Seau still impacting the NFL a year after his death

Scott Kitun/The Medillian

Scott Kitun/The Medillian

Former San Diego Chargers linebacker Junior Seau committed suicide in May by shooting himself in the chest. Seau’s family donated portions of his brain to the National Institutes of Health where scientists detected chronic traumatic encephalopathy, or CTE. Similarly, Dave Duerson, former Chicago Bears defensive back committed suicide in 2011 by shooting himself in the chest. He asked his family to have his brain examined for CTE, and the disease was found.

Now Seau’s family has filed a wrongful death lawsuit in California Superior Court that may pave the way for similar litigation. It comes on top of more than 140 concussion lawsuits involving more than 3,300 players that have been filed against National Football League, the most lucrative sports league in the country.

In August, attorneys for the NFL asked the judge to dismiss all of the lawsuits but nobody thinks the issue is anywhere close to being resolved.

Chicago-based attorney Nicholas Hobart, who is not a party to any of the cases, said NFL officials believe the suits involving concussions should be handled through an arbitration process, not in court.

“The NFL is trying to get all of these lawsuits dismissed by arguing that they don’t belong in the courts in the first place,” Hobart said. “It argues that federal labor law preempts the state law claims and that they actually fall under the [collective bargaining agreement]. Therefore, arbitration is proper.”

Hobart said the Seau family’s lawsuit will likely be consolidated with the remaining suits. And if the NFL’s motion to dismiss fails, “it will still be years before any kind of trial or resolution occurs due to the magnitude of discovery.”

Meanwhile, the players and their families contend the league was negligent by not protecting players from severe injury. Their position has been and continues to be that the league knew or should have known of the dangers associated with repeated concussions.

Currently, CTE can only be detected after death. In an American Journal of Geriatric Psychiatry study, deposits of tau, a protein that forms over damaged brain cells, was more prominent in brains of five former NFL players including Seau and Duerson than it was in the brains of five non-NFL players.

But detecting CTE in living individuals may be possible in the near future,
according to Dr. Julian Bailes at Evanston’s NorthShore Neurological Institute.

“It is the holy grail of CTE research to be able to identify those who are suffering from the [CTE] syndrome early, while they’re still alive,” Bailes said. “Discovering the effects of prior brain trauma earlier opens up possibilities for symptom treatment and prevention.”

If CTE could be identified in current players, it could have a major impact on their careers. Additionally, it could add fuel the filing of lawsuits against the NFL, which has an estimated value of $35 billion.

Such a medical advance also would likely force the league and its players to renegotiate their bargaining agreement to reflect the recognition of inherent risks of playing the game. Players would be able to have regular brain scans allowing them to formulate a benchmark that could help determine the actual damage their brain is sustaining.

Likewise, the league likely would take increased precautionary measures for concussions such as stricter tackling rules and potentially even widening the playing field. That would increase players’ room to run and possibly decrease the intensity of impacts, according to ESPN analyst and longtime team executive Bill Polian.

Prevention and symptom treatment would apply not only to professional players, but to children as well. Children as young as 5 years old in Pop Warner leagues are playing tackle football. But current professional players such as Chicago Bears wide receiver Brandon Marshall believe Pop Warner leagues and the NFL already are working to make the sport safer.

“I think the steps the NFL [is] taking now with implementing rules in Pop Warner football, trying to show [children] how to properly tackle and protect themselves is the best thing for us moving forward,” Marshall said. “We do have to make the game safer, and I think the NFL is doing everything in their power to do that, not just on our level, but starting at the young age of 6 years old.”

Experts such as Chris Nowinski, former professional wrestler and co-founder of the Sports Legacy Institute, disagree. He argues the age requirement should be changed to reduce the likelihood of concussions in children.

“There probably should be a higher age to play contact football,” Nowinski said. “Certainly not 5 [years old], but maybe stretch it to 14. There’s a lot of logic to that because that’s when you start having access to athletic trainers. You have to set limits to exposure.”

Lawmakers have taken notice of the concussion problem and its relation to children. In Texas, the legislature passed a bill in 2011 requiring coaches and trainers in public schools to complete two hours of training in identifying concussions. The bill also requires that a player who exhibits concussion symptoms during a game must be examined and cleared by a physician before getting back onto the field.

