With the 2014 FIFA World Cup only 27 days away, Bloomberg Businessweek discusses the battle emerging between sports apparel giants Nike and Adidas. The article gives an overview about how the strategies of both companies are leveraging the World Cup to increase sales of their footwear and jerseys. Adidas uses its long tradition in football and the advantage of being the official sponsor of the FIFA World Cup while Nike on the other hand sponsors teams and players competing in this summer’s tournament.
“Since 1970, Adidas has sponsored FIFA. Last year it extended that agreement to 2030; according to Rohlmann, this costs the company almost $70 million for every four-year cycle. For slightly less than that, Adidas also sponsors UEFA, which runs international soccer in Europe. The sport makes up a larger part of overall revenue for Adidas than it does for Nike, and Adidas’s sales jump in “event years,” as in 2010, when the last FIFA World Cup was played in South Africa.
Almost $400 million are spent on team sponsorships
On June 12 in Sao Paulo, Brazil will play Croatia in the first game of this year’s World Cup. The corporate spend on team sponsorships alone, according to Rohlmann, will total almost $400 million. Nike will sponsor 10 national teams, more than it ever has before — and one more than Adidas. Nike has Brazil, Portugal and Ronaldo. Adidas has Spain, Germany and Lionel Messi, the Argentine who has won the Ballon d’Or four times. As in every World Cup since 1970, the ball on the field will be Adidas’s.
For most of the planet, the tournament will be a work-stopping big deal. Adidas, in particular, is counting on a huge summer. Last year was a disappointing year overall for the company, so Hainer has been emphasizing an old promise to produce 2 billion euros ($2.7 billion) in soccer revenue in 2014. In May, Adidas reported first-quarter soccer growth of 27 percent, and the company projects confidence that it will meet its target. Yet even if it does, it has another problem. The World Cup is no longer the only global tournament.
Adidas has a long history as sponsor of the World Cup
As recently as a decade ago, if you lived in Germany, you watched the Bundesliga and the World Cup. If you lived in the U.K., you watched the Premier League and the World Cup. All the world’s best players used to appear on the world’s TV screens only once every four years; paying to own international contests made sense.
Soccer fans are “very precious about history,” says Andrew Walsh, a director at Repucom, a global sports marketing research group. “Adidas has been a part of that, and that carries some weight.”
Read the Full Article from Bloomberg Businessweek here: Nike Cleats Face Adidas Jerseys for World Cup