Companies Making High-Tech Investments in U.S. Gold

BMW and Under Armour are hoping that Olympic sponsorships and the development of new equipment and apparel for U.S. athletes will provide Olympic-sized exposure.

Jan 21, 2014 at 9:52AM

Endorsements of big-name athletes in high-profile sports are common and expensive marketing components for retail and automobile companies alike. Under Armour (NYSE:UA) and BMW (NASDAQOTH:BAMXF) are taking a less traditional route to commercial attention by developing new speedskating suits and 2-man bobsleds, respectively, for U.S. athletes competing in the Winter Olympics in Sochi this coming February.

Going high-tech
When BMW set out to design the ultimate driving machine, it's unlikely it suspected the driving machine would be a 2-man bobsled. BMW Group expanded its existing sponsorship arrangement with the U.S. Olympic Committee to include the sleigh redesign, and in the end it developed a completely new carbon-fiber 2-man bobsled tailored to the body-types of the U.S. Olympic athletes. The unquestionably expensive development effort included wind-tunnel testing and athlete body-scans to design the most efficient, aerodynamic sleigh while still complying with strictly enforced sled specifications. BMW has already received a great deal of attention for its redesign of the bobsled, including coverage from most major news organizations and a documentary on NBC. The development expenses are already paying off in media exposure.

If a faster sleigh is not enough to give U.S. the edge they need to win gold, hopefully the freshly designed Under Armour uniforms will be. Under Armour is upping its sponsorship in the upcoming Winter Olympics with the expectation of strong returns in brand recognition. Like BMW, Under Armour is a company building a reputation based on performance, and the Winter Olympics gives it exposure to demonstrate, or at least give the perception of, high-performance apparel in a setting where it can be associated with Olympic- and maybe even gold-medal-winning performance.

Under Armour's dedication to helping U.S. athletes win gold is no more evident than in its first-time sponsorship of U.S. speedskating athletes. Under Armour will be introducing a new speedskating 'skin' that it developed with help from, of all companies, Lockheed Martin (NYSE:LMT). Bringing in an aerospace company like Lockheed Martin implies just how high-tech Olympic apparel is becoming. With engineering expertise in aerodynamics, Lockheed Martin was a perfect complement to Under Armour in its attempts to design an ergonomic suit with reduced drag that may be enough to provide the edge needed in a sport where the difference between a gold and a silver metal can come down to thousandths of a second. The use of five different textiles, one being an ultra-low friction material at the inner thigh, gives an idea of how much effort went into the designing and manufacturing of these highly tailored racing suits.

Playing by the rules
The challenge for outside companies in entering the Olympic arena can be adhering to rules that limit the potential improvements that could be realized by unrestricted new bobsleds or speedskater suits. Design improvements in both bobsleds and speedskater suits have been implemented in past Olympics, but such changes are traditionally only marginal design improvements made without changing the fundamental composition of the suits or sleds that have been used in the past. BMW and Under Armour are making more significant changes in hopes of having the same drastic impact on athlete performance as was realized in swimming in the 2008 Beijing Summer Olympics with the use of a revolutionary Speedo-manufactured swimsuit.

Designing outside-the-lines worked for Speedo in that its LZR Racer Suit helped swimmers at the Beijing Olympics set 23 new world records. The astounding success was met with accusations of 'technological doping' and the eventual banning of body suits in 2010. Should BMW's or Under Armour's advancements see the same initial success or come under the same scrutiny, it should be delighted by the outcome. While the bobsled or speedskating purist may not appreciate the high-tech advantages offered, average observers looking for an edge in their flag football league may consider buying Under Armour apparel when they may not have otherwise done so.

The takeaway
In the end, a more aerodynamic suit or bobsled will only be as good as the athletes who are applying the technology. The newly developed, high-tech equipment will give the sponsoring companies Olympic-size brand exposure that commentators will undoubtedly reference repeatedly throughout the Winter Games. The international nature of the Olympic Games makes the investments all the more likely to pay off big. Though exposure of most sorts is a good thing in the world of marketing, BMW, Under Armour, and Lockheed Martin are making investments that they hope will pay off in gold.

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Fool contributor Shamus Funk has no position in any stocks mentioned. The Motley Fool recommends BMW and Under Armour. The Motley Fool owns shares of Lockheed Martin and Under Armour. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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