Analysis: Adidas cannot lose to Nike in Cup final

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br messi (43188439)

Emma Thomasson Berlin

With Adidas sponsoring both teams in Sunday’s soccer World Cup final, the German sportswear brand has declared victory over US rival Nike in the latest round of its battle to remain the biggest global soccer brand.

The two companies dominate a soccer kit industry worth more than $5 billion (R54bn) a year, sharing more than 80 percent of the market for many products, but Nike has been threatening Adidas’s leadership, including in western Europe, its home territory.

While Adidas has supplied the match ball for the World Cup since 1970, Nike kitted out more teams at the competition in Brazil for the first time. Ten of the 32 teams, including the hosts, wore Nike kit, compared with nine for Adidas. However, the three stripes of Adidas will dominate the pitch on Sunday, on both teams’ jerseys for the first time since 1990 and on many of their star players’ boots, as well as the match officials’ clothing and the ball.

“Adidas will be the most visible brand by far in the World Cup final,” said chief executive Herbert Hainer, who had predicted a Germany-Argentina final well before the two teams beat Nike-backed Brazil and the Netherlands in the semi-finals.

“We are once again underlining our position as the world’s leading football brand. Adidas is the clear number one in football globally,” he added.

br BRA-GER_0708_11 (43188440) Germany's Andre Schuerrle Reuters

It is not clear how long that will last. Adidas expects record soccer sales of $2.7bn this year, topping the $2.3bn Nike posted for its financial year to May. While the periods are not directly comparable, Nike has suggested the US firm could exceed the Adidas figure for this year in its fiscal 2014/15.

Despite the fact Nike teams did not make the final, the US-based firm sees no sign of growth in soccer slowing down.

Chief executive Mark Parker says Nike has already overtaken Adidas in boot sales in most countries and predicts a repeat this year of the 21 percent increase in soccer sales the company saw in 2013/14.

“The US offers huge potential in particular, enthusiasm for football is there. And in China there are tremendous growth opportunities,” Parker said.

The determination of Adidas to stay ahead is set to be underlined by a pricey long-term kit supply deal it is expected to seal with English soccer club Manchester United, replacing Nike.

Adidas shares, hit in recent months by exposure to Russia and other volatile emerging markets, fell to a 16-month low on Wednesday on concerns around the price of the Manchester United deal.

“The possible deal with Manchester United would lead to rising marketing costs and the profit dynamism of Adidas is also weak,” Warburg Research analyst Joerg Frey said.

Adidas, whose sponsorship of each World Cup is estimated to cost about $100 million, foresaw a “modest increase” in sales and marketing costs this year due to the competition. Nike said total marketing expenses rose 36 percent to $876m in the quarter to May, mainly due to expenditure related to the World Cup, with an executive predicting a rise of 30 percent in the current quarter too.

The German firm, founded by shoemaker Adi Dassler in 1949, admits it faces a “head-to-head” race with Nike in the boot business, but has predicted it would sell 2 million pairs of the special shoes it designed for the World Cup with striking black and white patterns. Nike has not given a forecast for World Cup boot or shirt sales.

According to sports app theScore, players wearing the Adidas boots scored 78 of the 166 World Cup goals so far, not counting penalties. Nike players scored 73 and other brands 15.

Adidas players dominate the list of top World Cup scorers, including Colombia’s James Rodriguez, Argentina’s Lionel Messi and Thomas Mueller and Andre Schuerrle of Germany.

Brazil’s Neymar, who Nike provided with golden boots, was also a big scorer.

Adidas and Nike have also fought a fierce battle on social media, with Adidas setting up a “newsroom” in Rio to generate real-time content after Nike dominated unofficial marketing at the 2010 event. – Reuters


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