Mike Harrison, head athletic trainer at Allen High School in Allen, Texas, believes the bill affects the likelihood of future lawsuits involving concussions with high school athletes.

“If you follow protocol and what’s represented by state law, I think you’ve done everything possible to decrease the possibility of liability and lawsuit there,” Harrison said. “I think that’s one thing that we do, and we’re fortunate to stay underneath the state law.”

Todd Kuska, head football coach St. Rita of Cascia High School in Chicago, believes the root of the concussion crisis begins with education, particularly in teaching young football players how to properly tackle. If those skills are taught, he believes it will reduce the risk of injuries and decrease the amount of lawsuits filed.

Professional players, he said, is a different story. “I don’t know what’s going to happen with those [NFL] lawsuits,” Kuska said.

The NFL has identified concussion prevention as important and continues to make changes to protect player safety. But the inherently violent nature of the game isn’t likely to change any time soon, experts say, and players are still motivated to hit as hard as possible.

“Obviously, things are different when you get to the NFL [with the] amounts of blows to the head…Those athletes are some of the strongest people in the world, and that causes more problems for them,” coach Kuska said. “Guys aren’t admitting they have a concussion because in the NFL, it’s their paycheck. It’s their job.”

Under Armour looking to bring the “Baddest Brand” overseas

Scott Kitun/The Medillian

Scott Kitun/The Medillian

Under Armour, Inc. long-term growth potential is substantial as the mainly North American brand eyes competing against Nike, Inc. for its global share.

As one of the major sports business success stories in recent years, the self-proclaimed “Baddest brand on the planet” is no longer just a newcomer to the sports apparel market.

In the company’s first year, it generated around $17,000 in revenue. Fast-forward to the end of fiscal 2012, and Under Armour has grown to more than $2 billion in revenue.

While playing football at University of Maryland, Kevin Plank set out to build a company that could produce athletic equipment that could impact the athlete’s performance.

In 1996, Plank founded the Baltimore-based company in the basement of his grandmother’s house.

“It started with a simple plan to make a superior T-shirt. A shirt that worked with your body to regulate temperature and enhance performance,” the company says on its website.

Its first big break occurred in 1999, when Warner Brothers Entertainment Inc. contacted Under Armour to outfit its upcoming Oliver Stone movie, “Any Given Sunday”, a football movie staring Al Pacino and Jamie Foxx.

The following year, the now defunct XFL football league made Under Armour its official uniform provider.

Originally designed for football, Under Armour is now engineered for all types of sports from golf to surfing. The company also sells an assortment of everyday apparel such as pants, jackets, and headwear – it even began designing tactical gear for the military.

The technology behind Under Armour’s diverse product assortment for men, women and youth is complex, but the program for reaping the benefits is simple, wear HeatGear when it’s hot, ColdGear when it’s cold.

The company’s website claims “Under Armour is the originator of performance apparel – gear engineered to keep athletes cool, dry and light throughout the course of a game, practice, or workout.”

Electrifying marketing campaigns, such as “Protect This House” and revolutionary athletic equipment have established Under Armour as a highly desired brand within the sports apparel market.

“I used to consider myself a Nike guy, but now, I wear almost exclusively Under Armour,” Chicago resident and Under Armour customer Eddie Milas said. “Their gear is unmatched.”

Scott Kitun/The Medillian

Scott Kitun/The Medillian

In 2012, net revenues increased 25 percent to $1.84 billion, or $1.31 diluted earnings per share, compared with $1.473 billion, or 92 cents per diluted share, in the prior year.

Increased revenues were sparked mostly by the performance of the Charged Cotton and Storm platforms, which contributed to apparel net revenues of $1.39 billion, a 23 percent rise from $1.12 billion in the prior year.

An additional boost to the bottom line was the debut of UA Spine running shoes, which spawned a 32 percent increase in footwear net revenue from $182 million a year ago to $239 million in 2012.

“We closed 2012 strongly, delivering net revenue growth of at least 20% for the eleventh consecutive quarter in the fourth quarter,” Plank said in a conference call.

Underscoring the apparel-maker’s ambitions, the company also recently said that it intends to turn its headquarters into one of the “top campuses” in the United States, and maybe even the world. In 2011, it invested $60.5 million in a 400,000 square-foot expansion to its campus, which will feature a 25,000 square-foot Under Armour store.

