Nike has dealt its rival Adidas a major blow by signing an eye-popping sponsorship deal with the French Football Federation (FFF), which sees the French squad switching from Adidas to Nike in 2011. The sponsorship agreement is worth €320 million for seven and a half years, equivalent to a record average of €42.66 million each year. The deal further includes bonus payments based on France’s performance in the 2014 and 2018 World Cups, if it qualifies, and equipment worth about €2.5 million each year.
This compares with annual payments of about €10 million by Adidas as part of its current contract. The vastly inflated deal came after the FFF for the first time organized a tender process and received competing bids from Nike, Adidas and Airness, a French team sports brand. Adidas reportedly put in a bid at about €25 million per year, way below the Nike offer. The German brand fiercely defended its French patch, even sending over Herbert Hainer, its chief executive, for a presentation to the FFF. But the federation said that it had picked the winner solely on the basis of the level of the bids.
This is a painful loss for Adidas, which has been a partner of the FFF since 1970. For many years the agreement included jerseys as well as boots, until a revolt by French football players before the 1998 World Cup triggered a change of rules. The tie-up with the French football team has been particularly judicious for Adidas over the last decade, as France won the 1998 World Cup as well as the 2000 European Championships, and it reached the finals of the World Cup in 2006. It has undoubtedly helped Adidas to consolidate its leadership in the French sports market over the last years, particularly in football: the latest independent research placed Adidas’ share in the French football market at 46.4 percent for apparel and 40 percent for cleated footwear.
The sum to be forked out by Nike for the French team is more than two and a half times the price it paid for its controversial deal with the Brazilian football federation. It illustrates Nike’s eagerness to add a leading European team to its roster, after the failure of its equally baffling bid for the endorsement of the German football team last year. While Nike had offered about €50 million per year and a one-off signing fee of €100 million, the German Football Federation stayed with Adidas for a much lower price of €11 million per year until 2011 and €22 million per year from 2011 until 2018.
The deal sets the scene for another football marketing frenzy at the European football championships in Austria and Switzerland later this year. France will still be wearing Adidas, along with the German, Spanish, Greek and Romanian teams. Nike has an equally strong roster of qualified teams with the Netherlands, Croatia, Portugal, Russia and Turkey. Umbro, which Nike should formally own in the next weeks, has another coveted deal with the England squad, but the team failed to qualify, leaving Umbro with only Sweden to cheer on at the championships. In contrast, just as in the African Cup of Nations, Puma will almost be playing a home game since it is endorsed by both of the host nations, Switzerland and Austria, along with Poland, the Czech Republic and the reigning world champions, Italy.
Coupled with the acquisition of Umbro, which is about to be completed, the move is clearly intended to lead Nike to take away the dominant position in the global soccer market. Meanwhile Nike has confirmed the renewal of its 11-year-old contract as teamwear supplier to the RFU, the governing body of England Rugby, for a further four years. The contract will cover the seven England teams, including the England Women’s team for the first time, through the end of the 2011/12 season.
On the other hand, the Welsh Rugby Union has chosen Under Armour as its new kit supplier under a wide-ranging 4-year deal, replacing Reebok after 12 years. The £10 million (€13.2m-$19.6m) contract also covers the Wales Sevens team and the Welsh women’s squad. The color coordination and the design of the uniform will embrace Wales’ rugby and cultural history, a statement says, reflecting the way in which the game helps define Wales as a nation.
