Football Shirts Attract Nike To Umbro - 21/10/2007

England's defeat in Russia gave shareholders in Umbro cause for gloom as the prospect of selling millions of England shirts in the 2008 European tournament slipped away. It was an event that should have sent Umbro's share price lower. But news that Nike was waiting in the wings to buy the replica kit manufacturer soon sent the shares soaring. Nike's likely approach to Umbro is the latest salvo in the US sportswear group's journey to become the leading global football brand before the 2010 World Cup. Nike first crystallised that vision at the beginning of the 1990s when it began investing heavily in football. Over the past decade it has been snapping at the heels of Adidas, which had always been the de facto football brand through its strong ties with Fifa. But Nike has been gaining market share, even briefly taking the leading in Europe in 2003/4. But Adidas enjoyed a stronger World Cup, held on its home turf of Germany, with Nike seen as having the weakest offering of the three big brands behind Adidas and Puma. Indeed, with qualification for the European Championship next year close to being decided, it looks like Adidas and Puma will again outpace Nike in terms of the teams under sponsorship.

It has been a bitter pill for Nike, who failed in a hard fought attempt this summer to grab the German football team contract from Adidas. Having lost out on that deal, Nike seems to have set its sights on the England contract. The three lions remains the most popular in the world and Umbro owns the branding rights to attach that logo to the shirt until 2014. Analysts estimate that Adidas' global market share is 35 per cent, Nike's 30 per cent and Umbro about 5 per cent. Acquiring Umbro would take Nike very close to being number one. Umbro is seen, however, as a problematic asset, mainly because it is closely identified with the English national team and clubs in England. While this helps sales in Asia where English clubs have marketed replica shirts strongly, sales tend to suffer when the national side struggles. Nike will also have to be sure that Umbro will retain the England contract in the event of a takeover. Under the current contract, the FA would have to approve of any new owner as part of a takeover. Competition regulators in the UK and Europe may also want to investigate any takeover.