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Nike favoured to beat soccer juggernaut Adidas at World Cup
[SAN FRANCISCO] In a World Cup brimming with upsets, Nike Inc looks on track to defeat soccer juggernaut and archrival Adidas AG in the closely watched jersey sponsorship battle.
The Nike swoosh decorates the outfits of Brazil, France and England, the sides in the quarter-finals most favored by betting websites to win the World Cup, plus Croatia. Top German sports brand Adidas has Belgium, Russia and Sweden in the quarter-finals, with the group of eight rounded out by Uruguay, sponsored by Puma SE.
The combined accomplishments of Nike-sponsored teams in Russia mark a major success for the US sports apparel maker as it pushes to increase global soccer-related sales that reached more than US$2 billion in fiscal 2018.
"While Adidas dominates the European leagues and the US professional league, certainly any market share that Nike can pick up in a nontraditional US sport can only bode well for the stock price and brand," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.
Sports brands typically sell the bulk of their fan merchandise ahead of the World Cup, but a team's success on the field can generate extra demand for gear emblazoned with its emblems and colors, especially if its progress is unexpected.
Nike kitted out more teams than Adidas for the first time in Brazil in 2014. Adidas fought back this year, sponsoring 12 of the 32 participating teams, including strong early contenders Germany and Spain, along with host Russia. Nike supplied shirts for 10 countries this year.
The tournament took a disastrous turn for Adidas last Wednesday, with the unexpected elimination of 2014 champion Germany. Shares of Adidas, Germany's team sponsor, fell 2.7 per cent in the following session.
In 2014, Germany accounted for a third of Adidas' roughly 9 million team jersey sales, Wedbush analyst Christopher Svezia wrote in a recent client note, with an incremental 10 per cent of those sales resulting from Germany's tournament victory.
Over the weekend, high-profile Adidas-sponsored teams Argentina and Spain were eliminated. Likewise, Mexico lost to Nike-sponsored Brazil on Monday.
Heading into this year's World Cup, Adidas downplayed the sporting event's potential effect on sales, pointing to Russia's tepid economy. But the World Cup remains a major marketing opportunity for Adidas, which is one of seven Fifa partners and the supplier of the World Cup match ball since 1970.
As well as team jerseys, sponsorship of top individual players is critical for the promotion of soccer shoes. Ahead of the World Cup, Nike expected 60 per cent of players heading to Russia to use its footwear.
Since the start of the World Cup on June 14, Nike's stock is up almost 3 per cent, helped mostly by a strong quarterly report and sales outlook last Thursday. Adidas has lost about 5 per cent.