Adidas faces basketball hit as NBA dispute drags on

Fri Oct 14, 2011 8:23am EDT

* NBA players, league call in mediator over dispute

* Licensed apparel sales could halve - analyst

* Fashion status seen protecting sales of basketball footwear

By Victoria Bryan

FRANKFURT, Oct 14 (Reuters) - With the first two weeks of the U.S. basketball season cancelled and more games under threat, German sporting goods maker Adidas faces losing half its licensed NBA apparel sales, analysts estimate.

Games that have been dropped from the 2011/12 season, due to start on Nov. 1, include defending champions Dallas Mavericks at home to the Chicago Bulls.

National Basketball Association (NBA) players and owners said on Wednesday they would enlist a mediator in the dispute over collective bargaining.

Basketball is a lucrative business in the United States for the world's top two sporting goods makers, Nike and Adidas, and for retailers such as Finish Line and Footlocker .

Canaccord analyst Camilo Lyon estimates basketball comprises about 30 percent of Footlocker sales and 20 percent for Finish Line.

Adidas stands to be worst hit from the "lockout" because it has held the licence to provide NBA uniforms and apparel since 2006.

The German group makes some $100 million in sales from licensed NBA products, with basketball products as a whole, including footwear, among its top five sporting categories.

Matt Powell, analyst at SportsOneSource, told Reuters licensed apparel sales could halve, similar to the last lockout in the 1998/99 season, if the season were cancelled.

"Overall, sales of NBA licensed products fell by 20 percent last week, and I view that as the beginning of the fall because of the lockout," he said.

Others say it is important for the season to start up before Christmas, not only because it's the busiest time for the retail world but because NBA products become less in demand as the season goes on.

"In terms of licensed apparel, fans tend to buy jerseys near the beginning of the season," U.S.-based Euromonitor analyst Kailing Cai told Reuters.

Adidas said it was less concerned about the expected drop in apparel and more interested in footwear sales, which make up the bigger part of the basketball market.

"The kids are still buying the shoes," Chief Executive Herbert Hainer said.

Analysts say sales of basketball shoes will be helped by ever-present advertising, especially on social media websites, and moves by companies to get their products noticed at a local level, such as via college basketball.

"I can't imagine the lockout will impact Jordan sales in any way at all," said Powell, referring to the Nike brand based around former Chicago Bulls player Michael Jordan that makes some $1 billion in sales annually.

Cai also highlighted the fashion status of the footwear.

"People wear basketball shoes out on the street every day. They're not an item that people associate with actually playing basketball," she said.