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What is happening to the New Balance football project?

The brand has not yet found its place in the world of football

What is happening to the New Balance football project? The brand has not yet found its place in the world of football

New Balance entered the world of football almost silently, but after becoming European champion with Liverpool, it became one of the economic powers in the sport business system. After reaching the peak, however, the English team of Jürgen Klopp has decided to switch to Nike and follows the same direction as Celtic, which will become adidas at the end of the season. What went wrong on the way?

"You might not be as big ad your competition, but you can be smarter" is perhaps the phrase that best of all contains the New Balance corporate culture. It was pronounced by Chris Davis, Vice President and Global Marketing & Sports Marketing of the brand founded in 1906. You must be "smarter" when your main opponents are called Nike and adidas, and especially when the field of battle is the football market.

The history of New Balance has been discontinuous over the decades, partly by choice and partly because the two giants above have literally engulfed a market that is worth gold. The debut for the Boston company came in 1984 when the playing shoes of Bryan Robson, an icon of English football and Manchester United, were made with which he played from the early 80s until the first half of the 90's. A short but significant experience, which however lasted the right time. For the return on the green lawn one must wait more than 30 years and above all a significant change of management. Everything goes through the acquisition of the Warrior brand, which officially takes place in 2004. Leaving sufficient room for working, the brand now owned by New Balance enters the world of football in the 2012-13 season by signing a six-year contract with the Liverpool for a figure close to 25 million pounds - one of the richest deals for those years.

The official arrival of New Balance is dated 2015, when the property decides to eliminate the Warrior logo and place "NB" on the football production. Shortly thereafter, teams like Porto, Stoke City and Seville, one of the teams that was dominating one of the main competitions such as the Europa League, would also have had that logo. Other agreements will also arrive over the following seasons: the new brands with Nantes, Lille, Athletic Bilbao and above all Celtic Glasgow bear witness to the commitment in the football world of a young and ambitious brand.

At the same time - and it is worth underlining it to evaluate the football project in its entirety - New Balance does not stop. Investments continue to increase, also thanks to the innovative ideas of Chris Davis combined with the planning of Robert DeMartini, the CEO of the Massachusetts brand. The 50-30-20 model (50% of the capital to be invested in what already works, 30% to be allocated to slight product evolutions and 20% to be relegated to high-risk investments in innovative and never explored territories) begins to give excellent results in other sectors and the increase in revenue is becoming increasingly significant. New Balance enters the world of basketball and baseball, in addition to increasing credibility in what is in all respects the company's core business, namely the running sector. Sport remains at the center, but trends dictate directions that top brands must follow in order not to lose considerable market shares. Also at streetwear level New Balance works effectively: giving new life to the 999 has required ingenuity and a modern mentality, as evidenced by the many collaborations put in place to bring their vintage charm back into vogue.

If on the one hand there is a company that in the sixties produced just 30 pairs of shoes a day and had a staff of only 6 employees available, on the other there is a planning that is recording a relevant line of 'arrest. Once the times when New Balance entered a world 70% of which belonged to Swoosh and Three Stripes, the reality tells a different story. The first alarm bells coincide with the choice of the outgoing European champions to join Nike starting from next season (a contract, it is estimated, that will be worth about £ 70 million per season), followed by those related to the very rich agreement that adidas offered to Celtic  another team that will leave NB at the end of the season.

Although DeMartini has always stated that it has a medium-long term vision (never less than 5 years), New Balance has recently shown that it has structural gaps and precisely related to a 360 ° vision of a market that, as that said, he can be ruthless to those who are not 100% prepared. The "Make mistakes, take risks, fail and learn from that" idea is certainly the one that allowed the Boston brand to cut important milestones - such as the 4.5 billion dollars in turnover in 2018 - but that same idea cannot last forever. The design is what makes the difference, is what allows Nike to involve top-level athletes, is what allows adidas to keep up with the Oregon company. The long-term approach is therefore a negative aspect of New Balance's current football project.

Thinking like "a 110-year-old start-up" can be a great advantage in terms of innovation and creativity, but it has a downside that seems not to have been taken too much into account by Chris Davis' team. The most pragmatic example is the team of players that New Balance has tried to build, also to strengthen its reputation in the world of football. If on the one hand the "basketball" project managed to structure itself in a more thoughtful way and managed to achieve important objectives such as the signing of a future Hall-of-Famer like Kawhi Leonard  on the other hand football did not go through the same phases approach to a concrete goal.

From 2015 to today, deciphering New Balance's investments has been an arduous task: not many teams have been added to the client portfolio, just as great players have not been convinced to leave a sponsorship contract to become a member of an engaging and satisfying project. A "young" project cannot immediately target the overpaid by Nike and adidas, but a team made up of Tim CahillRio FerdinandAaron RamseySami NasriAlvaro NegredoJesus NavasMarouane FellainiFernandoVincent Kompany and Adnan Januzaj it is nowhere near competitive. Especially in the choice of the faces to be linked to the brand, there is a certain fragility, the same that for example PUMA is not experiencing. The choice of the Germans - applied to any sport - to focus on young talents today is paying great dividends, underlining how fundamental the strategy is in an environment like that of football. New Balance's strategy resembles sinisterly that already implemented by Under Armor, which entered the market with the desire to move the mountains and then found itself dealing with a larger and more complex reality than it thought.

Being a technical sponsor of the European champions at home NB appears to be more similar to a point of arrival, while it should be considered as a starting point, a point in favor on which to pivot to aim for new horizons. New horizons, for example, represented by those championships in which the Boston company has not yet entered: Germany and especially Italy are not lands yet conquered by the beauty of a brand perceived as distant from the two giants, in the environment for excellence where players-users are wary and where vintage is much more appreciated than technical innovation.

The gap to be closed remains enormous. New Balance's football project is now experiencing a delicate stalemate, having lost two major customers in the UK such as Liverpool and Celtic. The paradox of the modern world is to love the challenge but at the same time to be afraid of failing, to experience the thrill of risk but not to take into account that something - especially if not treated in detail - could go wrong. This is the strength and at the same time the poison of those who since 1906 have been "fearlessly independent".