Derrick Rose Injury Delivers Blow To Olympic Hopes For Adidas

http://www.forbes.com/sites/kurtbadenhausen/2012/04/29/derrick-rose-injury-delivers-blow-to-olympic-hopes-for-adidas/

 Every four years the world’s greatest athletes gather to compete in the Summer Olympics. This year’s event in London will feature stars in track and field, soccer, tennis and more. The Olympic competition extends outside the playing arena to the shoe and apparel market where Nike and Adidas compete for their own kind of gold on the backs of the athletes each company endorses. 

The ultimate rock stars of the London Games are expected to be the U.S. men’s basketball team, which will feature Nike athletes LeBron James, Kobe Bryant and Kevin Durant. Adidas was banking on Chicago Bulls point guard Derrick Rose to be its Olympic basketball stud, but a torn ACL in today’s playoff game against the Philadelphia 76ers will shelve Rose for the Olympics. This comes on the heels of another Adidas athlete, Dwight Howard, getting knocked off the U.S. team after back surgery in April. Chauncey Billups, also with Adidas, will miss the Games after tearing his Achilles tendon in February.

The Rose injury is a crippling blow for Adidas. Major sporting events like the Olympics and World Cup are prime opportunities for Nike and Adidas to showcase their talent. The German apparel company made Rose its marquee athlete in February when it signed the 2011 NBA MVP to a 13-year worth $185 million that could net Rose more than $200 million after royalty payments. The deal kicks off with the 2012-13 NBA season.

Adidas badly lags Nike in the U.S. basketball shoe market with only 4.5% of the U.S. market in March. Nike has a stranglehold in the U.S. with 91% of the market including the 58% share of the Jordan brand, which is owned by Nike. Adidas is hoping Rose can be a transcendent athlete for the brand as Michael Jordan was for Nike.

Adidas will have to sell a lot more of Rose’s signature sneaker for the deal to make sense from economic standpoint. Wholesale sales of Rose’s shoe were $25 million in 2011 in the U.S. compared to $40 million for Bryant’s shoe and $90 million for James’ Nike kicks. Everybody is looking up at Jordan though where wholesale sales were $1 billion last year.

Does Rose just represent the basketball shoes or the brand as a whole?  Do you think it was worth the $200 million for them to sign Rose?

In response to Christine Sullivan
If you were a business owner would you look to advertise your business online? What benefits do you see from online advertising?

There are many businesses that have been around for years and years, and get advertised pretty much solely from word of mouth.  The owners have a basic business plan, that just works.  These businesses have been successful for many years, and will be for another many.

Most businesses today though, have a huge need to get their name out.  Billboards can work, TV ads can work, but they all are expensive and it is tough to narrow down the target market.  The internet however is a different story.  People voluntarily give their information about all of their demographics.  This is an advertiser's fairy tale, as they can cater to a very small group of potential customers.  

The next trend is advertising on mobile phones.  There are some discrepancies on how to do it though, as the screens are so small one can't view an ad and text at the same time.  

How do you think this issue will be solved?  When do you expect the mobile phone advertisements to skyrocket?  Or do you believe it has already happened, or there isn't much potential in it?