World Cup semis: It’s Nike Vs Adidas in sponsorship showdown
Two rival brands are going face-to-face in the late stages of the FIFA tournament in Brazil
Two rivals will go face-to-face in this week’s World Cup semi-finals in Brazil – and their main goal isn’t to put the ball in the back of the net.
Sports brands Nike and Adidas spend billions of dollars on marketing, and each sponsor two of the four remaining teams in the FIFA tournament.
On Tuesday, the brands will be part of a fierce competition as host nation Brazil (sponsored by Nike) plays Germany (Adidas). The following day, the Netherlands (Nike) will face Argentina (Adidas).
It’s a fair assumption that these two brands will be rooting for their respective teams – but their key goal will be to grab a greater slice of the multibillion-dollar sports clothing market.
Buying such sponsorship rights doesn’t come cheap. Nike – the largest sports brand in the world – spent over $3 billion in its last financial year on “demand creation expense”, which includes marketing, advertising and other promotions. In its last financial quarter alone the company spent $876 million, an increase of 36 percent on the year before, partly due to spending on the World Cup.
Adidas, unlike Nike, is one of FIFA’s official partners, having first struck a relationship with the football organization in 1970. Along with other major sponsors – Coca-Cola, Emirates, Hyundai, Sony and Visa – Adidas pays a reported $25-50 million per year for the FIFA sponsorship rights.
That gives Adidas – the world’s second-largest sports brand – the right to use the term ‘World Cup’ in its ads and have its logo on the ball and beamed across stadiums, among other sponsorship privileges.
This all marks big business for FIFA, which in 2013 generated over $400 million from marketing rights associated with this year’s World Cup, or about 29 percent of its annual revenue.
But a host of other brands, including Nike, spend millions sponsoring the kit of teams competing in the World Cup, without being official FIFA partners. Three sports brands dominate World Cup kit sponsorships: Nike has 10 teams, Adidas has nine and Puma has eight.
The value of kit deals at the 2014 World Cup has risen to a record $395m this year, according to research by German consultant Dr Peter Rohlmann and his team at PR Marketing. That marks an increase of 40 percent on the 2010 World Cup in South Africa, the sports consultant told Al Arabiya News.
Winners and losers
Individual players also receive millions of dollars in endorsements: Nike has deals with Cristiano Ronaldo and Zlatan Ibrahimovic; Adidas works with Lionel Messi and Gareth Bale; Puma sponsors Radamel Falcao and Sergio Aguero.
Between them, the top five players in the World Cup bag almost $80m in endorsements a year, according to Forbes.
But the FIFA World Cup has already caused waves in this lucrative business. Most notably, the on-pitch behavior of Uruguay’s Luis Suarez has impacted the player’s commercial endorsements, which are said to total about $4 million a year.
After receiving a four-month ban for biting Italy’s Giorgio Chiellini, Suarez lost his sponsorship deal with betting firm 888poker just one month after the alliance began, while concerns have also been raised by Adidas, another of the player’s commercial partners.
Other surprises came when the world’s best-paid footballer Cristiano Ronaldo, whose $28m in sponsorship deals brings his total earnings to a staggering $80m, crashed out of the World Cup with the elimination of Portugal.
Rohlmann said that this shouldn’t negatively impact Ronaldo’s sponsorship potential – but is unlikely to give it a boost, either.
“Because of the fact that Ronaldo is an icon or a brand of his own, I do not really expect any disturbance in his reputation and his marketability,” Rohlmann said. “On the other hand he will missing again the crown [of being] named the best player or most successful goal-getter at the FIFA World Cup.”
Another shock of the World Cup came on Friday, when Brazil’s star player Neymar Jr. suffered a broken vertebrae during the team’s match against Columbia, and will miss the rest of the competition. The player is the sixth best-paid in world football, with almost half of his $33.6m annual earnings made up of endorsements from sponsors such as Nike, L'Oreal, Police sunglasses.
Yet despite two of the world’s best-known footballers being out of the World Cup, key sponsors still have money riding on the competition’s third superstar player: Argentina’s Lionel Messi.
Messi ranks second on the football ‘rich list’, with total annual earnings of $64.7m, and still has everything to play for as his team prepares for Wednesday’s showdown against the Netherlands.
The player earns about $23m a year from endorsement deals, with key sponsors including Adidas, Turkish Airlines, EA Sports and Pepsi, according to Forbes.
Other players in the World Cup also stand a chance of rising in the sponsorship ranks. Rohlmann pointed to players such as Columbia’s James Rodríguez and Germany’s Thomas Müller as having a “lot of potential” to boost their individual sponsorship earnings further. A handful of players from the Middle East have the potential to grab big-league sponsorship deals, he added.
“The World Cup is a huge showcase for sportsmen with perfect performance and great charisma, such as Islam Slimani [Algeria] or Reza Ghoochannejhad [Iran],” Rohlmann told Al Arabiya News.
Yet while players like Messi and Ronaldo get millions in endorsements, many professional footballers playing in the Arab world would be lucky to bag a free pair of football boots, experts say.
Marwan Abu-Ghanem, a Dubai-based PR professional and author of the football book Kullul-Arqaam (Arabic for “All Records”), says there is “no comparison” between sponsorships in the Arab world and big-money global deals.
“Most of the players here get ‘zero cash’ sponsorships... they just get their kits and shoes, etcetera, for free. And that's it really,” he said.
Yet hope is on the horizon, Abu-Ghanem said, pointing out that Algeria was the only Arab nation to qualify for the World Cup, and its progress to the Round of 16 is likely to spur interest among regional and global sponsors.
“The good [sponsorship] candidates at the moment are the Algerian players who have just starred in the World Cup, in addition to a number of Egyptian players who have been doing well in the English Premier League such as Chelsea’s Mohamed Salah,” Abu-Ghanem said.
Yet James Dorsey, author of a blog and related book entitled The Turbulent World of Middle East Soccer, said any sponsorship boost for Algeria’s national team – which after a 2-1 defeat by Germany did not make it to the World Cup quarter-finals – is likely to be limited.
“Algeria’s performance constitutes first and foremost a boost for Algerian soccer,” Dorsey said. “As such it could well attract sponsors with economic interests in Algeria, but as good as Algeria’s performance may have been in Brazil, in terms of sponsors it remains a team with regional rather than global significance.”
Yet the ‘big three’ sports brands – Nike, Adidas and Puma – are no strangers to the Middle East. Adidas, for example, sponsors several regional teams and players including Ahmad Otaif and Taisir Al Jassim of Saudi Arabia.
Nike works with a number of players, clubs and federations in the Arab world. “We have a very strong roster of Arab football players that deeply connect and inspire our consumers in the region,” a spokesperson said.
“We are committed to exploring new talent around the world. The Middle East is a region that possesses a lot of talent and potential and we continue to inspire the young footballers who live, play and breathe football.”
Early stages of the game
Yet Arab teams and players have a long way to go before they enter the top leagues of sponsorship, partly due to a lack of global appeal, consultants say.
In order for Arab players to boost sponsorship deals in time for the 2018 World Cup in Russia – or even the Qatar 2022 tournament in their own backyard – a lot will depend on players getting greater international exposure.
“The local leagues are popular, as are the local players. But they are not promoted enough and there is too much emphasis on the European teams and leagues,” said Donal Kilalea, the chief executive of Promoseven Sports Marketing in Dubai.
“There is a lot of talent in the football field but the players tend to stay in their local clubs.”