In 2014 Nike grew soccer sales to 2.4 Billion which rivaled the brand sales in basketball and equaled adidas’ sales in soccer. 2014 just so happens to be the year the World Cup took off like a rocket in North America. I remember sitting in my office across the street from an Irish pub here in Memphis. You could hear cheers and screams up and down the street as the United States was playing an incredible match that captivated the country. At that point Nike benefited greatly from the interest in soccer. Parents were taking their kids to the parks. In Memphis excitement was doubled because the goalie, Tim Howard was a Memphis guy.
Fast forward 4 years and the World Cup is upon us and the 32 teams this time around don’t feature Nike’s darling in the United States. As a matter of fact adidas passed Nike in sponsorships with 12 teams to Nike’s 10. Here is the breakdown via Soccer365:
adidas sponsors the most teams with 12 Germany, Argentina, Spain, Belgium, Colombia, Egypt, Iran, Japan, Mexico, Morocco, Russia, and Sweden.
The swoosh will be worn on Brazil, France, Portugal, England along with Australia, Croatia, Nigeria, Poland, Saudi Arabia, South Korea.
Puma is sponsoring only 2 teams, Uruguay and Switzerland.
New Balance and Umbro also sponsor 2 teams. New Balance will kit out Costa Rica and Panama.
Umbro’s Double Diamond will feature on the jerseys of Peru and Serbia.
Errea – Iceland
Hummel – Denmark
Romai – Senegal
Uhlsport – Tunisia
Nike still maintains relationships with the biggest stars in the sport so the boots (cleats) is where the battle will take place as far as footwear is concerned. However with Nike losing the US and therefore a major market the brand has had to generate interest in other ways. The have taken Jordan Brand styled launch strategies with the apparel of their most popular kit in the Nigerian national team. The jersey sold out in less than 30 minutes and lines at Nike’s London stores were blocks long looking more like a limited sneaker drop than a jersey release.
adidas on the other hand owns the 70 million dollar contract with FIFA until 2030. The brand is so ingrained in the fiber of the sport that when futbol is mentioned adidas is the brand most associated. Their international strategy is primarily soccer and while they’ve shown considerable savvy in finally breaking down the walls of North America, adidas has more at stake with the World Cup not because of the 70 million, but because they have to spend a lot of time developing the marketing and plans for the athletes and national teams to cater to their base. This means that North America has become secondary at a critical time for the company as they are definitely losing brand heat.
The ultimate question is how important is the World Cup to each brand? Marketing can’t be measured or quantified. There isn’t any real way to see if a brand benefits from their footwear and apparel adorning a national team or an athlete. However, there are now studies being done to establish the worth of an athlete to a brand. I approached the topic in this post:
Why is Cristiano Ronaldo’s Social Media Presence Worth 1 Billion to Nike?
Time.com presented results from the World Cup on Nike’s revenue in 2014, “In announcing its quarterly results, Nike reported that for the fiscal year ended May 31, the company’s overall soccer-related sales grew to $2.4 billion. That represents an 18% jump from last year. And if you adjust for currency fluctuations, it represents a 21% increase from the fiscal year ended May 2013.” In a recent article I wrote that adidas’ growth in North America has to be taken with a grain of salt as the brand had plummeted in sales from 2010 to 2015. Because of their drop in revenue when they turned the corner it appeared more dynamic than it actually was. I explained it like how a team that was 4-20 goes 10-14 the following year. They show an incredible increase, but they are still losing. Nike however in 2014 wasn’t like a team that moved to 10-14. They turned the corner and had a winning record at 16-8.
In other words the World Cup is important. It’s very important for Nike as the brand has reached a maturation point in North America and their only opportunity for growth is via CDO and in the international market. While the heart of the World Cup won’t hit until Nike’s new fiscal and adidas’ 3rd quarter the event will be a vital part of each company’s reports. For Puma, who has seen incredible success in women’s footwear and apparel, needed the World Cup to spark their men’s footwear and apparel. The failure of their teams to make the tournament leaving them with only two sponsored national teams is sure to reflect on their revenue.
It’s an exciting time for fans and for those interested in the business aspects of footwear and apparel.