In 2006, NBA Commissioner David Stern said that ‘the adidas presence on a global basis is extraordinary’ and the deal to produce NBA apparel was extended until the end of the 2016/17 season for $400m. Despite this, although the NBA has becoming increasingly global, adidas recently announced that it would not renew the contract amidst reports that the NBA would hold talks with Nike and Under Armour.

So what has happened since 2006 to cause the relationship to break down?

The key issue is that, compared to its US-born rivals Nike and Under Armour, adidas has lost the US market. This was recognised by CEO Herbert Hainer who stated, “we lost some of our brand desirability because we didn’t focus enough on the needs of our consumers.” However, this admission may be too little too late because increasing competition from Under Armour has resulted in adidas dropping to third in the market for US athletic apparel sales, with Under Armour in second place and Nike in first; in relation to basketball specifically, adidas only owns 2.6% of the market. This lack of understanding which translates into a lack of sales means that the company has lost its ability to grow the NBA brand as well as it used to.

adidas also lacks appeal with the players themselves itself. It does not have a healthy superstar player on its books that can elevate the brand, whereas Nike and Jordan Brand (Nike’s subsidiary) are worn by 322 out of 440 NBA players, and Under Armour sponsors potential-MVP Stephen Curry. Not only has the consumer lost faith in adidas, but the players themselves also seem to have lost interest. As a result of adidas’ popularity waning both on and off the court, it is not surprising that the NBA will instead negotiate with the company’s fiercest competitors.

The declining market share and rumours that the company is contemplating selling off Reebok after having already sold off its Rockport business demonstrate that adidas no longer has the sales-gravity that it once commanded. Its deteriorating ability to influence the sports market is not a sufficient launchpad from which it can continue the NBA’s growth strategy and the loss of this partnership will make it hard for adidas to attain its own growth forecasts of “high single digits” so as to defy analysts’ more conservative projections of 6-6.5% annual growth.

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