Chat with Darren Rovell
Darren blogs on ESPN Insider, has a weekly podcast available on Apple.com and is the author of the upcoming book, First in Thirst: How Gatorade Turned The Science of Sweat Into A Cultural Phenomenon.
Deals, endorsements, agents, contracts -- Darren's knows all the dirt! Send in your questions now, join him for the answers on Wednesday at 1:30 p.m. ET!
Darren Rovell (1:32 PM)
Hello and welcome. I managed to get a few hours of sleep, despite the fact that this is probably the biggest deal in the history of sports business. There are a lot of questions here, so let's get started.
Michael (Atlanta, GA)
Will Reebok still continue to have its own logo and endorsers?
Darren Rovell (1:34 PM)
yes, Michael. As I pointed out in my column today, both brands will still run separately, but Adidas will obviously do some cutting to make sure the new company is as cost efficient as possible. They are going to have to figure out what their priorities are and I'd say in about a year we'll know what they are based on what appears to be on the cutting room floor.
is adidas going to move away from the reebok campaign of I am what I am, and their street approach?
Darren Rovell (1:36 PM)
Bill, good question. I asked adidas' chairman and ceo herbert hainer that question. They signed Missy Elliott, but obviously Reebok leads in the entertainer endorser category with Jay-Z, 50 Cent and Nelly. He says he likes what they did -- so I expect them to stay true to that. The bottom line is Reebok has made money off this approach and has definitely received a ton of buzz.
The Dish (Carol Stream,IL)
With Nike owning Converse, with Adidas now owning Nike, won't the shoe market just have 2 big players in it now? Is this good for me, Joe Consumer?
Darren Rovell (1:39 PM)
There are many more players than that. You'll still have a choice of brands and pricing. Nike actually owns Converse and Starter and the Dunkman brand each at different price points. You have to look at other categories besides basketball too. You have Pony, Puma, Saucony, Asics, New Balance and other smaller brands that will give you a choice. So it's not like you'll have a choice of $150 shoes or nothing.
Do you think in a few years the two companies will completly merge rather than having them remain separate?
Darren Rovell (1:40 PM)
No I actually don't. Both of them have created value. Reebok over the past 26 years and Adidas over the past 75 years, it would be a mistake to put it all under Adidas and I don't see that ever happening, especially given Reebok's nice resurgence in recent years.
Darren Rovell (1:41 PM)
Let me just say, Adidas does not own Nike. For those of you who haven't seen the news yet, Adidas has bought Reebok for about $3.8 billion.
Darren Rovell (1:42 PM)
The deal gives Adidas a 20 percent share in the US footwear market compared to Nike's 31 percent.
Mike (Roslyn, NY)
What will happen to the endorsement contracts of Reebok athletes like Allen Iverson?
Darren Rovell (1:43 PM)
Hey Mike. I don't expect contracts to be busted up, but Adidas is going to have to determine what their priorities are and who they think really moves the needle to make this deal worth it. Is Reebok going to stop producing Iverson shoes? No. But he could be in more or less advertising depending on how the guys in Germany think he helps the business.
How will this affect team licensing for uniforms and gear?
Darren Rovell (1:46 PM)
Dave, I think that's not yet clear. Once again, adidas is going to have to determine where their priorities lie. Adidas has kept its name relevant in Europe by signing the big soccer clubs -- Bayern Munich, Chelsea, Real Madrid. They did a huge deal (I thought too big) with MLS and Reebok has the official deals with the NBA and NFL. They have to figure out what drives the business more -- endorsers or teams, licensing revenue from gear or profits from shoes endorsed by their athletes.
What's going to happen to Sydney Crosby and the new rbk hockey gear?
Darren Rovell (1:49 PM)
This is going to be one of the most interesting components. Reebok spent $200 million to start their Hockey Co. in April 2004 and had to sit on it for more than a year because of the work stoppage. I know the guys at Reebok were planning on pushing Crosby hard, but now they'll have the guys at Adidas watching over them. Start-up costs are certainly a burden, but I'm pretty sure adidas is going to authorize Reebok officials to ramp up Crosby. They didn't have hockey this past year, but at least they signed its supposed savior.
What about Beckham and his soccer gear any effects?
Darren Rovell (1:50 PM)
If anything I expect to see more Beckham stuff populating the US markets, but we'll have to see. I'm surprised at Beckham's lack of popularity here. Even with soccer not doing that well, I think he should be more of an icon.
Is there any chance we could see endorsers switch companies? For example, Adidas has three huge NBA endorsers in Duncan, Garnett and McGrady, though I would argue that the Reebok brand has a larger NBA cachet Is is possible that those three stars would be moved added to the RBK roster?
Darren Rovell (1:53 PM)
Now that's a great question. I believe both want to keep their own basketball divisions, so I doubt this would happen. Plus, it would definitely lead to a loss of credibility. Garnett and Duncan were already Nike guys, so this would just be another switch. I think credibility counts for something in this world.
Tony (Manhattan Beach, CA)
Darren, what do you think Nike's reaction is to this deal? Will Nike do anything in response to the adidas-RBK merger? How about from other shoe and apparel manufacturers that you mentioned earlier?
Darren Rovell (1:54 PM)
Tony, I think that Nike is going to do business as usual. They've been the market leader for the past two decades by doing their own thing.
Don (Philly, PA)
Overall, is this good or bad for the consumer?
Darren Rovell (1:55 PM)
I don't think the consumer even realizes this. Or I guess I should say, if the transition is smooth and good, the consumer will never know. That's always the case with mergers and acquisitions. If you are keeping the brand identity of the company you are swallowing, you're in trouble if the customer realizes it's under new management.
If Adidas and Reebok are still going to produce different products, then it seems that sales should stay about the same with just different owners reaping the benefits. What's the point?
Darren Rovell (1:56 PM)
It's all about consolidating their efforts to make a more powerful company. But if each of the companies strengths are not strengthened, you are right. In 10 years, adidas and reebok might still have a combined 20 percent of the us footwear market.
If you could drink one gatorade flavor, and only one, for the rest of your life, which one would it be and why?
Darren Rovell (1:58 PM)
Jason, it would be Gatorade Chironja, which is only available in Puerto Rico. My favorite flavor in the US is Mango Electrico. For those of you who don't know why I'm talking about this, I have a book on Gatorade coming out next month.
Darren Rovell (1:59 PM)
That's all the time I have unfortunately, even though there are 500 questions left to answer. Please check out my blog on ESPN.com, my podcast on Apple.com and my article about the deal, which is on the front page right now. If you have any more questions, I will try to answer them at firstname.lastname@example.org. Thanks. Bruce Feldman is next.