How Important Is The World Cup For Sportswear Brands Like Nike, Adidas, & Puma?

Sportswear brands like Nike, Adidas, and Puma invest heavily in establishing relationships with athletes, teams, leagues, and events in a bid to promote their products with customers.

With FIFA boss Gianni Infantino projecting an audience of 5 billion viewers during the 2022 World Cup, it is the ideal platform to reach (potential) customers and spread their brand message.

How much do the biggest sportswear brands earn from and invest in football? And how do they promote their products around the World Cup?

Football’s Biggest Brands

The sportswear market is a competitive one with numerous brands of various sizes active in it. However, there are three brands that also have a huge presence in the football market: Nike, Adidas, and Puma. It is Nike and Adidas that lead the way in amount of sponsorship deals with major football clubs and national football associations across the world.

When it comes to revenue, Nike is the biggest player in the sports apparel market and by a considerable amount. For the fiscal year 2022 (ending May 31st) Nike, Inc. (Nike brand and Converse) reported a revenue of $46.71 billion. This was up more than $2 billion compared to the $44.538 billion they generated in fiscal year 2021. It has even doubled compared to fiscal year 2012 ($23.331 billion).

The company sells sports and lifestyle products, but as an American company it has traditionally been lagging Adidas when it comes to football. That is mostly because Adidas focused on football since the company’s founding in 1949. Nike only truly entered the sport in 1994. With Nike earning 40 percent of their income in fiscal year 2022 in the USA, the continually increasing popularity of football in the country is likely to affect football sales in the long run as well.

Adidas 2021 net sales amounted to €21.234 billion ($25.12 billion), up 15 percent compared to the €18.435 billion ($21.053 billion) in 2020. It has increased by more than 40 percent compared to 2012.

Puma on the other hand reported sales of €6.805 billion ($8.05 billion) in 2021, 30 percent up from the €5.234 billion ($5.977 billion) in 2020. Like Nike it has more than doubled overall sales since 2012.

Sales Revenue Nike (fiscal year 2022), Adidas (2021) and Puma (2021)

Football Related Revenue

Until 2021, Nike gave an overview of how much revenue the company generated from football related sales. The company made on average $1.999 billion from football related sales between the fiscal years of 2012 and 2021. As a percentage of total wholesale equivalent revenue, this was on average nine percent between 2012 and 2016 and dropped to an average of six percent between 2017 and 2021.

Adidas made a reported €2.1 billion ($2.4 billion) in football related sales in 2014. A similar amount as Nike. While this was €1.7 billion ($2.26 billion) in 2012.

Since football is traditionally one of Adidas and Puma’s main markets, they are likely receiving a higher percentage of their total revenue from football related sales compared to Nike.

According to quoted numbers from Macquarie Research in 2018, Adidas had the biggest global market share in football of the three brands with 29 percent. Nike followed with 26 percent, while Puma was third with seven percent. So, despite Nike being larger in terms of overall revenue, they have slightly less football related sales than Adidas.

The Need For Sponsorship Deals

To generate such sales, all three companies invest heavily in marketing and product activations. In the 2021 annual report, Adidas mentions marketing investments as an “important building block of creating brand desirability and winning the consumer”. Historically, the German brand spends almost half of its marketing investment on partners, while the rest is spent on brands marketing activities (digital, advertising, point-of-sale, and grassroots activations).

By sponsoring events with a global reach such as the FIFA Men’s World Cup, the UEFA Women’s EURO and UEFA Champions League, the company hopes to showcase their products worldwide. The same goes for partnering with high-profile national teams, like Argentina, Germany, Japan, and Mexico, and stars like Lionel Messi, Mo Salah, Paul Pogba, Serge Gnabry, Manuel Neuer and Heung-min Son.

High-Profile Football Sponsorships

Puma has a similar view. In Puma’s 2018 annual report, they mention how the World Cup offered them the “perfect stage to present our brand and innovative performance products”. The national team partners and player ambassadors provided the brand with high visibility. The company mainly attributed the growth of the sporting goods industry that year to the World Cup in Russia.

Nike even believes that a failure to establish and maintain high-profile partnerships, including those with national federations, clubs and players, is one of many operating risks the company faces that could negatively impact overall performance. It would namely result in a loss in visibility and on-field authenticity associated with their products, which in turn would require marketing budgets to be modified and increased. The risk of losing out on these endorsements is not unfounded as heavy competition with other brands increases costs.

Advantage Of Being An Official FIFA Partner

By being associated with FIFA since 1970, Adidas has an advantage when it comes to promotion around the World Cup. Currently the German brand is a global partner of FIFA. As such they supply the official match ball and equip officials, referees, volunteers, and ball kids. In 2013, Adidas and FIFA extended their deal until at least 2030. Although the financial details of the current deal are not public, a previous extension in 2005 covering the 2010 and 2014 World Cup editions, was estimated to be worth $350 million.

