Was The $225M Sale Of Umbro A Bad Move By Nike?

Umbro is a brand renowned across the world, thanks to its numerous sponsorships of popular soccer teams over the decades, including the Manchester City soccer team back in 1934, who went on to win the FA cup during the same year. Nike acquired the sportswear manufacturer in 2008, which was a move to counter Adidas’s acquisition of Reebok.

After investing millions into their subsidiary brand throughout the past years, Umbro’s future became a little hazy as Nike has announced its intentions to sell Umbro earlier this May. Interested investors pitched several offers to acquire the brand for sale, but all of which fell short of the original $580m purchase price Nike had to pay for five years ago.

Although the UK-based shoe-specialist has been struggling to rake in revenue above standards set by Nike, what really has observers puzzled is the fact that the latter let the former go for a significantly smaller price of $225M.

Nike eventually agreed to deal England’s beloved trademark to Iconix Brand Group – a brand management company that licenses brands to manufacturers and retailers – despite the fact they apparently seemed to be on the losing end of the bargain.

What’s even stranger is the fact that Nike has been “doing things” that’d make its former subsidiary appear less valuable, thereby justifying their reason to sell it for a much lower cost. Such suspicious moves includes Nike allowing Umbro kit deals with Swansea, Sunderland and West Brom slip passed their hands in favor of rival Adidas, whilst the company themselves stated that they’d be “taking the reigns” from Umbro at Manchester City.

To make matters worse, Nike announced that it’d be taking Umbro’s technical supplier position at the Football Association – a move that’d most likely bring Nike’s trademark to the FA Cup, St. George’s Park, Wembley Stadium and the England National Teams.

Despite the slight controversy, analysts believed that Nike played the game quite well. The short-term loss occurred with the sale of Umbro has actually paved the way for long-term deals with soccer teamssuch as that of Manchester City, as well as a series of other individual sponsorships.

In addition to effectively gaining rights to the soccer federation, Umbro’s qualities which made it attractive to potential competitors, such as Adidas, were eliminated. The lower price, along with hindered potential for immediate growth, made it a turn-off in the eyes of rivals, yet appealing to other “less-threatening” companies.

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