Soccer-related revenue will "clearly" exceed 1.2 billion euros (U.S.$1.51 billion) this year, Adidas Chief Executive Officer Herbert Hainer said today in Berlin. The German company said it added 1 percent to 2 percent to last year's 35 percent of the global soccer footwear market, while competitors lost ground.
Adidas, based in the southern town of Herzogenaurach, has exploited its home advantage at the monthlong World Cup, which ends July 9. The footwear maker, which narrowed the gap with Nike through last year's U.S.$3.8 billion purchase of Reebok, expects to benefit as soccer fans snap up almost triple the number of German team jerseys the company had planned to sell.
"Adidas are the clear winners" from the World Cup, said Gene Di Maria of the Sporting Goods Intelligence newsletter. "Nike's been disappointing in terms of product innovation."
Adidas has built a "World of Football" complex in front of Berlin's Reichstag -- festooning it with its trademark three stripes -- and benefited from wider public interest in soccer during the World Cup. One million fans watched Germany beat Sweden 2-0 on giant video screens in central Berlin last week.
Replica Jerseys
Hainer said Adidas "more or less exceeded all" of its expectations for the World Cup. The company now expects to sell more than 15 million match balls, 1 million pairs of Predator Absolute shoes and 3 million replica jerseys this year.
Adidas plans to maintain its dominance in soccer with sales of new products and sponsorships of events like the 2008 European Championship. Beaverton, Oregon-based Nike says it doubled its sales of soccer goods to almost U.S.$1.5 billion last year, though that figure includes fashion-oriented "lifestyle" products, according to Di Maria, which Adidas doesn't include.
Charlie Denson, president of the Nike brand, told investors yesterday on a conference call that the U.S. company will gain more young consumers in the U.S. with online advertising. Nike has formed a partnership with search engine Google Inc. to create a social networking site for soccer fans called Joga.com.
"The battle won't be won or lost in Berlin this summer, but in the next four years," Denson said yesterday. Nike reported a 4.8 percent drop in net income for the fiscal fourth quarter, the first profit decline in more than three years, because of lower European revenue and an unfavorable contract ruling.
Quarterfinals
Adidas has at least one advantage: three of the teams it sponsors -- Germany, Argentina and France -- have qualified for the quarterfinals, which start Friday. Only two Nike-sponsored teams have made it: Brazil, the tournament favorites, and Portugal.
In the five largest European markets -- Germany, France, the U.K., Spain and Italy -- Adidas increased its share of spending on soccer footwear to 37 percent in the first quarter from 36 percent last year. Adidas says it now controls 51 percent of the market in Germany. Nike lost share in those markets and may have a global market share in the ``mid 20s'' percentage range, according to Guenter Weigl, head of the Adidas soccer unit.
"The products they make are superb, at the top of the game," Stephen Pope, head of equity research at Cantor Fitzgerald LP in London, said about Adidas on June 8. "Particularly, they are now in a position where they can take on Nike, which of course dominates the North American sports scene.''
The German company lost ground to Nike in the U.S., where its market share slipped to 46 percent in the quarter from 48 percent in 2005. Nike, by contrast, lifted its portion of the U.S. market to 34 percent from 27 percent.