In many ways, the Under Armour story is akin to the early days of the Beaverton, Oregon-based apparel giant Nike.

Like Nike, Under Armour has a roster of high profile athletes across every sports platform, including multiple all-stars players such as, the NFL’s Tom Brady and Ray Lewis, baseball’s Ryan Howard, and rookie sensation Bryce Harper.

In fact, Under Armour’s chief competition when it comes to professional and collegiate equipment licensing is Nike.

The fast-growing company designed the uniforms worn by the 2010 BSC National Champion Auburn Tigers – they also design the uniforms for “Chicago’s Big Ten team”, the Northwestern Wildcats.

While Nike is the most direct competition to Under Armour’s growth, there are other capable competitors on its radar. Companies such as, Lululemon, Respect Your Universe [known as RYU] and Joe’s Jeans have emerged as significant road blocks to Under Armour’s goal of controlling the “athlete-engineered” apparel market.

The Vancouver-based Lululemon Athletica Inc. established itself by marketing to women who love yoga. By targeting these women, it was able to engineer designs and fabrics to fit the specific audience. As yoga continues to grow in popularity, so does their stock, the company gave guidance increasing its projected fourth quarter revenues from $435 million to $480 million.

Lululemon trades at over $70 per share, with strong investor interests.

RYU Inc., an athletic wear company focused on the mixed martial arts industry, developed by seeking out the athletes that would use their products most. The company founders sought elite athletes who could provide insight into what exactly they would hope for in their ideal martial arts shorts.

While RYU and Joe’s Jeans may not be nearly as dominant, they both maintain market caps of $37.77 million and $72.16 million respectively, compared to Under Armour’s gaudy market cap of $4.94 billion.

Each of the companies offers a unique product and compelling story, but they all share one thing in common – stock market success.

Under Armour, in particular, has performed extraordinarily. The stock has been reacting to increasing margins and strong top and bottom line growth in recent years. Net income, for example, went from just above $38 million in fiscal 2008 to nearly $180 million by fiscal 2012. Revenues during the same period increased from just above $725 million to almost $1.5 billion.

Over the last 5 years, its shares have climbed almost 70 percent and the stock finished up 28 percent in 2012 alone.

According to Plank in a recent press release, the company expects 2013 net revenues to grow more than 20 percent in 2013, ranging between $2.20 billion to $2.22 billion.

Despite its early success, Under Armour is not without hurdles, with a PE ratio of 41.42, compared to Nike’s PE ratio of 24.73, it cannot continue to rely just on its domestic market – 94 percent in North America.

Analysts like Matthew Boss of JP Morgan Chase warn that “a compound annual growth rate of 34% since 2005 is a double-edged sword,” because it can lead to over-cooking the stock’s price.

Last month Boss set the target price for Under Armour at $45 per share.

To justify such a high valuation it must expand globally and the best way to do that is to take market share in the largest global sports market, soccer-related goods.

Under Armour’s strategy to achieve this continued growth is through continued innovation and global expansion.

Company executives expressed, in a recent press release an intense focus on continuing to revolutionize the industry with its product lines, such as Baselayer and footwear.

They also stated a commitment to expanding further into global markets by increasing the number of retail stores abroad and by earning more endorsement contracts with globally recognized franchises.

Nike is currently estimated to own the largest global athletic market share, just edging out Adidas Group.

From 1994 through 1998, Nike introduced itself as a global brand by endorsing six major international soccer players and clubs, such as Manchester United and David Beckham. Now a $13 billion dollar industry, soccer-related equipment is the primary focus for globally expanding Under Armour.

Under Armour went about making its soccer debut, last year when it signed a 5-year contract with Tottenham Hotspurs, currently ranked fourth in the English Premier League. Additionally, it signed Hannover 96, the sixth ranked team in the German Bundesliga, and Deportivo Toluca, ten-time winner of Mexico’s La Liga.

In 2007, the company opened its first retail location at the Westfield Annapolis mall in Annapolis, Md. In the subsequent years, Under Armour specialty stores and factory outlet locations have popped up in 34 states, including its first retail location outside of North America, in Edinburgh, Scotland.

