Friday, January 16, 2015

Adidas Is Going On A Massive US Spending Spree, Sponsoring Up To 500 NFL And MLB Players


Adidas has announced plans to sign hundreds of endorsement deals with National Football League and Major League Baseball players over the next three years, The Wall Street Journal reports.

In total, the brand has set aside funds to sign deals with as many as 500 US-based athletes in total — although an exact figure for the amount being invested was not revealed in the interview with Adidas’ North American president Mark King. Business Insider has contacted Adidas for confirmation.
Adidas has announced plans to sign hundreds of endorsement deals with National Football League and Major League Baseball...

The announcement marks a major shift in strategy for the German sportswear retailer, which is a major force in soccer — endorsing players such as Barcelona striker Leo Messi and having recently signed a record breaking $1.3 billion 10-year deal to sponsor Manchester United — but last year it lost its second place position in the US sportswear market (behind Nike) to Under Armour.

In its most recent quarter, Q3, Adidas reported an 11% drop in profit which it blamed on currency impacts and its underperforming golf division, which saw a 36% sales slide. Overall, retail sales rose 13% but sales in North America fell 1.4%. By comparison, market-leader Nike saw its North American revenue grow 16% in its most recent quarter.

King told The Wall Street Journal: “We can’t use the global strategy. I know we’re a soccer brand globally, but in the US we have to be about US sport. We can still be number one in soccer, but that can’t be what drives our business.”

Adidas will need to move quickly if it is to snap up those 500 athletes ahead of its rivals. It currently has fewer than 40 such deals — Robert Griffin III of the Washington Redskins; Sammy Watkins of the Buffalo Bills; DeMarco Murray of the Dallas Cowboys; Chase Utley of the Philadelphia Phillies; and Von Miller of the Denver Broncos to name a few of the major ones.

Fortunately, for Adidas, NFL deals are far less expensive by comparison to the most popular soccer league, the English Premier League, with which it is used to signing major deals. During the 2012-13 season, the English Premier League outpaced the NFL in commercial revenue, according to data provided by the sports business group Deloitte and sponsorship consultancy firm IEG.

However, as director of Sportsimpacts Patrick Rishe notes for Forbes: “[It is] hard to quantify — especially this early in the game — how much athlete endorsements will rise if Adidas aggressively tries to hire away ‘talent’ from other firms. But make new mistake…increased competition in a free labor market means rates, fees, secondary prices and wages will all go up.”