Golden goals

Nike trounces Adidas to clinch World Cup title

World Cup – Russia Press Conference
Adidas ball’s up. Source: Reuters

Forget the soccer, unruly fans and Vladimir Putin’s PR offensive. The real battle at this summer’s World Cup soccer tournament in Russia has been among the sponsors. Who ever heard of Mengniu for example (it’s a Chinese dairy firm, apparently), and is it liberating or horrifying to find out that McDonald’s now delivers?

But it is an off-the-pitch tussle that has attracted most attention. And it’s as crushing for Germany as losing on penalties in the World Cup final. The German sportswear firm Adidas, an official sponsor of the tournament, has been trounced by its archrival Nike, which has not paid organizer FIFA a penny.

Adidas started the tournament as the sponsor of 12 national teams, two more than its American rival. But it ran into trouble in the early stages, with big hitters Germany, Spain and Argentina all sent packing early on. Nike, however, has the trophy in the bag: it sponsors finalist France as well as semi-finalists England and Croatia. Adidas’ hopes died with Belgium’s semi-final exit, meaning it’s only appearance in the final will come on pitchside billboards.

Nike is pleased. “Thanks to the good performance of our teams, the jerseys are selling phenomenally,” European boss Bert Hoyt said. He added that some teams’ jerseys had almost sold out. Adidas, meanwhile, has seen its advertising momentum stall.

Game on

The two brands have long been fighting for supremacy on the pitch. Adidas has been backing the German national team since the 1950s, for example, and Nike got involved in the game in the 1970s. Yet soccer is not the most important market for sneaker manufacturers. Sales to runners, fitness enthusiasts and lifestylers are much higher. But hardly anyone is interested in runners. Soccer marketing, however, affects the entire business.

“Soccer has a special impact on the brand and has a huge impact on our image,” Adidas boss Kasper Rorsted recently told Handelsblatt. This is why a disproportionate amount of money goes into soccer marketing. Both companies invest tens of millions each year in clubs such as Real Madrid and Bayern Munich (Adidas) or FC Barcelona and Chelsea (Nike), as well as individual stars and national teams.

“Adidas and Nike dominate the soccer business,” said Kim Roether, current head of Intersport, the leading sports retail chain in Germany. Smaller players such as Puma, Lotto and Umbro hardly get a look in, he added.

Although Adidas leads the way in cleat sales, Nike is much bigger than Adidas overall. In the latest financial year, the Americans generated sales of around €31 billion, almost €10 billion more than Adidas. Nearly €1.9 billion of this was from soccer-related goods. It made profits of €1.7 billion.

Both firms dedicate about 12 percent of revenue levels to marketing, and the World Cup social media has been key to their plans. Adidas has even set up a news center in Russia, in addition to running TV commercials. Nike, on the other hand, has foregone a TV campaign this year, which has turned out to be a clever move economically.

Level playing field?

When it comes to global soccer domination, however, Nike is at a permanent disadvantage. World governing body FIFA and its European counterpart UEFA are firmly in the hands of Adidas, which has long-term deals with both. It supplies the balls and clothing for officials, and, critically, is the only sportswear manufacturer allowed to advertise at tournaments.

But the knock-on effect of its teams’ success at the World Cup will boost Nike. “The more successful our stars and teams are at the World Cup, the more young people will emulate them — and hopefully buy our products in return,” Mr. Hoyt said.

With all the semi-finalists coming from Europe, he is targeting that market in particular. Business in the region has recently been good. In the fourth quarter of Nike’s fiscal year, which ended May 31, the company’s sales in Europe, Africa and the Middle East increased by 10 percent.

Such figures mean Adidas may well have more to worry about than Germany’s early departure from the World Cup.

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

We hope you enjoyed this article

Make sure to sign up for our free newsletters too!