As for continued product innovation, one of the product lines that the company wishes to expand upon is footwear. More specifically, it wishes to challenge Adidas and Nike’s share in the basketball shoe category. By endorsing young NBA stars such as Milwaukee Bucks Brandon Jennings and Charlotte Bobcats Kemba Walker, Under Armour is beginning to carry its following of amateur athletes from the football fields to the basketball courts.

In keeping with its commitment to innovation, the company recently released a new basketball shoe called “UA Charge” that are unlike any basketball shoe ever seen – including ankle braces as part of the shoe’s upper.

While early reviews of the shoe by called the shoe, “Ugly and disappointing”, the shoe contributed to a record fourth quarter, with footwear net revenues of $45 million, a 43% increase from $31 million in the prior year’s period.

Under Armour’s corporate culture is ambitious and aggressive as is evidenced by their rocket-like propulsion to the top of the North American athletic equipment market. However, sustaining its growth requires the company to challenge Nike on the global stage and for that, Under Armour must prove that its advantage is undeniable.

Super Bowl ads reflect gender shift

The Super Bowl, traditionally the focal point of any good man-cave, is no longer just an interest of men. Last year, more than 51 million women tuned in to the event, making it a game changer for the NFL—and advertisers.

According to a recent survey by Advertising Age, 55 percent of American women watched at least one regular season NFL game last season, and women account for 20 percent of all fantasy football participants.

While the NFL has done its job, appealing to the female audience; it is now up to advertisers to deliver those fans to their clients. In order to capitalize on this growing fan base, advertisers must revisit the question, what do women want?

The answer appears to be more family fare.

Since 2004, NFL has been promoting more family-oriented half-time entertainment and fan attractions. It also recently launched a new line of women’s fan gear called, “It’s My Team.”

Some advertisers and their clients have also altered their audience approach by using cozy animals, talking babies. For example, the most popular Super Bowl advertisements as rated by USA Today’s “Ad Meter” include the E*Trade talking babies and the driving monkeys. 

Ads that include cleverness and humor are most appealing, a survey by PHD Worldwide Media, suggests. The survey also found that cute animals were a close second.

But that doesn’t mean advertisers are moving away from the idea that sex sells.

“Especially given the female viewership, advertisers have to be broadly acceptable without being polarizing,” said Tim Calkins, marketing professor at Northwestern University’s Kellogg School of Management. “Of course there are exceptions like that depend on being polarizing as part of their marketing strategy.”

Each year, companies such as Axe and rely on beautiful women to carry their campaigns, and this year will be no different. Mercedes Benz has partnered with model Kate Upton for a commercial that is sure to be a topic of discussion.

In the ad, the model is taunting a football team washing new Mercedes Benz C-Class in revealing attire for the entire 90 seconds of air-time.

 Upton/Benz screen grab“With fewer sex appeal ads running, it makes companies like separate themselves. It makes their sex-driven ads standout,” Calkins said. 

In general, “Marketers are very cautious about what they run,” Calkins said. The Super Bowl is almost as synonymous with flashy advertising as it is football. And, like the NFL, advertisers are quick to adapt to a changing audience.

More than half of all women polled in the PHD survey reported that Super Bowl advertisements using sex appeal equally targeted both genders. Seventy-four percent of women aged 18 to 34 said they liked the sexy images in the previous year’s Super Bowl advertisements, compared with 84 percent of men in the same age range. 

“Today women are increasingly owning their sexuality for themselves and thus women, particularly younger women, have little problem seeing empowering female sex appeal used in advertising,” said Emnos consultant Leah Wawrzyniak.

“Still, I would challenge advertisers to find a way to embrace female sexuality without the woman being a mindless servant or the man displayed as weak.”

Calkins said the bottom line is that “savvy marketers test everything.”

He referred to an ad that fans won’t see during this year’s Super Bowl.

“A testing process that just prevented Coca-Cola Co. from running a Super Bowl advertisement involving camels that has drawn a lot of criticism,” he said.

As for the Mercedes Benz ad, “You can safely assume it tested well in the marketplace prior to the Super Bowl,” Calkins said.

Most advertisers agree that nothing compares with the reach provided by the Super Bowl, which offers a rare opportunity to enter the household of more than 100 million viewers. For that reason, Super Bowl advertisers strive to create advertisements that are both memorable and relatable for a mass audience.

“As an advertiser, the best Super Bowl ad is the one that can broadly resonate with the most viewers,” he said.