Nike's New NFL Deal Bulks Up Its Sports Cred on the Gridiron
byApr 5th 2012 11:40AM
The NFL showed off its shiny new uniforms from Nike (NKE) Tuesday and there's buzz building before they even reach stores.
Unlike some of its college uniforms, Nike didn't step too far outside the box with the new NFL duds, sticking largely to the look Reebok developed for the 32 teams. Besides a swoosh on the gear, you may not notice the difference between old and new.
But the biggest name in sporting goods is finally in a long-term deal with the biggest name in football, and it seems like a match made in heaven. This may not seem like a big deal for a company Nike's size, but the NFL is big business, and even a behemoth like Nike will feel the impact.
The company is reportedly paying the NFL $1.1 billion over five years for the right to sell its jerseys, and the payoff should be strong. Analysts have predicted that Nike will add $500 million in annual revenue from the deal -- not insignificant even for a company with revenues of $22.7 billion a year.
View our gallery of the NFL Nike uniforms here.
The NFL Keeps Nike Cool
The deal is also a chance for Nike to regain some of the swagger it has lost to rival Under Armour (UA) in the business of football.
The company has made inroads in the sporting goods business on the back of football gear. Its "We must protect this house" ad campaign was a huge success, and with Reebok making NFL gear at the time, Nike was left as something of an outsider on the gridiron.
The NFL deal puts Nike front and center and should help sales of everything from gloves to Pro Combat gear to shoes.
Nike will also be able to leverage its retail stores to push NFL gear. With more locations popping up around the country, the company will be able to focus its to local sports fans and offer a new range of clothing.
Update Your Tebow-mania Gear now
The new jerseys have already caused something of an uproar over the game's most popular backup quarterback, Tim Tebow.
Nike has already sued Reebok after the company tried to quickly capitalize on Tebow's move to the New York Jets. Nike calls the move a "once in a lifetime commercial opportunity" and it wants Tebow gear all to itself.
So if you were able to snag any Tebow-Reebok gear, you may have a collector's item on your hands. If not, the official Tebow Jets items are sure to hit a store near you, swoosh and all.
Motley Fool contributor Travis Hoium does not have a position in any company mentioned. The Motley Fool owns shares of Under Armour. Motley Fool newsletter services have recommended buying shares of Under Armour and Nike; and creating a diagonal call position in Nike.