Sponsorship Bid
January 30, 2007
Nike could score a substantial win if it achieves its goal of knocking German company Adidas off its perch on its home turf by winning the contract to sponsor the German national soccer team. Adidas has had the contract with the DFB German football association since Germany won its first World Cup title in 1954.
The Portland, Oregon-based company offered a 500 million euro ($648 million), eight-year sponsorship contract to the DFB, according to association President Theo Zwanziger, an amount which is six times more than Adidas' current contract.
He told reporters that the DFB has been in a dispute with Adidas over the duration of the current contract. Adidas had assumed the contract extended until 2014 although the soccer association assumed it would end in 2010.
"We're in a difficult situation," said Zwanziger saying that the two sides have reached no final agreement. Adidas pays around 11 million euros ($14.2 million) a year in its current sponsorship deal.
While analysts say losing the Germany team sponsorship deal would be a commercial blow to Adidas, it would also bring an end to a long tradition and perhaps dent national pride. Adidas, based in the small Bavarian town of Herzogenaurach, has partnered with Germany's national team since the country's victory in the World Cup in 1954.
There could also be accusations of treachery since Adidas founder Adi Dassler helped Germany win its 1954 title with his screw-in studs, revolutionary for the time.
Money trumps patriotism
But in today's world of globalized, media-driven sports, national concerns figure less than they might have in the past and sporting goods giants are aggressively vying for high visibility sponsorships since they raise brand awareness and help boost bottom lines.
Franz Beckenbauer, one of German soccer's most influential figures and member of the world soccer association's executive committee, has said that the DFB would be "liable to persecution" if it out and out rejected such an offer from Nike.
Nike already has a contract with Brazil, which has taken home the World Championship trophy five times. Puma outfits 2006 Champions Italy. That leaves Adidas with major teams like Argentina, France and, for now, Germany.
Adidas shares on the benchmark DAX index have suffered recently, losing almost three percent since the beginning of the year. Some traders have attributed the rough patch to repeated media reports that the company could lose the DFB contract.