So will LeBron go to Miami, New York, Chicago??? From an investment vantage point, I could care less. The simple fact that I am addressing this point is a big positive for the athletic brands and retailers.
Can anyone remember a time when there was this much hype around an athlete’s decision to play in a given city – or to play at all? I can… It was summer of 2001 when Jordan returned (which arguably should never have happened). Heck, I even recall sitting in the hot seat in the morning meeting room of my then-buldge-bracket employer and a seasoned salesperson literally asked me in front of thousands of ears whether Jordan was returning.
I thought that was both sad and ridiculous at the time. The reality, though, is that it mattered. It mattered because it was an incremental boost to the product cycle. Nike amped up its product line around MJ with the Wizards, and kicked its marketing machine into high gear. Any retailer worth its salt could not afford to miss out on that, so orders followed. Jersey sales also picked up, and Reebok had the exclusive license for ‘official’ league jerseys. Adidas has since restructured the deal such that it sells them under the Adidas logo.
So what are we looking at here? With the exception of LeBron ending up in the media-market-equivalent of Outer Moongolia like Portland (Trailblazers) or in Kobe’s shadow like w the LA Clippers (it'll never happen), this event will be incremental across the board.
1) For Adidas, they’ve been relying on World Cup and Shape Ups. WC is almost over, and Germany was sent packing by a ‘lesser’ Adidas team. Not sure when the bubble will end on shape ups, but a pick-up in Jersey sales from the most exciting free agent switcheroo will help keep adi’s momentum going for another quarter.
2) For Nike, they have LeBron, Wade, Carmello, and Bosh. From an asset standpoint, they can’t lose. Now they need to execute on product and marketing. That’s where my confidence level is highest. If these three guys (LeBron, Bosh and Wade) all end up in Miami, then Nike will be giddy with how they can build up this franchise into the next season. Given Nike’s legacy in Chicago with in the 1980s and 1990s with the Jordan/Rodman/Pippen trifecta.
3) Arguably, the biggest winners across the board are the retailers. We’re only talking about a half a point to a point in comp for a company like DKS, HIBB or FL. But given that this is a business that has faced headwinds for the better part of four years, we’ll take what we can get.