Nike's acquisition of the football kit supplier should boost its dominance and Umbro's fortunes, writes Ed Kemp.
Last week, Nike confirmed speculation that it intends to buy specialist UK sportswear brand Umbro in a deal worth pounds 285m. It is news that will cheer the Umbro camp.
The official kit supplier to the England football team, Umbro has had a miserable 2007. It has already been forced to adjust its profits forecast for this year from pounds 30m to pounds 22m, a revised figure based on the assumption that England would qualify for Euro 2008 However, following the team's 2-1 defeat to Russia earlier this month, its chances of qualifying are looking slim, and failure to do so is likely to result in a further slump in shirt sales.
Umbro has long prided itself on its focus on football, running campaigns with straplines such as 'We spend 0% of our time thinking about other sports. Which leaves 100% of our time to think about football, and how to make better football pro-training kit.' Its England shirt deal is the jewel in its crown and some sports marketing experts believe it is this that Nike prizes so highly. Without it Nike would have almost certainly not been tempted to make a takeover bid.
Umbro's troubles have ensured that Nike has been able to strike a deal at the bottom of the market and it should be a shrewd investment, cementing both Nike's association with sport and putting it in a stronger position to compete against its rivals. While Nike's global 'Joga bonita' campaign won praise for its creative execution during the 2006 FIFA World Cup, rival Adidas promoted its position as an official partner to great effect, doubling its sales in comparison with the 2002 tournament.
The takeover should receive a positive reception from the Football Association, whose current deal with Umbro expires in 2014. Sources close to the FA say that Umbro has previously invested so much in securing its FA kit deal that it has been unable to promote the long-term sponsorship as much as it would have liked; backed by Nike's considerable financial clout, however, the brand should finally be in a position to boost its association more effectively.
The deal should also see Nike gain greater dominance in the UK's domestic league. The brand currently supplies the kit for three Premiership clubs, including Manchester United and Arsenal; while Umbro's domestic football deals are not as prestigious, its reach is far broader. It currently sponsors Blackburn, Everton, West Ham, Birmingham, Wigan and Sunderland - more than a fifth of the Premier League clubs. Adidas, meanwhile, has shirt deals with four Premiership clubs, with Bolton Wanderers sponsored by its Reebok brand. The rest of the Premiership is split between Puma, Le Coq Sportif, Errea, Hummel and the latest entrant into the market, Canterbury.
While Nike has yet to disclose its plans for Umbro, Mark Dixon, director at marketing …