William L. Coney Blog: VICE FORMS PARTNERSHIP WITH NBA

Friday, April 20, 2018

VICE FORMS PARTNERSHIP WITH NBA

Direct-to-consumer ball company, Vice Golf, has launched a first-of-its-kind platform in conjunction with the National Basketball Association.

The exclusive agreement gives Vice licensing rights to logos for all 30 NBA teams to be placed on balls and packaging. Previously, both Nike and TaylorMade (as a subsidiary of adidas) had access to team logos and trademarks, but neither ever explored a joint venture, presumably because neither saw significant potential for profit. When TaylorMade was sold, and Nike exited the hardgoods portion of the industry, it left a gap which Vice is excited to fill.

IT SHOULD WORK BECAUSE:

Vice consumers have an appetite for ball customization. Currently, approximately 50% of all balls sold by Vice have some type of customization. Additionally, Vice allows consumers to work in small, manageable quantities (orders as small as a single dozen) and provides quick turnaround times (4-7 days beyond standard delivery times for balls requiring digital or LED UV direct printing).

Moreover, according to Vice market research, roughly 1/3 of U.S. based golfers (8.5 million) are also NBA fans. In terms of market size, this crossover of potential customers is greater than the entire European golf market.

POTENTIAL HURDLES:

While a release during the NBA playoffs may get this operation off to a running start, what happens when we hit June, and sports fans start counting down the days until the arrival of NFL training camps?

Vice is banking on NBA fans treating teams more like Europeans do its Premier League football (or soccer for the ethnocentric) clubs, where, while teams may have an off-season, the fans don't. A Gallup poll released in January of 2018 showed 37% of Americans rate football as the favorite sport to watch, while 11% rated basketball as such. This doesn't necessarily mean the raw numbers of possible consumers isn't sufficient, but it does at least raise the question as to how fervent NBA fans will be and how well this will translate into sales which aren't wildly cyclical.

The NBA will support Vice's marketing efforts largely via the league's social media presence. No doubt this should help, but both traditional and online retailers are less likely to lend support, at least initially. The primary reason for this is simple: margins – Fans interested in purchasing novelty balls with team logos are often neither golf enthusiasts nor looking for a premium quality ball. They want a sleeve of balls to give to the boss at Christmas and if it's only $7.99, all the better.

Comparatively, Vice's balls will have a higher wholesale cost and slimmer margins for the retailer. Without a guarantee of consumer demand, there's little initial incentive for sellers to forgo a higher margin product for a lower margin one.

NUTS & BOLTS:

Like other DTC ball companies, Vice's success rests upon the "tour quality at a fraction of the price" platform. As our testing has shown, Vice balls do just that. However, any increase in cost starts to cut into the price differential. Vice doesn't feel the $2 increase (per dozen ball increase over current custom ball prices) will have any meaningful impact on sales, in part because each order includes customized packaging.

Every NBA logo will be available on each of Vice's five balls, and the minimum order requirement is just one dozen.

Toward the end of 2017, it appeared Vice was close to debuting a fully custom ball platform which would give consumers an unprecedented suite of options, but now it appears this is still several months away. When this platform become available, we'll be the first to let you know.

It's another option in the ball market, which whether consumers flock to it or not, doesn't preclude the availability of every other ball option. So, with that is this a thumbs-up or hard pass?

To order your NBA Logo balls, visit ViceGolf.com.