a 10-year marketing and merchandising deal with the NBA to produce game uniforms for all 29 teams, become the league's pre-eminent producer of licensed apparel sold to the public and develop new avenues to sell that merchandise. The agreement, worth more than $200 million, closely resembles a $250 million pact Reebok signed with the NFL in December.

The new shoes, expected to hit store shelves in about a year, represent the first major entry by any pro sports league directly into the design, manufacture and branding of mass-produced sporting goods.

At the center of the landmark deal are plans to develop an exclusive line of basketball shoes. In recent years, the NBA has aggressively pushed its brand globally through the Internet, a satellite TV channel, retail, home video and other ventures.

"We have been working very hard to establish the NBA as a global brand," commissioner David Stern said. "This deal is a very important commercial expression of that aim."

The agreement includes the WNBA and the National Basketball Development League (NBDL), the NBA's minor league that starts play this fall. Reebok holds the rights to put its logo on WNBA and NBDL uniforms, and warmup apparel for all three leagues.

The deal also represents the latest challenge by Canton, Mass.-based Reebok to its much larger rival, Nike. Since January 2000, Reebok has landed the NBA and NFL deals, signed Venus Williams to the largest endorsement pact ever for a female athlete, registered huge sales for its Allen Iverson-endorsed basketball shoes and seen its stock more than quintuple. Reebok shares closed yesterday up 81 cents to $32.82.

"This [relationship] is something that demographically is a marketer's dream," said Reebok chairman Paul Fireman.

It was the forthcoming NBA shoe, however, that generated much of the attention at yesterday's news conference at the NBA Store in New York. Reebok and NBA staffers already have begun initial design work, and both intend to have the line become a market leader quickly.

"This is an unbelievable coup for both sides," said Ryan Schinman, president of Platinum Rye Entertainment, a New York-based sports and entertainment marketing company. "In an era where the concept of superstar and individual endorsements are declining, we have a situation that promotes the idea of team and the idea of league. It's very forward looking."

Because of the NBA's existing licensing agreements with Nike, Champion and Puma, there will be a three-year transition period before Reebok reaches full involvement with the league. Reebok will supply 11 teams with game uniforms next season and 19 in 2002-03 and 2003-04 before reaching the full league in 2004.

NBA-licensed merchandise apparel sales plummeted by more than 50 percent in 1999 following an owners' lockout that delayed the start of that season. Sales since have recovered significantly to nearly $2 billion a year, but Reebok's involvement should push revenues further and allow the NBA to supplant Major League Baseball and regain its No. 2 slot behind the NFL.

Nike did have preliminary discussions with the NBA about securing the league's exclusive licensing rights but opted out of the talks months ago by mutual decision, said company spokesman Eric Oberman. More than half of NBA players still wear Nike shoes on the court.

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