Adidas continues to trail Nike in the overall UK market, as indicated in one of the three volumes of the pioneering market research report that we have just published on Northern Europe. In a high-profile move to diversify its business in the UK, Adidas has obtained a 5-year endorsement deal with the England and Wales Cricket Board (ECB), due to start in September. The company has paid £1.6 million (€2.4m-$3.2m) to International Brand Licensing (IBL), owner of Admiral, to buy out the exclusive deal that the English apparel brand had with the ECB until April 2009.
IBL will continue to deliver England cricket’s kit until the end of March 2008 at most judicious conditions: as part of the deal, the ECB has agreed to a reduction in royalties to be paid by Admiral for the 12 months to April 2008. Adidas will then launch its own England cricket outfit, to be inaugurated at the team’s home series against New Zealand. Excluding the up-front payment to IBL, the Adidas contract with the ECB is thought to be worth about £4-5 million (€5.8-7.4m-$8.0-10.0m), and this sum could roughly double with the royalties.
Admiral indicated that its own deal with the ECB had been profitable, but the sport has gone through such an expansion over the last years, chiefly due to England’s win at the Ashes in 2005, that the brand could not hope to match inflated bids for the next term. It still sponsors the Leeds United football team and will seek deals in other sports. For the time being most of Admiral’s annual sales, reaching about £3.5 million (€5.1m-$7.0m) including royalties, are derived from cricket.
The Three Stripes are already worn by the Australian cricket team, and Adidas has long supplied cricket products in other countries like South Africa, India and Pakistan. However, the company only started to offer them on a large scale in the UK last summer, after the market began to take off.
