Bloomberg News

Nike Surpasses $2 Billion in Soccer Sales as Euro Final Beckons

June 28, 2012

Nike Inc. (NKE:US), the world’s largest sporting-goods maker, says its soccer business generated sales of more than $2 billion for the first time as it takes advantage of increasing interest in the sport in the U.S. and Asia.

Nike, which said soccer sales rose 14 percent for the year ended May 31, has been battling the market leader Adidas AG (ADS) for supremacy in the world’s most popular sport. Nike, based in Beaverton, Oregon, got $1.8 billion in soccer sales last year. Total revenue rose 16 percent to $24 billion this year.

A team in Adidas jerseys -- Spain -- will meet Italy, which wears Puma, in the final of the European Championship in the Olympic Stadium in Kiev in two days. Nike, which supplies Cristiano Ronaldo’s Portugal team and England through its Umbro brand, has been playing catch up to Adidas, soccer’s leader since the 1970s. The German company worked with soccer’s governing body FIFA for more than four decades, backing regional tournaments and the World Cup, sport’s most-watched event. When Nike entered the market during the U.S.-hosted 1994 World Cup, it got $40 million from the sport.

“Our strategy has always been more focused on athletes and teams than on sponsoring tournaments and events,” Nike spokesman Charlie Brooks said in an e-mailed statement. “That’s not to say we would never become a sponsor.”

The U.S. and Asia have growing interests in soccer. In America, television ratings for the European Championship are up by 63 percent from four years ago, with quarterfinals rising by 31 percent, according to ESPN. Manchester United, Chelsea and other professional teams are training in Asia to expand their fan bases. Growth in the economy of Brazil, where Nike sponsors the national team, is also helping growth, Brooks said.

Ronaldo, Rooney

Nike sponsors football players from the Euro 2012 including Ronaldo, England’s Wayne Rooney and Spain’s Andres Iniesta and made jerseys for five teams at the tournament. Adidas made jerseys for six teams. Mario Balotelli, who scored both of Italy’s goals in last night’s 2-1 upset of Germany, is sponsored by Nike.

Adidas Chief Executive Officer Herbert Hainer said on June 21 that he expects record soccer sales of “well over” 1.6 billion euros ($2 billion) for 2012. The forecast exceeds the previous record of 1.5 billion euros, set in 2010 when the last World Cup was held in South Africa.

Hainer said in Warsaw that the company will sell more than 7 million Tango 12 balls this year and that it already sold more than 1 million Germany jerseys, a record for a European championship. The company sold “close” to 1 million Spain replica shirts even in the current economic situation in the country, Hainer said.

“Seven million is a big number and they could well beat that number,” said Mark Josefson, an analyst at Silvia Quandt Research GmbH in Frankfurt. “Adidas was quite clever in terms of branding. Adidas logo was in the middle of the pitch. It was loud and in your face without being cluttered. We can already say the event was a success for Adidas.”

Umbro Sale

Nike is selling off its money-losing Umbro unit less than five years after buying the U.K.-based company for $580 million. It’s the apparel provider to the English national soccer team and its diamond insignia featured on the shirts of record five- time world champion Brazil until it switched to Nike in 1998. Umbro also sponsored record 19-time English champion Manchester United, which claims to have the biggest number of supporters in the world.

Brooks said Nike’s soccer brand has gained enough of a reputation that the Umbro brand is no longer relevant to its business needs.

“When we originally purchased Umbro it was with a view to Umbro providing a ‘lifestyle’ element, allowing Nike to focus on performance,” he said in an e-mail. “Now Nike Football can cater to performance and lifestyle, there is too much overlap. Our intent to sell Umbro shows the confidence we have in our Football category.”

New Shoes

Adidas CEO Hainer said in Warsaw on June 21 that Adidas is not interested in buying Umbro as his company is already the market leader.

Adidas and Nike used the European Championship this year as a platform for marketing products and both released new shoes before the beginning of the tournament. Nike unveiled its “Clash collection” boots, which were worn by Ronaldo, while Adidas released a new version of its eighteen-year-old Predator shoes, which were worn by German midfielder Thomas Mueller.

“The world cups and European cups are paramount to launch new products,” said Udo Mueller, a senior technical marketing manager at Adidas, in an interview in Herzogenaurach. “The new Predator is significantly lighter and the future will go more towards lighter shoes.”

According to Nike, 59 percent of the goals scored up to the quarter finals were by players wearing Nike shoes.

To contact the reporters on this story: Tariq Panja in Donetsk, Ukraine, via the London newsroom at tpanja@bloomberg.net; Julie Cruz in Frankfurt at jcruz6@bloomberg.net

To contact the editor responsible for this story: Christopher Elser at celser@bloomberg.net


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