Reebok’s $70m exclusive sponsorship deal with the Ultimate Fighting Championship (UFC) will be on the world stage for the first time this weekend for what is expected to be the highest grossing pay per view (PPV) event in the sport's history, a move that marks a milestone in the rebirth of the once-troubled brand.
On Saturday, Reebok’s partnership with the UFC will be up and running at UFC 189 at the MGM Grand in Las Vegas. The deal could not have come at a better time for the apparel brand with the event expected to break the previous UFC PPV record of 1.6 million views. After generating $7m in ticket sales it has already smashed all previous gate records and has led the sport’s president, Dana White, to state that the event will “set the all-time gate record for a mixed martial arts (MMA) event on American soil”.
The success of the upcoming event is down to the headlining fighter, Conor McGregor, himself a Reebok sponsored athlete who not only wears the brand while training and fighting but also has a line of exclusive merchandise in his name.
Similar promotions could be on the way with the key part of Reebok’s UFC deal ensuring that every fighter wears a Reebok kit while fighting in the octagon.
The scope of such a deal marks a major milestone in the brand’s marketing strategy and one that it stands to “benefit hugely from” according to Joel Seymour-Hyde, vice president of strategy at sports marketing firm Octagon.
No sport’s popularity has exploded like the UFC’s has in recent years and so Reebok has entered at the perfect time; the sport is hugely popular and will continue grow given the global success which has resulted in sold-out events throughout the US and the UK as well as the rest of Europe and South America.
The $70m fee for the exclusive sponsorship also represents good business for the sport apparel firm. Seymour-Hyde points out that “on the grand scheme of things, $70m isn’t that much for a kit deal when you consider the sums of money the likes of Adidas pay for a similar agreement".
The match works well for both, aligning their similar propositions of challenging their industry’s norms and being somewhat controversial. The UFC isn’t universally lauded in the sporting world the same way football is. The company is still prohibited from operating in the state of New York and Joel says that “Reebok’s image is more provocative than that of Adidas and Nike. Past deals including one with 50 Cent show this kind of approach”.
Marketing its brand in tough sports based on extreme fitness means Reebok is avoiding going head-to-head with the likes of Nike, which replaced it as the NFL’s kit supplier, and can also cement its brand identity in a realm where it receives a lot of attention. It already has exclusive sponsorship deals with Spartan race and CrossFit so the UFC deal fits into its marketing.
Antony Marcou, CEO of Sports Revolution, said the deal is “closer to the Red Bull strategy of owning events and teams” and believes that “as a challenger brand Reebok needs to think differently". He added that “the reality is that the big apparel brands have most of the big sports sewn up, so challengers need find different ways to break through".
Independent Sports Consultant Nigel Currie also sees the partnership as a perfect match because the UFC “is a big sport and it’s not without a bit of controversy either so it wouldn’t really suit the other brands like Adidas which have a squeaky clean brand that aligns itself with more traditional sports.”
The success of the partnership could contribute to Adidas’ decision on whether or not to sell Reebok, which it bought for $3.8bn in 2005 in order to expand its market in the US. In May this year Business Insider reported that Daniela Bergdolt, vice president of Germany's largest association for private investors, Deutsche Schutzvereinigung fuer Wertpapierbesitz, called on Adidas to sell Reebok.
Adidas chief executive Herbert Hainer, who was the architect of the Reebok acquisition, said it would be wrong to sell the brand now it was growing again, especially given the booming popularity of fitness.