The Shootout Nike aims to use the Brazil World Cup to shat­ter Adi­das’s foot­ball supremacy

The Economic Times - - World View - Brendan Gree­ley

On a cross from Fabió Coen­trão, Karim Ben­zema, with a sin­gle touch, puts the ball in the net. It’s the only goal of the night, but it’s beau­ti­ful, and with it Real Madrid win­satit­shome­s­ta­dium,theSan­ti­ago Bern­abéu. Ben­zema wears Adi­das boots. So does Coen­trão. Real Madrid wears Adi­das jer­seys. So does Bay­ern Mu­nich, the other team. The two clubs, among the best in the world, are play­ing a semi­fi­nal at the Cham­pi­ons League. Adi­das spon­sors the league, which gives it the right to sup­ply the ball and put its name on the field. Team, team, field, ball, as­sist, goal: a good night for Adi­das.

This is what Adi­das has been do­ing for 66 years. The com­pany helped in­vent the prac­tice of pay­ing ath­letes to wear its shoes, pay­ing teams to wear its jer­seys and pay­ing a league to use its ball.

In the 1970s, the com­pany was so dom­i­nant that a man named Phil Knight, sell­ing Ja­panese track shoes in Ore­gon, set Adi­das as his tar­get. It seemed ab­surd at the time. Knight is now the chair­man of the board at Nike. And his tar­get is still the same.

That one goal at the Bern­abéu started with a Nike shoe on the right foot of Cris­tiano Ron­aldo, who fed Coen­trão with a threaded pass from mid­field.

Tap the Feet

Nike is now the largest sports­wear com­pany in the world, with $25 bil­lion in rev­enue and a 17% mar­ket share. The sec­ond-largest, Ger­many-based Adi­das, has $20 bil­lion in rev­enue and 12% of the mar­ket. These share num­bers soar for foot­ball gear, where the two com­prise 70% of the mar­ket.

Ac­cord­ing to FIFA, 300 mil­lion people play foot­ball and a bil­lion watch it. The sport is ex­pand­ing in Asia and is the rare prod­uct for which the US is still a grow­ing mar­ket.

Nike says it brought in $1.9 bil­lion in foot­ball rev­enue in 2013. Adi­das de­clined to share its num­ber, but ac­cord­ing to Peter Rohlmann, a sports mar­ket­ing con­sul­tant based in Rheine, last year the com­pany had $2.4 bil­lion in foot­ball rev­enue. That this is even a con­test is a prob­lem for Adi­das. Nike didn’t do foot­ball un­til 1994, when the World Cup came to the US. And even when Adi­das lost its ad­van­tage in other sports, it held on to it in foot­ball. Her­bert Hainer, the com­pany’s CEO, likes to say that the game is “part of our DNA.” Adi­das re­lies more on the Euro­pean mar­ket, where foot­ball is the only sport that mat­ters. Nike wants foot­ball. Adi­das needs it.

Since 1970, Adi­das has spon­sored FIFA. Last year it ex­tended that agree­ment to 2030; ac­cord­ing to Rohlmann, this costs the com­pany al­most $70 mil­lion for ev­ery four-year cy­cle.

On June 12 in São Paulo, Brazil will play Croa­tia in the first game of the World Cup. The cor­po­rate spend on team­spon­sor­ship­sa­lone,accordingto Ohlmann, will to­tal al­most $400 mil­lion. Nike will spon­sor 10 na­tional teams, more than it ever has be­fore — and one more than Adi­das. Nike has Brazil, Por­tu­gal—and Ron­aldo. Adi­das has Spain, Ger­many — and Lionel Messi, the Ar­gen­tine who has won the Bal­lon d’Or four times. As in ev­ery World Cup since 1970, the ball on the field will be Adi­das’s. (The ball this time will be called “brazuca,” af­ter a Por­tuguese slang term for Brazil­ians.)

Nike’s Game

Dur­ing Cup years, Nike has be­come adept at run­ning some­thing else: ads that im­ply a global foot­ball event with­out ut­ter­ing “FIFA World Cup.” Nike is so good at ad­ver­tis­ing and event pro­mo­tion that it some­times seems as if no other com­pany is play­ing the same game. Adi­das main­tains an overwhelming ad­van­tage at the only global tour­na­ment, and it makes more money in the sport. But Nike is draw­ing its only real ri­val into an old and ex­pen­sive game: spon­sor as many of the best teams and play­ers as pos­si­ble.

“The No.1 foot­ball boot brand in the world, that’s what we are to­day,” says Trevor Ed­wards, head of brand man­age­ment for Nike, “in­clud­ing Ger­many.” When Ed­wards says “Ger­many,” he means Adi­das.

In a base­ment at an Adi­das build­ing in the Ger man town of Her­zo­ge­nau­rach, me­chan­i­cal feet never tire of kick­ing goals and stomp­ing boots. A sad ro­bot named New­ton walks and sweats in a cli­mate-con­trolled en­clo­sure. This is where Matthias Meck­ing and An­to­nio Zea, heads of soc­cer mar­ket­ing and soc­cer in­no­va­tion, re­spec­tively, come up with boots “si­los.” Si­los are shoes ded­i­cated not to play­ers but to player styles. It’s how both Nike and Adi­das ap­proach foot­ball boots. It’s risky to make shoes that are branded around a sin­gle player. Ath­letes can fade un­ex­pect­edly or have a cat­a­strophic World Cup sum­mer. The com­pa­nies pick their play­ers, move them into a line of boots, then move new play­ers up the same line as they ar­rive. Messi, the great­est of what Adi­das calls its “as­sets,” has his own colour scheme at Adi­das, his own M logo. But there is no Messi shoe. He wears a ver­sion of the F50, a light shoe de­signed for fast play­ers. Adi­das is count­ing on Messi’s style of play this sum­mer. On the wall of the Adi­das store at Nurem­berg, near Her­zo­ge­nau­rach, there are two quotes: one from Messi and one from Adi Dassler. Her­zo­ge­nau­rach is where Adolf “Adi” Dassler — adi das — started mak­ing sports shoes in the 1920s. Adi­das is still based there. Adi­das’s com­pany mythol­ogy is built around Adi: the cob­bler, talk­ing to ath­letes and mak­ing boots, just like Zea and Meck­ing do to­day. It was Adi’s son Horst, though, who had the fall­ing-ap­ple mo­ment in sports mar­ket­ing when he re­alised in 1956 that he could get Olympians to wear Adi­das shoes if he just gave them away. Horst also was the first to un­der­stand that the event it­self could be for sale. He cre­ated Adi­das’s en­dur­ing re­la­tion­ship with FIFA. What does suc­cess look like for Adi­das in 2014? “Ger­many win­ning the World Cup,” says Markus Bau­mann, com­pany’s head of soc­cer. Mean­while, Nike’s new ad of Ron­al­doshowswhat the­com­pa­ny­has al­ways done best: own­ing an event with­out ever hav­ing to pay for it. “The play­ers from Nike have a lot of en­ter­tain­ment char­ac­ter,” says Rohlmann. “Messi, spon­sored by Adi­das, he’s more a foot­ball kicker.” Adi­das backs ath­letes. Nike backs ath­letic celebri­ties. Bloomberg Busi­nessweek

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