Soccer stakes rise as Nike presses on Adidas' turf

Fri Jun 8, 2012 4:56pm EDT
 
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By Nivedita Bhattacharjee

(Reuters) - When Germany faces Portugal at the Euro 2012 soccer championship on Saturday, another battle is playing out between sponsors Nike Inc (NKE.N: Quote) and Adidas AG (ADSGn.DE: Quote) for the top spot in selling gear for the world's most popular sport.

The Portuguese team's Nike-sponsored red jerseys, set against the white Adidas jerseys worn by Germany, underscore how much headway Nike has made against Adidas, once the dominant brand for all things soccer.

Adidas has been associated with soccer (called football outside North America) since the German company was founded in 1949. Nike, whose roots date back to the 1960s, did not enter the soccer business until 1994. Two years later, it scored an impressive goal when it signed Brazil's national team to a sponsorship deal.

"The Brazil deal gave presence and profile. It was also a signal of strategic intent," said Simon Chadwick, professor of sports business strategy and marketing at Coventry University Business School in Coventry, England.

Since then, the Beaverton, Oregon-based Nike has spent heavily on marketing. It also sponsors popular teams and players, including Portugal forward Cristiano Ronaldo. The most recent sponsorship battles between Adidas and Nike were fought over the German and French national soccer teams.

Adidas managed to keep its home team, but France was won over by the money Nike offered, which was reportedly north of 300 million euros ($374.01 million). By comparison, Nike's deal with Brazil in 1996 was worth 100 million pounds.

As the top sportswear brand in the world, Nike has been investing in soccer to increase its international presence. Soccer has about 2 billion fans worldwide, followed by basketball with 1.2 billion, according to sports research consultancies REPUCOM and SPORT+MARKT.

Companies sponsor popular teams and players to market their products in the hope of influencing fans. Sporting events like the UEFA Euro 2012 can boost sales of soccer merchandise by about 5 percent, according to Morningstar analyst Paul Swinand.   Continued...