Nike May Oust Adidas as German Soccer Team Sponsor

Nike Inc., taking on Adidas AG in its home market of Germany, may take over as the official uniform supplier to the country's soccer team.

The German soccer federation, known as the DFB, received an offer worth 600 million euros ($778 million) from Nike for an eight-year contract, DFB President Theo Zwanziger said at a press conference today in Frankfurt. Adidas's current agreement is worth about a sixth of that, he said.

An accord with Nike would end more than 50 years of cooperation between the DFB and Adidas, which has provided apparel for Germany's three World Cup champion teams and three European Championship winners. Adidas executives including Chief Executive Officer Herbert Hainer met the DFB today to discuss the future of their alliance, which Adidas says runs until 2014. The DFB suggests the contract expires in 2010.

``We can only reject a new, much more lucrative offer from Nike if there's a binding agreement with Adidas,'' Zwanziger said in a statement. The DFB is prepared to send the matter to an independent arbiter.

Adidas will ``evaluate the legal expertise that we were given from the DFB'' and will continue to discuss the issue, spokesman Oliver Brueggen said.

Nike spokesman Derek Kent said the company doesn't comment on sports marketing contracts and negotiations.

Shares of Nike climbed $1.43, or 1.5 percent, to $97.75 at 4 p.m. in composite trading on the New York Stock Exchange. Adidas climbed 25 cents to 36.82 euros in Germany.

World Cup

The Herzogenaurach-based company's breakthrough with the German national team was at the 1954 World Cup in Switzerland. Adidas supplied the players with soccer shoes, including cleats that could be unscrewed and changed, a factor that helped the team overcome Hungary in the rain-sodden final.

It has supplied the World Cup ball since 1970 and was a sponsor of last year's tournament that Germany hosted. Nike's biggest bet on the 2006 edition was its backing of the Brazil team that exited in the quarterfinals.

Nike's assault on Adidas's home market comes as the German company's profitability is being hurt because of lower margins at its Reebok unit in North America.

The company on Nov. 9 cut its 2007 profit forecast because of increased spending to revitalize Reebok, which Adidas bought for $3.8 billion in a bid to catch Nike. Its struggle for market share with Nike, the world No. 1 athletic-shoe maker, has intensified after the Reebok takeover gave Adidas annual revenue approaching 10 billion euros. Nike's sales were $15 billion in fiscal 2006.

Sports Accords

The purchase of Reebok has, however, helped Adidas gain greater access to the four biggest North American sports.

Last year, it signed an 11-year deal that Walt Disney Co.'s ESPN said was worth $400 million with the National Basketball Association to provide team uniforms. It also provides gear for the National Hockey League, is the official shoe supplier to Major League Baseball and the official apparel provider of the National Football League.

In North American soccer, Adidas plans to take advantage of David Beckham's move to the Los Angeles Galaxy at the end of the European season. Beckham, who endorses Adidas products, is the second-highest earner in the world's most popular sport.

In tennis and golf, Nike still holds the upper hand. The company is endorsed by three of the four finalists at last weekend's Australian Open -- Roger Federer, Serena Williams and Maria Sharapova. Fernando Gonzalez, runner-up to Federer, was wearing clothing with Adidas's three stripes logo.

Tiger Woods, the world's top-ranked golfer and richest athlete, plays in shirts adorned with the Nike swoosh.
source:www.bloomberg.com