By Josh Barr
Washington Post Staff Writer
Friday, April 11, 2008

BALTIMORE -- In the window of a third-floor office overlooking the Inner Harbor stands Under Armour's latest foray into the athletic apparel business. An overly muscular mannequin is clad in black, another in red and a third in white, all adorned with the uniforms to be worn in Sunday's Capital Classic all-star high school basketball games.

When the Baltimore-based company signed on as the event's title sponsor last month, its executives hoped to breathe new life into what used to be one of the nation's premier scholastic sporting events. They also are using the doubleheader at Comcast Center as the jumping-off point for Under Armour's plan to gain a foothold in a basketball shoe business that brings in an estimated $4 billion annually, one that is dominated by marketing and manufacturing giant Nike.

"Everything is on the table as far as the sport of basketball is concerned," said Steve Battista, Under Armour's senior vice president of brand. "And we're looking at every opportunity, both product and marketing or sponsorship, from youth up through professional."

Under Armour already has had some interest in basketball. It makes uniforms for the teams at Auburn University and Loyola College in Baltimore. The company has run a booth at the National Association of Basketball Coaches convention, held annually in conjunction with the Final Four, since the late 1990s. And, Battista said, basketball ranks among the three most popular sports, along with football, baseball/softball and running, for people buying products from the company's Web site.

But starting with the 2008-09 school year, Under Armour has agreements to sponsor five prominent high school basketball teams, including O'Connell High in Arlington. The company also will sponsor camps run by O'Connell Coach Joe Wootten and his father, Morgan. For the time being, that means providing uniforms and other apparel. Before long, Under Armour plans to provide shoes as well.

Both O'Connell and its camp had been sponsored by Reebok.

"I know Under Armour has a chance to really do well in basketball," said Sonny Vaccaro, the retired shoe company executive who pioneered the field of youth basketball marketing. "I've known they want to get into basketball. The reason I think it's a logical step in the right direction is because kids identify with their brand. They would be a logical person to get into this fight."

Vaccaro, who said he had a social meeting with Under Armour founder Kevin Plank earlier this year, said it was his understanding that, for basketball, Under Armour would "be ready in 2009-10." Vaccaro compared Plank and his path to what Nike founder Phil Knight "did in the 1970s, starting a company on a shoestring."

"I like [Plank's] bravado," Vaccaro said. "Anyone I've dealt with over the years will go for the next rung on the ladder. It's no fun being rich and stagnant. The fun comes in the quest."

As part of that quest, Battista said, the company has tripled the size of its footwear creation team in the past 12 months and hired people from And1 and Adidas. No timeline exists for when any shoes in development will be on the market -- the company currently is focused on the May 3 launch of its cross-training shoes -- but Under Armour does not want to sponsor teams and then have those players wearing Nikes or another brand on the court.

Although it has yet to make a move into the controversial practice of sponsoring youth travel teams, there is talk that such a move is in the works. Under Armour has expanded its reach in the past few years to sponsor national high school all-star games in football, baseball and lacrosse, and this year began sponsoring combines for high school football players.

"Everybody is speculating and anticipating that Under Armour is coming," said Carlton "Bub" Carrington, director of Nike-sponsored Team Melo, one of the most prominent travel-team organizations in Baltimore. "Right now, they're hush-hush. But people are anticipating it's going to be big."

Becoming more involved in basketball sponsorship seems like a natural fit for Under Armour, one analyst said.

"It makes very good sense on a strategic basis as long as they're not investing too much of their free capital into it," said Marc Ganis, president of SportsCorp Ltd., a Chicago-based sports industry consulting firm. "One of three things is going to happen with Under Armour: They're either going to remain a niche player, they're going to be acquired or they're going to start acquiring."

Plank, a former football player at the University of Maryland, founded Under Armour in 1996 as he attempted to create undershirts for players to wear during games that would not retain moisture. As the product took hold, the company then started producing other apparel, also moving into cleated shoes for football and baseball. And this year the company, whose commercials helped coin the term "We Must Protect This House," debuted a 60-second commercial during the Super Bowl television broadcast.

Under Armour's profit grew from $39 million in 2006 to $52.6 million last year, its revenue rising from $430.7 million to $606.6 million. Still, that's just a small fraction of the overall market. According to Sporting Goods Intelligence, which tracks the industry, the U.S. wholesale market in 2006 for athletic footwear was $11.7 billion, with $25.5 billion spent on athletic apparel.

But with the economy struggling, there is some concern that Under Armour's spectacular growth could slow.

"Basketball is so dominated by Nike and Converse, and of course, Nike owns Converse," said John Horan, publisher of Sporting Goods Intelligence. "At this point, even the Adidases and Reeboks and people like that, they don't really move the meter much on basketball. I'm sure [Under Armour] is starting to seed the brand. The thing Under Armour has is they have such credibility with the base layer [of clothing], especially with kids, that it basically lets them travel into almost any category they want. They start with that base layer to get in and then start building out."