Since its inception in 1996 Under Armour (UA) has been growing at an exponential rate. As the pioneers of compression undershirts and briefs; innovation, aggressive marketing and key player sponsorships have been significant drivers in maintaining a permanent presence in the United States. Under Armour products can be seen worn by celebrities, in movies, and now on more and more collegiate athletic teams. As Under Armour commences its international expansion, the company must not overlook opportunities nearby.
In the last five years Under Armour has outfitted sports clubs throughout the world, ranging from rugby to soccer and hockey to basketball. UA’s most recent, and notable, contract was signed with Tottenham Hotspur of the Barclays Premier League (England). On an international scale, Under Armour’s branding and expansion efforts have been almost exclusively focused toward Europe. This approach can be fruitful, but can also carry a heavy financial burden if UA wants to keep up with the likes of Nike and Adidas in outfitting clubs and sponsoring athletes in Europe. The cost-effective approach that can generate a quicker return on investment for Under Armour rests in Mexico and Latin America.
To say that Under Armour has not had any penetration in Latin America would be false. Under Armour is the official outfitter of Toluca FC (a historic club in the Mexican soccer league), and also had contracts with Tecos UAG (also in Mexico) and Once Caldas (of the Colombian soccer league). Considering the emerging economies and growing populations however, the argument can be made that a larger effort and investment should be made. Under Armour has already missed a recent opportunity for immediate growth.
The Mexican Primera Division was the country’s top flight soccer league. This past year in 2012, in an effort to renovate the league’s image and also separate itself from the Federación Mexicana de Futbol (Mexico’s governing body for soccer) the league was renamed Liga MX. The promise to fans and the media was more transparency, higher TV ratings, and a better product on the pitch. After the announcement that the “new league” would take shape in the latter end of 2012, the league began to pursue a title sponsor. This would be in the same fashion as the Barclays Premier League (England), La Liga BBVA (Spain) and others. In the end the league was not able to secure a title sponsor prior to the beginning of the Clausura season.
Under Armour missed a great investment opportunity to become the title sponsor for the Liga MX for several reasons. First and foremost, UA would benefit greatly from a brand recognition standpoint. As mentioned previously, Under Armour is the official outfitter of Toluca FC and was the same for Tecos UAG. These are only small target segments among Mexican soccer fans as opposed to those who follow Club America, Rayados de Monterrey, and Chivas de Guadalajara. As the title sponsor, Under Armour would not only be known as the logo that sponsors Toluca, but a brand that all Mexican sports and soccer enthusiasts could relate to.
Second, the financial cost of sponsorship would be relatively affordable as opposed to the costs in European leagues. Barclays, for example paid over $100 Million in 2004 just to retain sponsorship rights for the Premier League after initially sponsoring in 2001 as Barclaycard. Soccer critics worldwide have ranked Liga MX anywhere between the 9th and 11th best soccer league in terms of quality, revenue, and prestige. As a result, it can be safely assumed that a title sponsorship of Liga MX would not demand top dollar, but in Under Armour’s perspective a significant discount.
Finally, Under Armour could benefit from product placement. Had UA taken the steps to become the title sponsor of Liga MX, it could have placed several stipulations in the contract about where and how the brand could be viewed and used. For example, Voit is remembered by many Americans as the tetherball used at recess, a volleyball or even a water polo ball. Today Voit seems to have been forgotten in the United States, while it has a large operation in Mexico. Currently Voit is the official soccer ball supplier of Liga MX. In addition all match referees wear Voit made uniforms. Although Voit has been the official ball supplier of the Mexican soccer leagues for three decades, Under Armour could take advantage of competing with a smaller corporation in terms of what it may be able to offer.
Under Armour does not currently manufacture soccer balls, but can make the investment to make a high quality product. Furthermore, as official title sponsor, Under Armour could require that all match referees wear uniforms made by the company. Of course, one would have to take into consideration any existing contract Liga MX may have with Voit and seek to exploit the opportunity once the contract expires.
By becoming the title sponsor of Liga MX, Under Armour would begin brand expansion of Latin America. With many Mexican consumer tastes such as fashion, music and sports that are similar or identical to those of Americans, Under Armour would be able to utilize the same marketing strategies and campaigns (“Protect This House”, and “I Will”) that have made the brand famous in the United States. After fully entering the Mexican market, Under Armour would then be able to expand further south in Latin America and do so at a discounted price in relation to pursuing the European market, which has a high entry level and high risk.
In conclusion, Under Armour must not overlook opportunities like the one recently lost with Liga MX. UA must consider the cost-benefits as well as its leverage position in negotiating product placement. If Under Armour employs this strategy, it can see international expansion accelerate and truly promote a more worldwide following.