Soccer Gear

German Team Scores Record Deal with Adidas

adidas-schweinsteiger- dpa-picture alliance
German national team players remain loyal to Adidas.
  • Why it matters

    Why it matters

    Sports manufacturer Adidas had to double the price it was willing to pay to extend its multi-year sponsorship deal with the German national soccer team.

  • Facts

    Facts

    • Adidas has agreed to pay €50 million a year betwen 2018 and 2022 to supply gear to the German national soccer team.
    • The company expects growing interest in the Euro 2016 championships to help boost revenue by as much as 25 percent.
    • Adidas will pay a dividend of €1.60 per share this year, an increase of 10 cents.
  • Audio

    Audio

  • Pdf

In a tight battle with U.S. rival Nike to dominate the global market for soccer gear, sportswear manufacturer Adidas agreed on Monday to double the amount it currently pays to supply the German national soccer team with jerseys, shoes and other products.

The deal, worth €50 million ($56.7 million) per year from 2018 to 2022, is now the biggest national team kit deal, surpassing the €43 million Nike pays the French national team.

The partnership between Adidas and the German football federation, or DFB, is one of the longest and strongest collaborations in the world of soccer. The alliance between the brand with three stripes and the winner of four World Cups goes back to 1954, the year of the “Miracle of Bern,” when an underdog German side beat the powerful Hungarians in the World Cup final.

The victory not only put Germany back on the soccer map; it was also seen as a crucial turning point in efforts to rehabilitate the country in the wake of the war. “We are someone again,” was the popular slogan after the victory.

“Adidas as a global sports equipment firm, and the DFB and its team, contribute greatly to Germany's image in the world.”

Herbert Hainer, CEO, Adidas

The 1954 final was played in a downpour on a heavy pitch. Adidas supplied the German team with football shoes with extra-long cleats, seen as the secret weapon against the Hungarians. And the team’s triumph helped set an unknown manufacturer on the road to world prominence. The two have been together ever since.

“We belong together, because Adidas as a global sports equipment firm, and the DFB and its team, contribute greatly to Germany’s image in the world,” said Herbert Hainer, the Adidas chief executive. As part of the deal, Mr. Hainer promised to return production of the national football jersey to Germany.

Reinhard Grindel, the DFB president, is more than satisfied with the outcome of the negotiations. “We intend to use the money to improve the DFB and German football,” he said, noting that money would be invested at both the top and lower levels.

Soccer gear is a key market for Adidas and one of the few remaining areas where it can still compete successfully with Nike, its powerful rival. This year, Adidas expects revenues of €2.5 billion from soccer gear, or around 10 percent of its overall sales, representing an increase of €300 million over last year. Only sales of jogging and fitness gear are more lucrative for the company.

In recent years, Adidas has allowed many sponsorship deals to lapse to concentrate on a small number of globally significant clubs and football associations.  Only last month, Mr. Hainer announced the end of the company’s relationship with the English club Chelsea. “We are continuing our process of concentration in sports sponsorship,” he said at the time.

The slimmed down roster helped put the company in a stronger position to pay more for the DFB deal — and also pay for the nearly €1 billion ten-year deal it signed with Manchester United.

Adidas expects to sell 1.3 million German national jerseys during the current Euro 2016 tournament, up 300,000 over the tournament four years ago. For the 2014 World Cup, which Germany won, the company sold more than 3 million jerseys – an all-time record.

 

Joachim Hofer covers the high-tech industry and IT sector for Handelsblatt. To contact the author: hofer@handelsblatt.com

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