While the World Cup is often thought of as the ultimate battle ground for football stars, the immense following that the tournament attracts makes it fertile ground for other titanic confrontations.
Nike and Adidas have been at loggerheads since 22 Brazil player wore Nike Tiempo boots in the 1994 final and within two years signed the Brazilian Football Federation.
Not that Adidas was ever a walk-over. Adidas typically pays more than other brands because football is key to its business model, and being seen as the market leader in football across the world is vital. In 2014, Adidas-sponsored Germany beat Adidas sponsored Argentina in the final which marked a peak in the brand’s domination of the sport. However, this time round it appears that Nike are the clear favourites for winning the tournament.
Going into the quarter final stage, Nike will appear on the chest of the four top favourites: Brazil, France, England and Croatia. With an outside chance of winning the tournament are Belgium, Russia and Sweden that wear Adidas and Uruguay, sponsored by Puma.
Add to this Nike marketing prowess, like the incredible demand generated for the new Nigeria home kit, which was sold out within minutes after its release, and one gets an idea that Adidas’ once dominance of the sport may now be in jeopardy.
Sports brands normally sell most of the World Cup merchandise ahead of the World Cup, but as teams progress, extra demand is generated especially if results are unexpected. Nike sponsored more teams than Adidas for the first time during the 2014 tournament in Brazil. Adidas responded by sponsoring 12 out of the 32 participants in Russia, including initial top favourites Germany, Argentina and Spain, along with hosts Russia. Nike sponsored 10 teams.
Events have been unpredictable and while Germany, Spain and Messi’s Argentina are miserably out of contention, Russia is in the quarter final and has potential to surprise. However, there is no denying that Nike is in a privileged position with Brazil, France and, yes, England. Without any doubt the chance of the trophy going Nike’s way is overwhelming.
Investing in both firms currently seems like a good idea as confidence in the global economy and a huge push towards a healthy lifestyle have helped both firms prosper in recent years. Nike performed better this year gaining 22 percent, Adidas on the other hand is 12 percent up. This is remarkable considering the pressure on equity markets.
There is no denying that Nike is in a privileged position with Brazil, France and, yes, England
Long-term investors in these stocks have more to celebrate as both have gained over 140 percent, dividends included, over the past five years.
Going forward, the cut-throat competition between the two is proving to be a catalyst for innovation. Nike continues to boast products developed hand in hand with athletes. From its early days Nike has always preferred to translate athlete’s requests into consumer products. The results are often as much about performance as design.
On the other hand, Adidas has often stood at the forefront of consumer trends. Classics such as the Copa Mundial, the Predator, the Tango, the Samba and the Superstar have captured the imagination of many athletes, fans and enthusiasts alike.
Disclaimer:
This article was issued by Antoine Briffa, investment manager at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article are being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice.