Adidas 2 Nike 0 in World Cup final but competition goes on

Adidas are sponsoring both teams in Sunday’s World Cup final in Brazil

 Photo: Bloomberg

Photo: Bloomberg

Thu, Jul 10, 2014, 13:27

With Adidas sponsoring both teams in Sunday’s 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 a year, sharing more than 80 per cent of the market for many products, but Nike has been threatening Adidas’ leadership, including in its home territory of western Europe.

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, 10 out of the 32 teams including the hosts, 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 semis.

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

It is not clear how long that will last.

Adidas expects record soccer sales of $2.7 billion in 2014, topping the $2.3 billion Nike reported for its financial year to end May. While the periods are not directly comparable, Nike has suggested the U.S. firm could exceed the Adidas figure for 2014 in its fiscal 2014/15.

Despite the fact Nike teams did not make the final, the Portland-based firm which has only been a serious player in soccer since the World Cup was held in the United States in 1994, 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 in the current fiscal year of the 21 percent rise in soccer sales the company saw in 2013/14.

“The United States offers huge potential in particular, enthusiasm for football is there in any case. And in China there are tremendous growth opportunities,” Parker told Germany’s Handelsblatt daily in an interview published on Wednesday.

The determination of Adidas to stay ahead in the sport 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 stock was down 0.8 per cent by 1106 GMT.

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

Adidas, whose sponsorship of each World Cup is estimated to cost about $100 million, predicted a “modest increase” in sales and marketing costs in 2014 due to the competition, without giving figures. Nike said total marketing expenses rose 36 per cent to $876 million in the quarter to end May, mainly due to expenditure related to the World Cup, with an executive predicting a rise of 30 per cent in the current quarter too.

Reuters