Sports sponsoring

Adidas, Nike and Puma vie for top soccer clubs

soccer
There's lots of money kicking around in sponsorship deals. Source: DPA, Fotolia, PR [M]

“Whoever has will be given more.” Those words from Matthew the Apostle sound ever so true in professional football today. The 10 most sought-after clubs in Europe now receive almost three times as much in sponsorship deals from the major sporting goods companies as they did in 2012. Next year, Nike, Adidas and Puma will fork over €633 million ($752 million) to the top clubs to wear their jerseys, shoes and other gear, according to a global study by the sports marketing expert Peter Rohlmann as seen by Handelsblatt.

“The shotgun approach has come to an end,” Mr. Rohlmann said. The major sporting goods brands, he noted, are sponsoring fewer and fewer teams, and the ones they do sponsor are global brands, like Spain’s Real Madrid and FC Barcelona, and England’s Manchester United and Chelsea. Big names like these demand big prices.

Adidas pays Spanish champion Real Madrid about €140 million a year – it’s the world’s most lucrative equipment supplier agreement. Second-ranked FC Barcelona collects about €125 million annually from Nike. By comparison, FC Bayern Munich, Germany’s top-ranked club, receives only €60 million a year, less than half as much as its Spanish rivals.

The world’s top three suppliers, Nike, Adidas and Puma, have changed their approach and are now concentrating on only a few selected teams per country. Adidas currently outfits three teams in the German top-tier league Bundesliga: Bayern Munich, FC Schalke and Hamburg SV. But next season,  Schlalke will be dropped, bringing the number to two, like Puma. The two Bavarian sporting goods companies no longer even have their local clubs under contract, Greuther Fürthand and FC Nürnberg, which are located just a couple kilometers away from each of their headquarters.

The major sporting goods brands are sponsoring fewer and fewer teams.

This is no accident. Soccer fans around the world are no longer as interested in their local clubs and players as they are in teams like Manchester United and Real Madrid, according to Adidas Chief Executive Kasper Rorsted.  So it pays off economically to work only with the top clubs who attract these fans, he said. Adidas partner Bayern Munich, for example, sells more jerseys than all other Bundesliga clubs combined.

Soccer is an important source of income for sports brands. It accounts for around 11 percent of sales at Adidas and Puma, although only about half as much at Nike because the company, with its iconic “Swoosh” logo, is more involved in US sports like basketball. Adidas sees itself as the market leader in the soccer gear business, with sales of just under €2.5 billion, followed by Nike with revenues of around €1.7 billion. Puma is in third place, with sales just under €500 million. Worldwide, soccer clubs annually spend about €7 billion on shoes, jerseys, balls and other gear.

However, it isn’t enough to just sponsor the big clubs, warned Hendrik Fischer, head of the Advant sponsorship agency in Frankfurt. “It doesn’t work without signing up players too” outside of the club deals, he said. But even then, the labels are very selective, focusing on superstars like Lionel Messi, who has a sponsorship deal with Adidas, or Cristiano Ronaldo, who works with Nike. According to Mr. Fischer, soccer players are particularly appealing to sporting goods companies because of the millions of fans they have following them around the world on social media. A hundred and ten million people follow Mr. Ronaldo on Instagram, double the numbers his club Real Madrid attracts on the platform.

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The losers are all the clubs that haven’t joined the ranks of the global elite. “Top clubs aside, most are losing their power and ability to influence new supplier contracts,” said Mr. Rohlmann. Bayer Leverkusen, which regularly competes at the international level, no longer has equipment deals with the major brands. Instead Jako, a medium-sized company from the southwestern German region of Swabia, provides the outfits for Bayer Leverkusen, along with Hannover 96.

Many clubs in the second and third-tier leagues will struggle to find sporting goods firms as sponsors in the future, according to Mr. Rohlmann. And while their players may still be wearing Adidas or Puma jerseys in the future, they’ll be purchased at a local sporting goods store.

Meanwhile, the rich clubs are getting richer. Since only a few contracts with top clubs are expiring in the near future, the top sporting goods brands will be sending even more money their way. Puma Chief Executive Björn Gulden, in particular, might have to reach even deeper into his pockets to keep Puma’s contract with Arsenal, the brand’s most important international club. The contract, which ends in 2019, is worth €33.5 million a year, only half of what London rival Chelsea FC receives from Nike.

Mr. Gulden also wants to keep Borussia Dortmund on board, which he signed until 2020 for a relatively moderate fee of €9 million a year. Despite its current losing streak, Dortmund is still the second-most popular Bundesliga team internationally, after Bayern Munich. And the Norwegian executive is rumored to be close to signing a contract with AC Milan, after Adidas terminated its contract with the Italian club, worth about €20 million a year. Mr. Gulden will probably have to fork over a few million more, given the few prospects he has to sign another top club in the foreseeable future.

Joachim Hofer covers the sports and leisure sectors for Handelsblatt. To contact the author: hofer@handelsblatt.com

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