Reebok (NYSE: RBK ) reported higher third-quarter sales and earnings yesterday, and announced that it had signed basketball star Yao Ming to a multi-year endorsement deal. While that's all well and good, I've been more impressed by Reebok's off-the-court scores lately. The company's making all the right moves to enhance its credibility in both the hip-hop community and the basketball world.
Earlier this month, Reebok announced that it had finally enticed basketball godfather Sonny Vaccaro to come aboard. If the name's not familiar to you, trust me, you've seen this guy's work. Somewhere between mentor and marketing guru, Vaccaro's known for his youth basketball camps and his ability to spot big talent before anyone else does. He's one of the most respected -- and feared -- guys in the game.
He was integral in getting Michael Jordan's Nike (NYSE: NKE ) deal back in 1984, creating new expectations for the marketing of basketball players. He later left Nike and worked for Adidas. While there, he helped Kobe Bryant ink his Adidas deal. (Kobe, of course, jumped ship to Nike earlier this year, and before his recent troubles.)
Reebok pursued Vaccaro in the summer of 2002, but got shut out. Vaccaro decided to stay on at Adidas. At the time, he was helping a high school kid named LeBron James navigate the publicity and marketing opportunities that were then only just beginning to sprout. James eventually signed a $90 million deal with Nike, which marked a second shut-out for Reebok. Reebok can smile now, though; having Vaccaro on its side is huge.
Reebok also is launching a sneaker with rap sensation 50 Cent, who is one of the most hyped hip-hoppers ever. If you've somehow avoided hearing the marketing around this Eminem protege, it goes something like this: He's been shot nine times!
To say that his shoes will likely be wildly successful for Reebok is an understatement. Reebok set the precedent for this with its "S. Carter" line, designed by rapper Jay-Z. (Incidentally, the company's releasing another shoe from this collection to tie in with Jay-Z's upcoming CD release.)
Don't discount the green that Reebok can generate from its hip-hop connections. A recent cover of BusinessWeek featured hip-hop pioneer and Def Jam founder Russell Simmons. Corporate America is finding gold in the world of urban marketing, and Reebok's got the goods here.
Nike may still be the go-to name when people think about basketball shoes, but Reebok's rapidly closing the gap. Reebok's also doing something that Nike's not: It's capitalizing on the connections between professional sports and hip-hop. That's smart business.
LouAnn Lofton owns shares of Nike, and can't get the hook from 50 Cent's "In Da Club" out of her head.