Adidas Looks to Beat Nike for Soccer Dominance in 2014 World Cup
NEW YORK (TheStreet) -- On Thursday, the 2014 World Cup in Brazil kicks off, with 32 teams fighting for a chance to claim the top prize. For investors, the company hoping to gain the top prize is Adidas (ADDYY), a powerful sports brand that has the most to gain and lose from the quadrennial tournament. With Nike (NKE - Get Report) nipping at its heels in the soccer market, this World Cup is more important than ever.
The two sporting giants are going head to head at the 2014 World Cup, spending millions of dollars to endorse athletes, teams and even the official soccer ball. Nike has a 17% share of the global sportswear market, while Adidas has a 12% share. Together, the two companies have a 70% market share in soccer, which leaves little room for error or competition.
In 2013, Nike officially saw $1.9 billion in soccer revenue. Adidas, which didn't break out officially, is believed to have seen annual revenue of $2.4 billion in its soccer division in 2013. Adidas has been a major sponsor of the World Cup for quite some time. Nike is relatively new to the market, debuting with the 1994 World Cup, which was held in the United States. Adidas has sponsored FIFA since 1970, and recently renewed that deal through 2030. Also in 1970, Adidas became the official name on the World Cup ball.
Nike is outfitting 10 of the 32 World Cup teams in 2014: Brazil, the U.S., Greece, Croatia, England, Portugal, South Korea, Australia, France and the Netherlands. Adidas outfits nine teams but has the better roster. Puma has eight teams under contract. The remainder of the teams are outfitted by private international companies.Nike has the clear favorite, Brazil, and also has one of the biggest players under contract: Portugal's Christiano Ronaldo. Adidas has the next three most likely winners: Argentina, Germany and Spain. Americans, who love to tune in every four years to this great event, are also a key win for Nike, with the official USA jersey. However, Adidas is seeing impressive gains in Latin America, where it has Colombia, Argentina and Mexico. A huge Mexican fan base in the U.S. should also help Adidas' sales here. Adidas is putting its full weight behind Argentina and its star player, Lionel Messi. On Forbes' list of the top 100 celebrities, Messi is ranked 39th. His annual earnings of $41 million rank 48th, while his social presence ranks 10th. In the 2010 World Cup, Messi wound up empty-handed, with no trophy and also no goals scored. The four-time winner of the most prestigious soccer award, the Ballon d'Or, Messi has turned in an impressive amount of goals over the last two years and seems to be peaking. In 2013, Messi scored 91 goals, the highest-ever calendar year total. Argentina is currently the number two pick by sports books to win the 2014 World Cup, while Messi is the favorite for top goal scorer at 7-to-1 odds. Messi recently became only the second Adidas soccer player, after David Beckham, to get his own brand, with the launch of the iconic Messi signature line. If Messi can regain form and score some goals, his new "boot" line may lead to riches for Adidas, as fans and players buy into the new shoe brand. Adidas has four of the top 10 highest-paid soccer shoe endorsees. A list from The Richest reveals Adidas pays Beckham $11.7 million a year, making him the highest-paid soccer player for a shoe endorsement deal. Gareth Bale is paid $5.5 million annually by Adidas. But Bale, the fourth-highest-paid soccer shoe player, won't be in the World Cup, as Wales did not qualify. Mesut Ozil, paid $4.9 million, and Lionel Messi, paid $3.3 million, will be at the 2014 World Cup.