originally appeared in TheStreet.com July 7, 2014
The World Cup semifinals are now set and in no surprise, Nike will be facing Adidas for world domination. Sort of.
Both matches feature the two companies going head to head for a spot in the finals on July 13. Nike will be on the field with Brazil when the host country takes on an Adidas kitted Germany. The other side of the bracket features Argentina versus the Swoosh-styled team from the Netherlands.
The two sports apparel companies account for $45 billion dollars and nearly 30 percent of the market share of the sporting world. When you take a closer look at the soccer market, that number shoots up to a combined 70 percent.
Adidas won’t report on its earnings until August, a month after the tournament ends but reports have pegged the German company’s investment in the tournament at $70 million dollars. Nike reported its annual numbers right in the middle of the tournament. Total revenue had increased 11 percent to $7.4 billion dollars for the fiscal year. It’s fastest growing division, however, was soccer which rose 18 percent to $2.3 billion, from $1.9 billion in 2013.
In a conference call to analysts reported on cnn.com, Nike brand president Trevor Edwards said “Our football (soccer) business has never been stronger.”
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The approach taken by both companies differs though. Adidas is the official sponsor of FIFA’s World Cup, with its name all over the tournament and the official game ball which they have provided since 1970 and will through the 2030 tournament. While Nike has no official sanctioning from soccer’s ruling body, they have an edge in the number of players and teams they have sponsorship deals with.
On the opposite side of the spectrum is Lotto Sport Italia. The small firm rode the backs of Costa Rica into the quarterfinals and while behemoths like Nike and Adidas have dominated the marketing of the World Cup and keep blank uniforms on hand in case a previously little known player puts his name on the map during the cup, Lotto had trouble keeping up with demand.
“We are now having trouble organizing some fast production to let everyone have this shirt that will become a memory of a historic achievement,” Lotto President Andrea Tomat told Reuters in an interview.
Of the top 10 players in the world, Nike suits up six of them while Adidas has just three. (Puma rounds out the category with French star Thierry Henry.) Adidas’ advantage though, lies in the fact that they have arguably the world’s biggest star, Argentinean forward Lionel Messi.
Aside from the back breaking left-footed goal he delivered against Iran, Messi’s mark on this year’s tournament has been typified by the opportunities his mere presence on the pitch can create. For Adidas, Messi is more than just a presence.
A tour of Adidas headquarters in Herzogenaurach, Germany illustrates that fact. The only people with more of a profile are Adolph “Adi” Dassler, the shoe cobbler who founded of the company in the 1920s, and Dassler’s son Horst, who pioneered the marriage of sports and marketing when he began getting teams to promote his product by giving it away for free to teams in the 1950s.
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In a perfect world, Adidas would most like to see a Germany-Argentina final match and while it would clearly favor a win by Germany, the sight of Messi hoisting the World Cup trophy while wearing his Adidas emblazoned uniform and the resulting sales would do more for Adidas than any other result. Opportunities for Adidas to be at the center of the sports universe are few and far between, despite their status just behind Nike. The Portland, Oregon company can absorb the loss on the field but can quickly turn around and refocus its efforts on basketball, football and baseball where it has a stronghold on the market that simply Adidas doesn’t.
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