Boston-based footwear firm New Balance has been firing on all cylinders in recent years with sales up 17% annually since 2010 to reach $3.3 billion last year. Much of the growth has taken place outside the U.S. with international revenues up more than 25% a year. The New Balance brand is bigger than ever. To take advantage of that expanding brand power, New Balance is jumping into the world’s biggest sport with the launch of a soccer business under the New Balance name.
Privately-held New Balance announced plans to enter the soccer market in simultaneous star-studded events in New York and London, featuring Arsenal midfielder Aaron Ramsey in London and Costa Rican footballer and Vancouver Whitecap Kendall Watson in New York. New Balance’s move has been rumored for months with Ramsey sporting a whiteout version of the new boots and later a pair with the New Balance logo added. Other new additions to the New Balance soccer roster include Adnan Januzaj, Jesus Navas, Fernando Reges, Samir Nasri and Álvaro Negredo.
New Balance is hardly starting from scratch, as it started a soccer business three years ago under its Warrior subsidiary. Warrior’s entry into the soccer market was highlighted by its $40 million-a-year jersey deal with Liverpool starting with the 2012-13 season. Liverpool has one of the best-selling kits in the world. Warrior also sponsored Stoke City, Sevilla and Porto and a handful of other clubs. Warrior-endorsed players included: Vincent Kompany, Marouane Fellaini, Tim Cahill and Nikica Jelavic. All of the teams and players will move over to the New Balance endorsement roster. “Given the global reach we have with the New Balance brand, we are better served to move those assets over,” says New Balance product executive Joe Preston. “We want to take it to the next level.”
Soccer is still a small fraction of New Balance’s $3.3 billion in revenue with running providing the bulk of the business. New Balance’s entry into the soccer market is about generating revenue from soccer, but also exposing the brand to a bigger audience to benefit its other product categories, most notably running.
New Balance faces a brutal environment in soccer with Nike and Adidas battling for global supremacy in the sport. Adidas’ soccer revenue was expected to reach $2.7 billion last year. Nike’s soccer revenue was $2.3 billion, up 18%, for its fiscal year ended in May 2014. The sportswear giants have combined revenue of $50 billion. New Balance was just a bit player in soccer with its Warrior brand, but Preston thinks there is room for another player. “We’re a challenger brand. We’re not going to outspend Nike. We’re not going to outspend Adidas,” says Preston. “But given our ability to make great products and the assets that we are introducing today, we think we can come in and earn that number three spot.”
Warrior already has established lines of cleats with Gambler, Skreamer and Superheat. Preston says New Balance is going to take a different look at the product. “We want to really define what fit is to the sport,” says Preston. “The product we have developed is centered on two types of players in [goal scorers and those that set up the goal scorers].”
New Balance can use its success in baseball as a roadmap. It entered the sport in the late 2000s and already has 25% of major league players wearing New Balance cleats. The company will follow a similar strategy with soccer by focusing on specialty retailers and not the big box stores. New Balance will also tap the hundreds of stores it operates in China and Korea to push the product.
© 2015 Forbes | This article was written by Kurt Badenhausen and first appeared in Forbes on 5 February 2015.