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NBA Finals Reignites Nike-Under Armour Rivalry

For the second year in a row, Lebron James and the Cleveland Cavaliers will take on Steph Curry and the Golden State Warriors in the NBA Finals. While this year’s Finals rematch promises to dazzle basketball fans on the court, it also represents a monumental faceoff in the sports apparel industry.

Curry vs. Lebron isn’t just a basketball matchup; it’s also the face of Under Armour UA squaring off against the highest paid active Nike NKE athlete.

James has been Nike’s golden boy since he signed with the shoe company after being drafted straight out of high school. In December, he signed a lifetime contract with Nike, and although both parties left the details undisclosed, many estimate the deal was worth anywhere from $500 million to $1 billion.

Of course, Nike’s basketball division was well established long before Lebron James came along. Despite his immense popularity, Lebron’s shoe sales are just a fraction of what Michael Jordan and his Nike-owned Air Jordan line bring in.

On the other hand, Curry has been the driving force behind Under Armour’s growing basketball brand. In the first quarter, the company’s revenues rose by 30% year-over-year, causing CEO Kevin Plank to joke that his sales rose by the same number that Curry wears on his jersey (also read: Can Steph Curry be Under Armour’s Michael Jordan?).

The Numbers

Unlike the Cavaliers, who are looking to avenge their loss to the Warriors last year, it is Nike that has had the upper-hand over Under Armour. With the dominance of the Jordan brand, which accounts for about 75% of all basketball shoe sales, Nike is well ahead of Under Armour and Adidas ADDYY.

When we look at the specific Curry and Lebron shoe lines, however, things become a whole lot closer. In fact, according to projections made by Morgan Stanley, Curry’s signature line is expected to do $160 million in sales in 2016. This could outpace Lebron’s signature line, which is expected to bring in about $150 million.

At the end of the day, sales of signature shoes will always be dwarfed by signature shoes, and both athletes serve to attract customers to their brands in any way possible.

Does Performance Matter?

Simply put, the result of the NBA Finals will mean much more to Under Armour than it will to Nike. While Lebron is their star, Nike’s roster is incredibly deep and includes Kevin Durant, Cristiano Ronaldo, Kobe Bryant, Roger Federer, and Russell Westbrook. In fact, Nike was close to having its three biggest basketball players in the Finals before Westbrook and Durant’s Thunder team blew their 3-1 series lead against the Warriors.

Don’t get me wrong, Under Armour has boosted its roster with other superstar athletes like Jordan Spieth, Tom Brady, and Cam Newton. However, there is no doubt that Curry is the face of the company, and his continued success will only boost the Under Armour brand. After winning his second-straight MVP award and leading his team to an NBA-record 73-9 regular season, Curry is on the brink of a historic season.

Bottom Line

Basketball fans: make sure to enjoy yourselves over the next couple of weeks. Hopefully this NBA finals will be one to remember. While you’re watching, take some mental notes. Which player rises above the other? Which player are people talking about more? Which player just feels “bigger” than the other?

If Curry can cap off the season with another title, it’s clear that he will be the answer to all of those questions. That’s very good news for Under Armour. No one is saying they’ll pass Nike anytime soon, but they have to start somewhere. For Lebron and Nike, this series is about maintaining their position as the best for just awhile longer.

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NIKE INC-B (NKE): Free Stock Analysis Report
 
ADIDAS AG-ADR (ADDYY): Free Stock Analysis Report
 
UNDER ARMOUR-A (UA): Free Stock Analysis Report
 
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