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Under Armour bets on bobsled to fuel global growth

BobsleddingUnder Armour Inc.FinanceBudgets and Budgeting

Facing a cupboard bare of medals and reeling from scandals, the once-proud U.S. bobsled and skeleton program was at rock bottom the year of the 2006 Winter Olympics.

The helping hands that reached out to restore stability and glory came from an unusual place, one that knows heat and humidity better than snow and ice: Baltimore.

Under Armour, the sports apparel company based in Baltimore, provided sponsorship dollars and put its logo on athletes' clothing and equipment in a deal that lasts through the 2014 Winter Games, part of the company's effort to expand beyond its base in traditional U.S. sports such as football and baseball and into overseas and niche markets.

Two Baltimore-area businessmen with marketing and deal-making savvy joined the revamped board of the U.S. Bobsled and Skeleton Federation to entice financial backers to help double the program's annual budget. As a result, the team is back on the podium, with Olympic medals and world championship laurels to mark its resurgence and even eyeing the use of the Ravens' logo on one of its bullet-shaped sleds.

"Baltimore — it's not the first place you'd think of when you think bobsled — but the pieces have fallen together in just the right way," said Don Schaaf, one of the new board members and an Annapolis resident who owns a marketing firm that bears his name.

While Under Armour is no stranger to college sports — its logo is stitched on football jerseys from Maryland to Hawaii — its professional and Olympic emphasis mostly has been on individuals.

It has a multiyear deal with swimmer Michael Phelps that experts estimate is worth more than $5 million. The best-known model for Under Armour winter wear is Olympic gold-medal skier Lindsey Vonn, who captured her fourth women's World Cup overall title this month.

While bobsled and skeleton — the face-first sliding sport that became an Olympic event in 2002 — might be curiosities in this country, they offer entry to a bigger market, said Tori Hanna, Under Armour's director of global sports marketing.

"For us, it was taking a look at bobsled and the international possibilities ... as we're becoming more of a global brand," she said. Bobsled "may not be mainstream and important in the U.S., but they're mainstream and important in Europe and other parts of the world."

It's a growth move for Under Armour. The company, with annual revenue last year of $1.47 billion, is taking aim at what was a $3.3 billion market in the United States for sales of snow sports apparel and equipment in the 2010-2011 winter season, according to the trade group, SnowSports Industries America.

Since jumping aboard U.S. bobsled and skeleton, Under Armor has added the Canadian snowboard team, the Polish bobsled team and the U.S. speed-skating squad. Hanna said other announcements are coming.

Under Armor's support and success in the 2010 Olympics helped the U.S. bobsled and skeleton program add to its stable of sponsors. It's received support from BMW's domestic unit, Kampgrounds of America and the National Guard, helping increase its annual budget to $2 million. By comparison, U.S. Figure Skating has an annual budget of about $12 million.

Training and transportation costs eat up most of the bobsled federation's budget.

Attracting and keeping sponsors is difficult. The federation learned that the hard way in 2006, when a doping scandal and allegations of sexual improprieties involving a coach and women athletes grabbed headlines. The U.S. Olympic Committee intervened to install a caretaker until a new leadership team could be installed.

"The USOC recruited a board with no history, and we didn't look back," said Ted Offit, the business attorney from Baltimore who agreed to serve as a director and who recruited Schaaf. "We needed transparency and trust, and that led to a turnaround."

The key to financial legitimacy was getting a well-known company to sign on as a top-tier sponsor willing to spend $100,000 to $500,000 a year on a sport that doesn't command prime-time TV or have an adoring U.S. fan base.

Darrin Steele, a former bobsledder who was tapped to lead the new program, went to an outdoor retail trade show to find a partner and made a pitch to Under Armour. Intrigued, Under Armour signed on in 2008 to provide uniforms — parkas, shirts, pants and shoes — and training gear as well as financial support for the amateur athletes.

The company and federation would not disclose the dollar value of Under Armor's sponsorship commitment.

"They are a huge piece of our success," Steele said. "They're just not cutting us a check; they give us their expertise on fabric technology and they make us look professional, which helps us attract more business."

Under Armour designers first took aim at the federation's uniforms, which hadn't been updated in more than a decade and looked third-rate compared with those of Olympic powerhouses Germany and Russia.

And when Speedo got out of the speed suit business in 2010, Under Armour took on the task of building a better speed suit.

"We felt we could come in and stake a claim for innovation," said Hanna. "We're a company about making athletes better, and this was a perfect platform to do it on. The high visibility of the Olympic Games and the high visibility of bobsled in the Olympic Games, we felt like it was a good investment and a good partnership."

At Under Armour's "innovation lab" staff members designed and tested fabrics for speed suits, working within International Olympic Committee standards. Samples were put through a wind tunnel to measure aerodynamic properties. Athletes weighed in with their likes and dislikes.

"The fastest material in the world, it turns out, isn't very breathable and doesn't stretch, so it's not much of a help to us," said Steven Holcomb, who, as the best U.S. bobsled driver, has won an Olympic gold medal and four world titles in the past three years.

In the end, they settled on a fabric used in the company's ColdGear line of apparel that was stitched into one-piece garments adorned in stars and stripes — "a Captain America look," Hanna called it.

"They give us a competitive advantage," said Holcomb of the speed suits. "If you get one-hundredth of a second on each of four runs, that's a lot, that can be the winning margin."

Wearing a top-flight brand makes the athletes feel good, too.

"When we won the gold," Holcomb said, "we looked like champions."

And in every picture of that snow-swept moment was the Under Armour logo.

Despite recent success, "it's a tough sell on the best of days," Offit said. "Most people see bobsled as a once-every-four-year occurrence and they don't even know what skeleton is."

Schaaf is working on building a consistent message and a brand that boasts speed, power and a bit of danger. And he is making lists of potential sponsors that could benefit from a partnership with the federation — perhaps one with a product made in America or a company that's expanding to Europe.

"We're under a lot of pressure," Schaaf said. "The athletes have done the heavy lifting, and the board is on a mission to pass them and give them the tools they deserve. We want to double the budget and get long-term deals so that there's no panic. We want sponsors who get the passion of this sport."

Such as, for example, the Ravens and their owner, Steve Bisciotti.

Coach John Harbaugh and offensive coordinator Cam Cameron flew to Utah before the 2010 Olympics for a bobsled ride with Holcomb and to give the team a pep talk. The Ravens, in turn, invited the bobsled team to tour The Castle, the Ravens' training facility.

"We'd love a Ravens sled," Schaaf said. "Black and purple."

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