Adidas vs. Nike: The Real World Cup Battle

As the world convened on the country of Brazil to passionately watch thirty-two countries compete for immortality on the FIFA World Cup stage, another epic battle unfolded between the sportswear giants, Nike and Adidas.

Much of how consumers interact with businesses is based on perception and taste, which is why so many resources are devoted to marketing and advertising.  Through sponsoring the countries’ football teams and famous players and countless commercials and marketing ploys, the two brands geared up for a month long sporting festival that was sure to entice the consumers and bring in large chunks of revenue.  Let’s take a look and see which industry leader came away with the upper hand.

Adidas

Overall, you probably saw the Adidas logo more prevalent in the World Cup competition because of the official partnership the company has with FIFA.  At around $70 million per four year cycle, Adidas has the rights to manufacture and sell the World Cup Brazuca game balls as well as the referee kit.   Such a deal aligns Adidas with the FIFA logo on pretty much any advertisement, as we saw on ESPN’s virtual scoreboard.  Needless to say, this deal, for any sportswear brand, is extremely lucrative since the brand was quite visible.  Expenditures for the German company did not stop there, though.  According to reports, Adidas spent $2.3 billion in advertising and marketing for the World Cup.  High numbers, yes, but the ratio between the marketing budget and revenues in 2014 has held steady with the ratio during 2010’s World Cup in South Africa (10.1% and 10.7% respectively).  The target revenue with this year’s World Cup was $21.2 billion.

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Another indicator of Adidas’ exposure at the World Cup was their share price throughout the entire tournament.  Starting on June 12th, Adidas was selling at $52.99 per share and ended the tournament at $50.22 per share.  Initially, I had thought both corporations would see increased stock prices during the tournament, seeing as they would have extreme visibility and favorable marketing, but this $2.77 decline may actually be completely unrelated to the Cup.  Just yesterday, Adidas agreed to a ten year, $1.3 billion kit deal with English football club, Manchester United.  Despite the fact that this deal severs the thirteen year partnership Nike had with the football club, concerns were raised (and consequently stock prices lowered) due to the staggering price of such a deal.  Thus, it is not certain whether the World Cup had a positive affect on Adidas’ share prices.

Lastly, and maybe foremost, Adidas’ triumph at the World Cup could’ve been cemented on the final day.  Out of the thirty-two teams, Adidas sponsored nine with two of those nine making it to the World Cup Final (Brazil and Argentina).  Furthermore, out of the 166 World Cup goals, 78 were scored with Adidas soccer cleats, which belonged to some of the tournament’s top performers including Lionel Messi (Golden Ball winner), James Rodriguez (Golden Boot winner), Thomas Mueller and Andre Schuerrle of Germany.

Nike

Although Nike did not have the official FIFA World Cup sponsorship, the Oregon-based company played as big of a role as its counterpart.  As usual, Nike had the most aggressive, yet artistic marketing campaign for the event.  You probably noticed their ‘Risk Everything’ campaign, which featured the cartoon versions of Brazil’s Neymar Jr., USA’s Tim Howard and Portugal’s Cristiano Ronaldo–all Nike sponsored athletes.  Prior to the World Cup, Nike introduced their first ever football-only store in Rio de Janeiro which boasted Brazil’s World Cup kits and the boots Nike athletes would wear during the games.  With such an extensive advertising scheme, its no wonder the company’s marketing expenses jumped 36% to $876 million in the quarter to end May.

Contrastingly, Nike saw share prices increase for the month of the World Cup, opening at $74.77 and closing at $77.95.   This could have occurred for several reasons:  Nike’s forecasted 21% growth in the global football business, its share of 80% of a $5 billion industry with Adidas or because of the potential the game of soccer has in the United States.

On field success for Nike was expected, as it out-kit Adidas with 10 sponsored countries including host nation, Brazil.  Furthermore, 53% more players wore Nike boots than any other brand.  However, a series of unfortunate events on the pitch, like Neymar’s back injury, Ronaldo and Portugal’s lackluster performance and Brazil failing to make it to the final hampered Nike’s exposure as the World Cup waned.

Conclusion

Adidas was the much more visible brand during the 2014 World Cup. In competition, their teams triumphed and it seemed like all the individual awards were also given to Adidas athletes.  Beyond this, Adidas’ YouTube viewership during the World Cup eclipsed Nike’s by six million.

The future is bright for Nike, though.  The buzz around the World Cup and for the Men’s National Team in the United States was created because of Nike’s marketing.  The brand understands that while Adidas may hold a stronger foothold around the globe, it is in control of the largest consumer market in the world.  With Major League Soccer growing in popularity, Nike is primed to capitalize on soccer equipment, apparel and footwear in the US.  As far as I am concerned, Nike is well positioned to make a run at Adidas again in 2018.

Maxwell

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Sneaker Pawn Shop

“Young kids don’t have jewelry.  They don’t have cars, but what they do have is the thousands of dollars worth of sneakers in their house,” says Troy Reed, father of young entrepreneur and founder of Sneaker Pawn, Chase Reed.

Sneaker Pawn, located in Harlem, New York, is the latest venture to capitalize on the budding sneaker culture that is prevalent within today’s younger generation.  The shop, manned by Chase and his father, offers secured loans to people with limited edition or dead-stock sneakers, which are used as collateral.  The two place a value on the sneakers by checking for odors and wear around the toe box and heel counter.  Just like any other pawn shop, if the pawner wants to retrieve their sneakers he/she must pay the original loan back plus a storing fee, almost like interest.  In the case that someone else makes an offer on the pawned shoe, the pawner is notified and has the right of first refusal, so long as they can provide the cash.  When the sneakers sell for more, the pawner keeps 80% of the profit and the rest goes to the store.  Besides lending money in exchange for kicks, Sneaker Pawn also customizes and refurbishes sneakers.

Chase and his father used to be the obsessed sneakerheads who would stand in line for hours and sometimes days for the newly minted Air Jordan and Nike limited releases.  Like all entrepreneurs though, the two saw an opportunity to capitalize on this hobby.  Chase, 16, sold his own collection of shoes (around 200 pairs) to gather the $30,000 of seed money for Sneaker Pawn.

The store is the current holder of some pretty exclusive kicks, such as the Kobe 9 Masterpiece, the Air Jordan 6 Infrared, and the Lebron X Crown Jewels, which are valued at $1,400–more than five times their retail price.  The shop has seen immediate success amongst consumers as collectors have pawned their kicks to pay for funerals, prom dresses, and even a move from the Bronx to Brooklyn.

Lebron X Crown Jewels
Lebron X Crown Jewels

Sneaker Pawn is effective because it enables young people to have access to fast cash.  Like Chase’s father said, kids do not always have jewelry or the expensive items that are normally used to borrow money against, but with so many investing in shoes that appreciate over time, their assets are much more liquidable.

Check out the New York Post’s article on Sneaker Pawn and check out some of the shoes the shop has to offer on their website.

Maxwell