Most Improved Player
The 74th season of the National Basketball Association (NBA) begins tonight.
And what better way to celebrate than by pointing out that the CEOs of Under Armour ($UA) and Nike ($NKE) are each stepping down.
Part of me is not surprised with the Under Armour news, but it is more of a standout case since Kevin Plank is also the founder:
“Meanwhile, after the announcement was made Tuesday morning, there was some speculation that Plank had been pushed out of the CEO role because of the company’s recent poor performance in North America. Or perhaps due to the fact that, up until last year, employees were able to expense visits to strip clubs on the company’s dime. Plus there was the fact that women in the company reportedly felt overlooked for key jobs.
But Plank says that’s not the case.”
Full disclosure: I do not own any Under Armour shares (or any Under Armour clothes), but I do occasionally stop by its SoHo store to check out foot traffic, which is usually less than Nike’s location a couple of blocks away.
It is almost hard to believe that it’s already been 13 years since Mark Parker was named CEO of Nike, the third in the company’s history, and maybe even more mindboggling that he’s been with the team in some form since 1979.
For comparison, Under Armour as a company was founded in 1996.
Full disclosure: I own Nike shares and a lot of Nike stuff. Maybe too much.
On a valuation basis, the two companies are miles (or kilometers) apart with Under Armour hovering below $10 billion while Nike is above $100 billion.
These numbers fluctuate with the stock market, but a moat still exists.
Technology is another differentiator:
In 2015, I was listening to Under Armour’s conference call when it disclosed spending $85 million for Endomondo and $475 million for MyFitnessPal:
I used MyFitnessPal for a couple of months this Fall to lose 5 pounds (I’m not converting this number to kilograms), but now I am not using it much at all.
And, in 2015, I barely had the Endomondo app on my phone for more a month before deleting it. It was all right, but nothing groundbreaking.
Under Armour’s half-a-billion dollar gamble on apps did not pay off as handsomely as Facebook’s ($FB) acquisition of Instagram just three years earlier for only one billion dollars.
Meanwhile, I am no sneakerhead, but Nike’s SNKRS app is so popular that its customer demand often crashes the app, which is a major problem, but still a better one to have than no one using your app(s).
Under Armour has Stephen Curry under contract as its most valuable spokesperson while Nike’s contract with the NBA suits up its players.
But around the world, playing ball also means having to deal with China, which is quickly becoming a “Voldemort” word, not to be spoken.
Ben Thompson at Stratechery seeks to unravel this culture clash:
“Indeed, this gets at why the Facebook questions are so critical: the company’s critics that argue that Facebook is too big are making a cogent argument that reconciles concerns about Facebook’s power with a desire to control misinformation; critics that ignore these tradeoffs, though, come across as authoritarians in their own right, disappointed in Facebook only so far as the company fails to leverage its power to enforce their personal preferences.
And so we are back to China. The U.S. specifically and the West broadly is not going to out-authoritarian an avowedly Marxist regime with a demonstrated willingness to use ‘re-education camps’ and omnipresent surveillance to ensure the Second Estate era — that of the cohesive nation-state — remains in place. To fight the Internet’s impact, instead of seeking to understand it and guide the fundamental transformations that will surely follow, is a commitment by the West to lose the fight for the future.
The fact of the matter is that the world is fundamentally changing, just as it did five hundred years ago. At the same time, that change will take time — the printing press was invented in Germany in 1440 and yet German unification did not happen until 1871 — and will be guided by choices we make along the way. The sooner we recognize that transformation is coming, the more readily we can reject authoritarian attempts to hold onto the world as it was, and create the world we want to see.”
China hosted this past Summer’s FIBA World Cup this past Summer.
Expect the country to want more playing time on the court.
