The Umbro turnaround: a master class in Design Strategy by Nike

It has barely been three years. On October 23rd, 2007 Nike bought Umbro for $582.2M, paying a 61% premium on that day’s share price to discourage potential counterbids. At that time, Umbro was a company in clear decline. Their only valuable assets were the contracts it had signed to supply uniforms for multiple club and national teams (being the one with the British Football Association one of the longest lasting in the industry, spanning more than 20 years) and its history as a company that has deep roots with professional football since 1924.


Why buy another football apparel company? To keep the contracts and kill the brand? As a late newcomer to the football business in the 90s, Nike was not so much interested in the contracts but on the brand heritage. The global market for football kit and equipment is around $5B, and Nike's rationale to add another brand to their football portfolio is the same they had when they diversified their basketball brand portfolio: to segment the market not just by product category but by brand promise.


Nike Basketball started its brand multiplication process in 1997 by spinning off the Air Jordan brand (who in his sane mind would not turn the most recognizable logo of basketball into a standalone brand?), then bought Converse in 2003 ($305M for the brand that invented the very first basketball shoe), and by now it is becoming clear the LeBron James brand will become a solo subsidiary pretty soon.




With football, a sport mainly dominated by deep-pocketed European clubs that until recent years did not benefit from the sophistication of American marketing, we are witnessing the start of the same maturation process: a departure from a strategy based on a single lowest-common-denominator brand that tries to appeal everybody equally, to a more sophisticated strategy based on a multi-brand ecosystem that has the agility to be more diverse and vibrant. And this trend will only increase in the next years as football’s audience grows even bigger and more global.


Without quite going multibrand for football yet, Puma already started the lifestylization of football few years ago by positioning itself as the brand that “really loves football” (in their own Milton-Glaser-esque 'I <3 football' they replace the heart with a football). In their campaigns they frame African football as the purest and less money-fueled manifestation of the sport in order to leverage their sponsorships of African national teams. That's what they sell now: the innocent and untarnished soul of football.


With Umbro's acquisition, Nike went even further and enriched their portfolio by adding additional dimensions to it. Just take a look at how complementary the brands are:


The way the Nike Football brand has been developed in the last years makes it stand forperformance, high technology, and success. As a token, just look at their latest performance boots, the Vapor Mercurial Superfly II. These are boots that go for ~$400 and embody everything the brand wants to be: they are the lightest thanks to the materials used and the way the boots are built; they come in a wide range of screaming colors because, hey, if you are the best and you know it, you want to signal this to the rest of the world, right?; they have special cleats with exclusive advanced technology so you can have an edge over the rest and win; and they are endorsed by arguably the most famous and notorious football player now, Cristiano Ronaldo.


In contrast to all this edgy 21st century agressive brand attitude, Umbro clearly positions itself as a more emotional organization. The company not only is based in Manchester, England but it is also proud to be British as their tag reads: "Tailored by Umbro in England". Having started so early in the 20th century in the land of football (the foundation of association football rules were established in a London pub in 1863) is not only a key identity asset; this is something that virtually no other brand in the world will be able to brag about ever no matter how much money they have. And that's exactly what Nike was buying when they shelled out$582.2M for a dwindling company: a symbol in football history.


Umbro had potential. And they saw it. Fast forward three years to today and all the signs indicate there has been a massive turnaround: Umbro stands now for incomparable football heritage and craftsmanship, creative lifestyle, and a strong passion for the game beyond the competitiveness of winning or losing. How did Nike manage to do this? What strategic decisions were taken that had a positive impact on the Umbro brand? More on this in follow-up posts.