December 18, 2020

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Adidas grows physical store presence, demand for consoles lifts Nintendo and Sony stock, Under Armour ends another sponsorship deal, and a collegiate sports bill is introduced in Congress.

Adidas to Grow Store Count

Mackenzie Shuman-The Arizona Republic via Imagn

Adidas will continue to invest in physical stores even as the company’s e-commerce business sees significant growth during the pandemic.

“We think the stores are still here to stay, but coupled much closer to the online experience,” Adidas CEO Kasper Rorsted told CNBC. “I think most people are really bored of sitting at home.”

The German sportswear company saw a 51% year-over-year increase in online sales during its 2020 third quarter while overall revenues fell 3%. That followed a 93% year-over-year increase in online sales in its second quarter, despite revenue falling 34%.

Rorsted said that “online has accelerated two to three years into the future” during the pandemic. Adidas is still committed to brick-and-mortar locations, and will make an announcement in March about plans to build more stores.

But Adidas isn’t shying away from its e-commerce boom.

  • It ramped up e-commerce hiring by repositioning 700 jobs into digital operations, according to GlobalData
  • 38% of Adidas’ posted jobs in Q2 contained the keywords ‘digital’ and ‘ecommerce’ in the job description while these only appeared in 8% of Nike’s posted positions

Adidas’ investment into digital and physical shopping experiences comes as the company considers selling Reebok, which it acquired in 2005 for $3.8 billion.

Reebok revenues were down 20% in the first three quarters of 2020.

Scarcity Breeds Success

Sony

Wrapping up video game consoles could be difficult this holiday season, but it’s to the benefit of manufacturers.

Both Nintendo and Sony hit record prices on the Tokyo Stock Exchange Thursday, fueled by the demand for their consoles, the Switch and PlayStation 5, respectively.

  • Nintendo shares jumped 6.6% Thursday, surpassing its highest level since 2007
  • Sony was worth more than $97 per share for the first time since 2001

Nintendo released the Switch in 2018 and has topped sales charts for 24 straight months, including in November when Sony and Microsoft debuted next-generation consoles. Sony’s more expensive PlayStation 5, however, generated the most revenue last month.

All three stocks are on the rise in 2020:

  • Nintendo — up 62% this year
  • Sony — up 40% this year
  • Microsoft — up 36% this year

Scarcity has been an issue for Sony and Microsoft since their new consoles hit the market. Consumers are buying up units as soon as they’re available, and online bots are targeting the products for scalpers as well.

Resellers are in turn charging up to $1,400 for the consoles, and scalpers made an estimated $35 million selling marked-up PlayStation 5 units at launch.

Walmart alone said it blocked over 20 million bot attempts to purchase a PlayStation 5, but that doesn’t appear to be enough to control the issue.

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2020 Best Employers In Sports

This year, FOS returned with the Best Employers In Sports award thanks to our friends at FEVO, the technology company reimagining online shopping. Even in trying times, our two companies want to honor the organizations that do right by their employees.

Organizations were selected based on anonymous surveys conducted among over 1,600 sports industry executives.

The survey period was open from October 6, 2020, until October 30, 2020. Only 25 organizations – the top 5% – were selected.

See this year’s list of selected organizations now!

UA Drops Another School

Sam Greene-USA TODAY NETWORK

Under Armour continues to offload college sponsorship deals. 

The sportswear company and the University of Cincinnati agreed to a buyout deal that gets Under Armour out of a 10-year, $50 million commitment five years early.

The company will pay a $9.75 million exit fee in eight installments and provide $3.65 million worth of product through June 2021.

Under Armour’s 2020 shakeup:

  • January: Patrik Frisk replaced longtime CEO Kevin Plank
  • February: Scrapped plans for a flagship store on Fifth Avenue in New York City
  • June: Backed out of an $86 million deal with Cal, alleging the parties never signed a formal contract
  • July: Terminated a record-breaking $280 million partnership with UCLA 
  • October: Sold off health tracking app MyFitnessPal for $130 million less than it acquired it for five years earlier

After reporting a 41% decline in revenue year-over-year in Q2, Under Armour reported flat numbers in Q3. The company’s shares are down 14.61% in the last year, to $17.42.

College Athlete Rights

Rob Ferguson-USA TODAY Sports

Senator Cory Booker is introducing the details of his College Athlete Bill of Rights in Congress.

The sweeping legislation addresses not only college athlete name, image, and likeness regulations, but also athlete healthcare and scholarship benefits. 

This follows several college athlete-related bills, the most recent being a Republican-backed name, image, and likeness bill that would hand most control of regulations to the NCAA.

What the College Athlete Bill of Rights proposes:

  • Schools must share 50% of profits with athletes from revenue-generating sports
  • Athletes can participate in group licensing deals like video games
  • Government agencies would set health guidelines for college athletes
  • Schools must provide expanded benefits with a medical trust fund
  • Scholarships must last for as long as it takes for an athlete to complete their undergraduate education

Co-sponsors of the bill include democratic senators Richard Blumenthal and Kirsten Gillibrand, as well as democratic representative Janice Schakowsky.

On Wednesday, Michigan became the sixth state to pass a bill allowing college athletes statewide to profit from the use of their name, image, and likeness.

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Latest On FOS

Latest On FOS

FOS spoke with ESPN’s Steve Levy about calling “Monday Night Football,” and whether he’s interested in hosting the network’s NFL draft coverage.

“It is very, very accurate,” Jack Marucci, director of athletic training at LSU, said of motorized robotic quarterback The Seeker. “Once you have it set in, locked in, you’re getting a quality rep.”

Terrell Owens is the latest athlete on the wine scene, launching his own label: Eighty-One.

Question of the Day

Do you prefer shopping for shoes and apparel online or in physical stores?

 Online   Physical stores 

Thursday’s Answer

42% of respondents would buy an athlete’s wine label; 18% already have; and 40% would not buy an athlete’s wine label.

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