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Under Armour and Nike Work to Grow Sales, Protect Players

By Andrew Marder - Feb 18, 2014 at 5:35PM

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Youth organized sports are in decline, and Under Armour and Nike are eager to turn the trend around by keeping the players safe.

The world of youth sports is in a bad place. Reports have shown that over the period from 2008 to 2012, the biggest organized sports for kids in the U.S. -- soccer, football, baseball, and basketball -- all had drops in participation. In 2012, 20% of all 6-to-12-year-olds undertook no physical activity -- no running, no swimming, no bike riding of any meaningful sort -- for a full 12 months straight.  

We often take the easy out for explaining the rise in childhood obesity and inactivity, putting the blame on the rise of video games and other sedentary pastimes. Other problems are no doubt affecting participation rates, though. A sharp rise in the awareness of concussions and other dangers may be scaring parents off.

The dangers of contact sports for children
According to the Center for Injury Research and Policy, about 2,000 kids are treated for football-related injuries each day in the U.S. during the football season. With those sorts of numbers flying around, it's no wonder that some parents are hesitant to let their kids suit up.

Motivated by a mixture of doing the right thing and keeping the cash flowing, big businesses are starting to spend more on research for sports injuries in the hope that they can become less of an issue so that more kids can play and stay healthy. Last year, for instance, Under Armour (UAA 3.64%), G.E., and the NFL joined up to promote the prevention and diagnosis of brain injuries.

Protecting the head, helping the bottom line
Under Armour's demographic is clear -- people who will buy better helmets -- while G.E. is a leading manufacturer of MRI machines and other diagnostic equipment, putting it in a position to benefit from advances in the field. Other technical solutions include movement-tracking mouthpieces and helmets that let NFL trainers diagnose on-field hits as they happen.  

For helmet makers, the trickle-up effect isn't going to happen overnight. Rules changes at the youth and college levels seem more likely to have an impact on Under Armour's sales right away than advances in concussion-tech do. As more airtime is given to the discussion of the new rules, parents may thaw to the idea of letting their kids play on the local team.

Under Armour's main concern isn't the sale of helmets themselves but the other apparel that comes along with football participation. Under Armour's footwear division has been growing like kudzu, led by the Highlight line of cleats. Footwear sales rose by a quarter over the company's last fiscal year, up to almost $300 million. 

Taking the research beyond football
On the West Coast, Nike (NKE 0.11%) is hard at work -- indirectly. The University of Oregon's Bowerman Sports Science Clinic -- named for Nike co-founder Bill Bowerman -- is also tackling the problem of concussions. Those studies have focused more on the long-term effects of concussions, tracking injured high school students over a two-month period, for instance.

Nike is one of the largest sports equipment manufacturers in the world, and advances in safety in America can be applied to all its regions of business. While the focus in the U.S. media is largely on the effects of football, soccer is also full of concussions. Recent studies have found that high school players are at a higher risk, with many playing through the injuries. If research at Oregon can help cut down on those injuries, it's sure to be good news for Nike.

Increasing the safety of children's sports is one of the rare areas where the desires of businesses overlap with the hopes of consumers in such a way that everyone comes out a winner. As Nike, Under Armour, and others continue to fund research, the outcome is likely to be an increase in their bottom lines. Luckily, it should also mean fewer long-term injuries for players and less concern for parents -- something we could all live with.

Andrew Marder has no position in any stocks mentioned. The Motley Fool recommends and owns shares of Nike 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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