The world of sport is rapidly changing as a result of the digital frontier. A few weeks ago, Under Armour, a relatively new brand in basketball and a significant player in the athletic training business, invested $150 Million to buy an app company, Map My Fitness. Map My Fitness is a digital fitness platform that runs on both the iOS and Android platforms with over 20 million users worldwide and also includes its flagship brands, Map My Ride and Map My Run.
This acquisition is quite significant for a few reasons. The first is the purchase price represents nearly 10% of Under Armour’s annual revenues, but several of the app company’s products are free and would offer no substantial immediate revenue. It almost seems too expensive for the value that it delivers. Secondly, the traditional model for growth in sporting goods business has been through expensive sponsorship and endorsement deals. Under Armour has yet to find an elite signature athlete in any of its big sports — soccer, basketball or football. Its biggest to date are Stephen Curry, Cam Newton and Auburn University, quite popular as of late after the miraculous Alabama upset over the weekend. However, rather than saving this money to attempt to sign one of the elite NBA prospects joining the league next season (Julius Randle, Jabari Parker, Andrew Wiggins, etc.) or to throw crazy money at Kevin Durant who will be a free agent soon, Under Armour opted to invest in the digital world. Third, it places Under Armour second in the digital sport world behind NIKE with its NIKE+ running and Fuelband communities, but ahead of adidas and Puma. I think that this is the real reason that Under Armour spent the money.
By the way, if you know the founders of MapMyFitness, you might want to call and ask for a loan or even their hand in marriage. They got a sale price of $150M for a company that is only 6 years old. OMG!