Fila tries tennis again

Global sponsorship of ATP Super 9 to promote new line

June 29, 1999|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

Hoping a return to its sports roots will boost its global share of the tennis shoe and apparel market, Fila Holding SpA has secured exclusive rights to sponsor the Association of Tennis Professionals Tour Super 9 for three years and create a line of ATP branded footwear and apparel.

As technical sponsor and official supplier for the tour's 10 events, including the ATP Tour World Championship, the Biella, Italy-based athletic footwear designer will supply athletic shoes and apparel for tournament judges and other officials and get brand exposure through courtside signage, program ads and ATP television commercials, the company said yesterday.

The company, which has its U.S. division in Sparks, will also develop Fila products and accessories, co-branded with a new ATP logo, to sell at the tournaments and in athletic specialty stores and department stores. "It makes sense to go back to their strength and build their tennis business," said Peter Kaplan, co-chief executive officer of the National Media Group Inc., a sports marketing firm in New York. "It's strong business for them historically."

Fila finalized the agreement last week with ISL, the company that controls Fila's exclusive media, marketing and licensing rights and secures sponsors. Yesterday at Wimbledon, England, Fila announced the agreement, which takes effect immediately and runs through the end of 2002.

The ATP is trying to increase recognition of its Super 9 tour by marketing it as a single entity, in part by changing the way it signs on sponsors. The organization now offers licensing agreements that cover the entire series of 10 events rather than for each event individually. Because of that, Fila has a greater potential for exposure than it has had in the past as a sponsor of the Lipton (now Ericsson) Championships, one of the nine tournaments, held each year in Key Biscayne, Fla. Other tournaments take place each year in Indian Wells, Calif.; Monte Carlo, Monaco; Rome; Hamburg and Stuttgart, Germany; Toronto; Cincinnati; and Paris.

Fila expects to capture a greater share of the tennis footwear and apparel market, which totals about $1 billion in the United States alone, said Howe Burch, Fila's senior vice president of advertising and sports marketing. He said Fila's U.S. sales represent about 10 percent of the market.

"We have a small piece of the overall business, and, frankly, we think tennis is our birthright and we should have a bigger piece," Burch said. "An investment in a global sponsorship will help us achieve that."

With total attendance surpassing 1 million, and television coverage reaching 300 million annually, "that gives us a pretty significant platform to present and promote the brand in a category where we have a strong history," he said.

The company, started 72 years ago by the Fila brothers, who sold knitted goods and underwear, got into athletic apparel in the early 1970s and made a name for itself on the tennis court. Over the years, Fila has won professional endorsements from some of the biggest tennis stars: Bjorn Borg, Guillermo Vilas, Gabriela Sabatini, Boris Becker and Monica Seles.

Basketball, though, has fueled much of Fila's growth this decade. In 1994, Fila, then the sixth-largest maker of athletic footwear, signed a multimillion-dollar deal with former Duke University basketball star Grant Hill. By 1997, Fila had risen to the No. 3 spot.

But industrywide, sales of basketball shoes have begun to decline, hurt by the rising popularity of outdoor shoes and hiking boots.

Fila, which had difficulty competing with dominant companies such as Nike and Adidas, lost $132.9 million last year. Its American Depositary Receipts, which once traded above $100, closed yesterday at $12, down 25 cents.

"In the last three or four years, they have had so much success with basketball, they lost a little bit of focus on tennis," said Andrea Storti, assistant vice president in equity research for Merrill Lynch Global Securities in Milan, Italy. "A new management team is on board, and they are trying to refocus the brand on the core heritage categories. It's part of Fila's strategy of sponsorship."

As for the new ATP-branded line, which Fila says will include items such as tennis shoes, slides, polo shirts, tennis shirts, tennis shorts, T-shirts, hats, socks and wristbands, "this is a clever way to get the most out of a sponsorship," Storti said. "Basically, the money you are investing in the sponsorship doesn't end when the event ends. You can keep promoting yourself."

The benefits for Fila depend in part on how much Fila is investing, Kaplan said. Fila would not release the amount of the contract.

Kaplan said such agreements often can cost the sponsor millions annually. Companies typically use the sale of licensed goods as a way to recoup some of the expense of the sponsorship, he said.

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