Licensing giant Iconix bought its second brand from Nike, acquiring Umbro for $225 million this week after buying Starter from Nike in 2007. I sat down with Iconix CEO Neil Cole to discuss the thinking behind buying the once-stalwart brand.
Neil, why did you see this as an opportunity for your company?
We took a look at Umbro and saw that it is a global brand that has distribution in close to 100 countries. They had strong licensing agreements in 30 countries including Russia and in both South America and Europe. And then, the great history that comes along with Umbro. Pelé wore the brand, so did [David] Beckham.
After Nike bought the company, it seemed like it didn't want to give Umbro the big soccer team deals. Instead, it won them for the Nike brand.
Even though Umbro was run autonomously, they were definitely going at each other and competing for teams. I knew from the experience we saw with Starter that they weren't treating Umbro in the right way.
Nike's problem with Starter and why it ultimately unloaded it was that Nike and its sister brands are premium brands and they didn't speak well to Starter's market in the mass value channels. How is Umbro similar and different from Starter?
As a brand, it's actually very different from Starter. It's a major business in 30 countries with close to $900 million in annual retail sales. It's also not a brand that should be or will be in the hands of mass retailers. In the U.S., we will continue to keep it in places like Dick's Sporting Goods, which had the exclusive right to sell Umbro equipment under Nike, and it will be in the premium channels in other countries, too.
Umbro didn't fit with Nike, but it was doing really well and we don't want to change that. They have great sponsorship deals in place and a strong market in the U.K., France, China and the U.S. It is like Starter in that it bought the licensees back that Nike got rid of when they bought it. We felt that the people who controlled the Umbro brand in the years before the Nike acquisition knew what they were doing and letting them go might have restricted the business. Plus, licensing is our business. We are experts at marketing and branding and we let those who are experts at distribution do their jobs.
Does your success with Starter give you more confidence with Umbro?
We see a similar upside. In the five years since we bought Starter from Nike, we have tripled the business. On Starter, Nike tried to sell $40 shoes in a place that was asking for $20 shoes. In Umbro's case, Nike brought in its distribution system and we're bringing back the people that we think did a good job in the past. So it's a much different model.