Why Is Under Armour Inc Getting Into NASCAR?

Under Armour is attaching its brand to NASCAR. What's the company's underlying goal?

Apr 4, 2014 at 7:34AM
When most people think of Under Armour (NYSE:UA), they likely imagine the apparel-maker's football jerseys, its baseball gear, and during Olympic season, its speedskating suits. One sport the company isn't synonymous with is auto racing, but that may soon change. According to SportsBusiness Journal, Under Armour is attaching its brand to NASCAR.
The details of the deal
Although the financial details of the deal remain unknown, it could have a lasting impact on both sides. Under Armour will reportedly sponsor two racing teams: Michael Waltrip Racing and Hendrick Motorsports. Both are multiyear deals, and as SBJ's Tripp Mickle explains, they'll clothe "everyone from the pit crew to the front office."

Image via The U.S. Army, Flickr.

Unlike some NASCAR sponsorships, Under Armour won't outfit team drivers or cars -- Hendrick has Dale Earnhardt Jr., Jimmie Johnson, Jeff Gordon, and Kasey Kahne, for example -- but it can use their likenesses on gear.
Under Armour's strategy
So will we see a race-themed line of apparel? It's certainly possible, and because the average auto enthusiast is different from the company's normal customer base, it provides new marketing opportunities. Mickle notes the deal could help Under Armour improve sales of its outdoor apparel -- "NASCAR fans are more likely to hunt and fish than other sports fans," he writes -- and the advantages don't stop there.
As Nielsen's most recent "Year in Sports Media" report reveals, NASCAR's demographics are unlike any of the other major North American sports.
Screen Shot

Nielsen "Year in Sports Media" report, 2013.

By the percentages, NASCAR has a larger female representation than golf, hockey, baseball, basketball, soccer, and football. And with nearly half of all viewers above the age of 55, auto racing's fan base is older than every sport except golf and professional football.
Diversity does continue to be a problem, but it's something NASCAR is working to fix by boosting its digital footprint -- it introduced a Twitter-focused social media campaign this winter, and launched NASCAR Connect, which lets fans make race predictions on Apple iOS devices, last month.
The business side of things
While Under Armour doesn't report financials by product type, its latest annual report cites training and hunting gear as a significant driver of recent expansion. In 2013, the company's net sales rose by nearly 30% to $2.2 billion -- the quickest growth in two years.
It's impossible to know exactly how much it's paying Michael Waltrip Racing and Hendrick Motorsports. But remember, Under Armour's NCAA football apparel deals typically range between $2 million and $9 million a year, and its entire annual sponsorship portfolio is likely at least $200 million. Given that, it's reasonable to think the company is willing to pay seven figures per year to get the UA logo into NASCAR.
The bottom line
At the end of the day, that's a small price to pay for a fan demographic unlike any other. NASCAR's efforts to inject youth into auto racing should appeal to current Under Armour customers, while the sport's existing fans -- especially those who are older -- should snatch up more outdoor apparel: a win-win for the company.

3 stocks to own for the rest of your life
As every savvy investor knows, Warren Buffett didn't make billions by betting on half-baked stocks. He isolated his best few ideas, bet big, and rode them to riches, hardly ever selling. You deserve the same. That's why our CEO, legendary investor Tom Gardner, has permitted us to reveal The Motley Fool's 3 Stocks to Own Forever. These picks are free today! Just click here now to uncover the three companies we love. 

Jake Mann has no position in any stocks mentioned. The Motley Fool recommends Under Armour. The Motley Fool owns shares of 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.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't 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.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information