In this spotlight edition, we take a look at the meteoric rise of Spieth and Under Armour, and how they left apparel giants Nike and Adidas trailing in their wake.
When Jordan Spieth inked a deal with the sports apparel brand Under Armour in January 2013, many questioned why the young Texan phenom didn’t jump into bed with Nike or Adidas. Little did the world know that Spieth and Under Armour had a grand vision none of us saw coming.
2013 -THE DEAL OF THE CENTURY
Flashback to January 2013, when Under Armour met with a young 19-year-old by the name of Jordan Spieth in their North American office. At the time, Under Armour had a small fledgling golf division that was going nowhere. Meanwhile, Spieth was one of America’s hottest young golfers having won the US Junior Amateur Championship on two occasions. The organization knew they had their work cut out to persuade the Texan to wear its logo head to toe instead of the swoosh.
3 fundamental reasons were presented to Spieth which swung him towards the brand:
- In all of their advertising materials, they would feature Spieth as an athlete, not just as a golfer. This appealed to Spieth, who didn’t like the way golfers were marketed.
- Under Armour would never make golf equipment. This was hugely attractive to Spieth, who didn’t want to have to change equipment from his beloved Titleist clubs and ball.
- Hunter Mahan. Of the small stable of golfers that Under Armour represented, one of them was Hunter Mahan who was also represented by Jay Danzi, Spieth’s agent.
Spieth aptly signed for Under Armour several days later, leaving Team Nike and Adidas gobsmacked. No golfer before them had shunned their brands for a low six-figure deal. How did they miss out on America’s next great superstar?
2015 – THE YEAR OF THE SPIETH
Spieth had shown in 2013 that his performance on the golf course correlated to Under Armour’s stock price, although it was largely unproven. After his maiden victory at the John Deere Classic, the company’s stock price steadily increased over the next 12 months. It wasn’t until 2015 that the Spieth effect became apparently obvious however.
After a thumping victory at the Masters in April 2015, Spieth’s celebration seemed understated. According to Kevin Plank, CEO and founder of Under Armour, the shareholders’ reactions were quite the opposite. On that famous Sunday, a brand was truly born.
“Thanks to Jordan, our company grew up today. He was like apple pie with a golf club. There was nothing more Americana than Jordan Spieth this weekend.”
Plank took a direct shot at Nike in the aftermath of a historic four days for Spieth and Under Armour. At the time, Nike had made a point of dressing their top athletes in bright colors, including Rory McIlroy and Tiger Woods. Plank knew what was happening in the seemingly impossible power struggle between Under Armour and Nike – it was all of a sudden a fight that they would be willing to take to Beaverton, Oregon.
Within days, Under Armour’s stock price had risen 2%. Over the next month, Nike’s stock fell 7% as Spieth’s face dominated newspapers across the globe. For the first time since Jack Nicklaus burst onto the scene as a 20-something phenom in 1962, a fresh-faced, family-oriented superstar was inspiring a whole new generation of athletes.
This was just the beginning.
8 weeks later, Spieth pulled off the unthinkable in the Pacific Northwest when he won the U.S. Open. What looked like a second-place finish went one better on the 72nd hole when Dustin Johnson imploded, gifting Spieth and Under Armour the ammunition it needed to explode.
Kids across the world from England and France to Canada and the USA wanted to be seen in Under Armour. Just like Tiger Woods had made Nike cool in the late nineties, Spieth was turning Under Armour into the must-have brand. With further help domestically from Steph Curry’s brilliance on the basketball court, Under Armour’s stock price had risen to 103.7 by September 2015, a staggering 345% increase in just two-and-a-half years.
THE SPIETH EFFECT ON UA’S STOCK PRICE
When Jordan Spieth missed a short putt to force a playoff at the 2015 British Open, it wiped $140m off Under Armour’s valuation 3,000 miles away in New York. Under Armour – Spieth’s sole clothing sponsor – saw its shares crash minutes after the 21 year-old failed to win his third straight major championship.
When Spieth shut his season down having won the FedEx Cup, Under Armour’s shares were at an astonishing 103.7. Without him on television boxes as he frequently was during the four major championships, Under Armour’s shares tumbled again, falling to a dismal 68.7 until, you guessed it, the PGA TOUR season rolled around again. After Spieth won the first tournament of the year and began appearing in newspaper headlines, stock prices rose to 84.01, which they were as of March 2016.
Spieth’s effect on Under Armour is so great that the company ripped up his existing contract and offered him a mega-dollar deal that extends for the next decade. With a roster of high-profile stars including Steph Curry and Gisele Bundchen, Under Armour has outperformed Nike over the past three years. As of December 2015, Nike’s trailing 12-month revenue growth was 20% down on Under Armour’s.
Under Armour’s revenue is increasing at a faster pace than any other sports brand, and Jordan Spieth is a major factor in explaining the incomprehensible growth. If the Texan wins a couple of majors this year, one thing is for sure – you’ll see kids wearing Under Armour at every Top Golf location, every municipal golf course and on every driving range beyond just the USA. As for how much the company can grow… why even begin predicting this inconceivable fairy-tale that Under Armour is on?