A lawsuit filed by Skechers USA Inc (NYSE: SKX) against adidas AG (ADR) (OTC: ADDYY) that accuses the German footwear maker of
blocking Skechers' entry into the basketball shoe market comes directly on the heels of the U.S. Appeals Court upholding a ruling
that blocks Skechers from selling a tennis shoe that Adidas said copied its
design.
The latest litigation between the two shoemakers piggybacks on accusations that Adidas was involved with payments to prospective college
basketball players in return for signing with Adidas-sponsored schools and eventual endorsement deals.
Skechers, a brand more associated with moms
running errands than basketball, said in its lawsuit that Adidas' alleged corruption was a barrier to the basketball shoe
market. Adidas "effectively blocked Skechers and other companies" and “unfairly bolstered the perception of the brand," according
to Skechers.
The basketball
shoe market is stagnant, and it would take a sizable investment to enter at any level. Just ask Under Armour, which has made a
significant attempt to enter the sector and has made little headway.
Adidas said in a statement that Skechers' lawsuit, filed May 10 in U.S. District Court, is "frivolous and nonsensical and should
be summarily dismissed,"
according to The New York Times.
A Skechers spokesperson did not respond to phone and email messages seeking comment for this story.
'A Publicity Stunt'
Sports attorney Darren Heitner told Benzinga the lawsuit is a PR ploy.
“The timing is quite suspect coming after the
Stan Smith injunction," he said. "This seems much more of a publicity stunt than a real act to receive relief by way of
litigation. The legal budget has been repurposed to serve as a PR budget, and perhaps it was deemed a cost-effective way to create
publicity — and it did."
Skechers will have a hard time proving a link between the reported payments to student athletes and losses to the Skechers
brand, Heitner said.
“By even putting Skechers in the same sentence in Adidas, a highly successful brand, Skechers continues to maintain
relevance and effectively deflected the court ruling in the Stan Smith case. From a PR standpoint, well done, but I don’t see
this lawsuit holding up."
The Collegiate Landscape
Skechers has garnered little interest in the Amateur Athletic Union basketball landscape.
Under Armour entered the AAU market in
conjunction with its push into the basketball footwear market, knowing that grassroots penetration is needed to make an impact in
the sport.
Asics Corp (ADR) (OTC: ASCCY) found some traction in the past in basketball, a fiercely competitive
environment that depends on the next generation of trendsetters and superstars in the sport.
The same can't be said for Skechers, a brand known for endorsing athletes after they retire, such as Tony
Romo, David
Ortiz and Mariano
Rivera.
A footwear industry executive with more than 30 years of experience told Benzinga that Skechers' legal move is more about ego
and CEO Robert Greenberg's lifelong ambition to compete in performance footwear.
"Greenberg is very shrewd and a very tough business guy, but there is no case for blocking them from entering the basketball
world. Skechers has never been in the basketball world in the first place," said the executive, who asked not to be identified.
While the basketball market would represent a small piece of the company's business, it would be a validating move for the brand
to enter the performance shoe market, the executive said.
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