While Adidas is battling it out with Nike and other brands on the sidelines of the European football championships, it has bagged an agreement to extend its partnership with the German football federation (DFB) for four years until 2022, at a cost of about €50 million per year.
The agreed annual price amounts to twice the €25 million fee currently paid by Adidas to outfit the German national teams. It also makes the partnership more lucrative for the DFB than the annual €42.7 million fee previously agreed between Nike and the French football federation, which was formerly sponsored by Adidas. Another change reportedly obtained by the German federation is that Adidas no longer has a right to match any offer for the next round of negotiations.
The period of the extension is strikingly short compared with several other such partnerships signed in the last years, indicating that the federation may want to keep the door open for competitors. As part of the agreement, Adidas said it was stepping up its production in Germany and planned to make the national teams' jerseys in the country.
Although the current deal is not due to expire until 2018, the DFB has been holding talks with potential sponsors for several months and Adidas certainly faced stiff competition from Nike, which already came up with a large-scale offer to poach the DFB from Adidas around the previous renewal. The deal was confirmed in Paris by Reinhard Grindel, the DFB's president, and Herbert Hainer, outgoing chief executive of the Adidas Group, who was hoping to finalize the agreement before his departure at the end of September.
Adidas and the DFB have been partners for six decades and it may appear more compelling for the federation to team up with a German brand. Hainer even stated as part of the announcement that the two entities “belong together.” Then again, the personal ties between Adidas and federation managers are no longer as strong as in previous years, since Wolfgang Niersbach left the presidency last November amid allegations surrounding the 2006 football World Cup, although he denied any personal wrongdoings.
Sales of German football team jerseys have been buoyant since the country organized the football World Cup in 2006 and fans started waving the flag with pride. As outlined above, Adidas sold about 3 million German team jerseys in 2014, when the team won the World Cup in Brazil and it expects to sell another 1.3 million around the European football championships that are currently underway.
The federation wants to use part of the money it will receive from Adidas for projects such as the development of the fussball.de internet portal and the construction of a football academy in Frankfurt.
