OLYMPIC GOLD

Bolt’s Lightning Doesn’t Strike for Puma

usain bolt-reuters-lighter
Puma hasn't been able to turn Usain Bolt's speed into sales.
  • Why it matters

    Why it matters

    Runners spend around €15 billion per year on equipment worldwide but Puma hasn’t managed to turn money spent on sponsoring into sales.

  • Facts

    Facts

    • World leader Nike sold €4.5 billion in jogging equipment during the last business year.
    • In comparison, Puma had €3.4 billion, or about $3.8 billion, in total revenues.
    • Puma slid to fourth among the world’s largest sporting goods companies in 2015, replaced in third place by U.S.-based Under Armour.
  • Audio

    Audio

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Bjørn Gulden, the chief executive of German sporting goods company Puma, is enthusiastic about the track and field contests underway at the 2016 Summer Olympics in Rio de Janeiro.

“It’s the biggest and most diverse sports gathering,” Mr. Gulden said. “Hopefully, it will turn many people throughout the world into sports fans.”

The Puma boss earned his money for years as a professional soccer player in the top Norwegian and German leagues. His heart beats for sports.

But there’s another reason why he looks forward to the summer games: His company sponsors Jamaican sprinter Usain Bolt, regarded as the world’s fastest man and winner of six Olympic gold medals.

“Puma has the fastest and best known track and field athlete in the world, but doesn’t fully exploit the potential.”

Hartmut Heinrich,, of Mistresstech consulting

On Sunday, the 29-year-old world record holder will once again line up for the 100-meter race, one of the Olympic highlights. It’s a great opportunity for displaying the Puma brand and logo to millions of TV viewers around the world.

For the past 15 years, the Jamaican has been under contract at Puma. But if past experience is a guide, it’s unlikely that customers will storm stores on Monday morning in search of the company’s shirts and shoes.

“Puma has the fastest and best known track and field athlete in the world, but doesn’t fully exploit the potential,” said Hartmut Heinrich of Mistresstech consulting, referring to advertising and sales.

Puma pays Mr. Bolt huge amounts each year: Some speculate up to as much as $15 million. That’s a lot of money for a firm that in the second quarter only had profits of €1.6 million, or about $1.79 million.

Others sporting goods firms do business in the billions with recreational runners. Japanese shoe specialist Asics has the best reputation among serious joggers, based on sales.

As the world’s largest sporting goods company, U.S.-based Nike sold jogging equipment worth €4.5 billion during the last business year. That is significantly more than Puma’s total sales.

Other U.S. companies that focus on joggers, such as Marken Brooks and Saucony, also have a fixed place on retailers’ shelves. As does Germany’s Adidas, the world’s second largest sporting goods company after Nike.

Both Adidas and Puma — which were established respectively by the brothers Adolf and Rudolf Dassler — are based in Herzogenaurach in Bavaria.

Although Mr. Bolt has run from victory to victory for more than a decade, Puma has been unable to turn those victories into a winning business with runners.

When Mr. Gulden arrived at Puma in 2013, the brand had the most successful track and field athlete under contract, but lacked a competitive jogging shoe.

Mr. Gulden has been busy trying to change that to cash in on joggers. Alongside soccer and fitness, running is the most lucrative source of revenues in the sporting goods business. Joggers spend around €15 billion per year on equipment worldwide, with an upward trend.

All big sporting goods brands have put their athletes in the limelight at Rio, and Puma is not exception. “Usain Bolt sticks out because he is incredibly popular,” said the consultant Mr. Heinrich. “Puma should be profiting from that.”

The company needs to boost sales. Last year, it slid to fourth among the world’s largest sporting goods suppliers, replaced by U.S.-based Under Armour.

Running star Mr. Bolt has had tweaks and twinges for a while now. As he approaches 30, Rio could well be his last Olympic appearance. So it won’t be long until Puma loses its star attraction.

Mr. Gulden recently said Puma might introduce a shoe collection along with Mr. Bolt after the athlete retires. He would have more time then, and what didn’t work out during his active career could succeed in athletic retirement. The partnership could lead to increased sales.

Nike is the model. The company developed an entire collection with basketball legend Michael Jordan.

Its founder Phil Knight recently acknowledged that it isn’t easy to market stars: “It’s an art that often goes wrong,” he said.

But when it works, the benefits are real. During the last business year, Nike sold Jordan equipment for €2.5 billion ($2.9 billion).

By comparison, Puma had €3.4 billion, or about $3.8 billion, in total revenues.

 

Joachim Hofer covers the high-tech industry and the IT sector as well as the outdoor- and recreational-industry for Handelsblatt. To contact the author: hofer@handelsblatt.com

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