It is a way for the company to connect with consumers and football fans around the world. However, due to a “highly diversified category mix” the company expects and sees a limited direct financial impact from the tournament. Even though it has led to a growth in the football branch, they focus on brand visibility and customer connection. By spending extra on marketing during the World Cup they hope to leverage the platform. In 2014, their sales and marketing expenditure increased by seven percent to €947 million (2013: €882 million) The brand mainly attributed the €65 million increase, to marketing costs related to the 2014 FIFA World Cup.

Nike and Puma miss out on the access and privileges that being an official FIFA partner gives brands, but at the same time they can invest that amount of money on different marketing activities and product activations. They can even leverage the extra buzz around the World Cup, provided that they adhere to the rules and do not mention the World Cup or any affiliated names directly.

Especially Nike pays heavily for numerous deals with national federations, so they have visibility in the football market. In addition, they sponsor a good number of players. During the 2018 World Cup in Russia, Nike expected 60 percent of all players to wear their brand.

Brand Visibility At The World Cup

At the 2022 FIFA World Cup, Nike will have the most visibility when it comes to the kits that nations wear. 13 teams play in Nike kits, seven in Adidas and six in Puma. Together these three major brands sponsor over 80 percent of the teams participating in Qatar.

During the 2018 FIFA World Cup in Russia, it was Adidas who led the way by sponsoring 12 nations. Nike and Puma followed with 10 and four respectively. However, it was a Nike-final when France beat Croatia 4-2.

It was only the second time in the last 10 editions that a Nike sponsored team won the World Cup. Adidas had the honour four times, Le Coq Sportif twice and Puma and Umbro both once during this period. In recent editions especially, it is the three major brands that dominate as supplier of the best nations. During the last five World Cup editions (2002-2018) the final four teams always played in either Adidas, Nike (both nine) or Puma (two).

Securing New Football Partners Not Easy

Having more partner nations competing in the World Cup, gives sportswear brands extra visibility and that ultimately, even if it is indirectly, trickles down to sales. It is therefore far from ideal for Puma that its highest ranked team, Italy, is missing out on the World Cup for a second consecutive time. The German brand was there when the Azzurri won EURO 2020, but once again has less visibility on football’s biggest stage.

Securing new deals with major football powers is not easy without large investments. One of the last high-profile teams Nike was able to get on board was France in 2011. The American brand paid a reported $64 million a year to take over from Adidas, who had sponsored Les Bleus since 1974. They offered four times what Adidas was paying at the time.

The brand was also able to secure England in 2013, the year before the World Cup in Brazil. The English had been playing with British brand Umbro since 1984 but given the size difference of the two brands, Umbro could probably not compete financially with Nike.

Adidas secured Belgium as partner in 2015, who have attended the four major European and World Cup tournaments since then and have done reasonably well.

Shirt Sales & Official Balls: More Direct Measures

Although the focus is on brand visibility and the direct effect on sales is hard to measure, jersey and match ball (in the case of Adidas) sales are an interesting measure for the brands.

Much of the benefits of shirt sales comes before the tournament as shirts have already been sold to retailers. Extra sales during or after the tournament is related to a team’s progression.

In the year of the 2014 World Cup in Brazil, Adidas sold 14 million units of the official match ball, the Brazuca. During the 2010 World Cup year, the sportswear manufacturer sold 13 million units of the Jabulani match ball.

Adidas Jersey And Match Ball Sales

In addition, Adidas sold around eight million jerseys in 2014. Which was a 23 percent increase compared to the 6.5 million units sold during the 2010 World Cup year. The German jersey was sold the most with sales of 2 million units, more than 30 percent above the previous record of 1.5 million in 2006. This was also due to the German’s successful run that edition, winning the World Cup by beating Argentina 1-0 in the final after extra time. Interesting enough half a million German jerseys were sold outside of Europe, while that was 300,000 in 2010.

Argentina, Mexico, and Colombia jerseys did also very well around the 2014 World Cup with each one selling more than one million units.

A positive for the brands this year may be that the World Cup takes place in November and December instead of the traditional summer months. The holiday season may give an extra boost to sales.

World Cup Campaigns

In recent years, more and more focus has come on digital activations and making content and products widely accessible. Especially Adidas is in the perfect position to do this. As official FIFA partner, the brand has access to the tournament and behind the scenes. In 2014, Adidas’ goal was to make the World Cup the most accessible one in history.

The brand focussed on portraying itself as a, or rather the, football brand and portrayed Adidas-sponsored star Lionel Messi as the best footballer. Digitally the company achieved a lot of interactions, also due to setting up a Twitter account for the Brazuca match ball that gained over 2.4 million followers.

During the 2018 World Cup, Adidas believed itself to be the most influential brand on social media with more visibility and having a greater effect than its competitors.

Especially the advantage of stadium advertising as official FIFA partner helped as it increased the average download rates of the Adidas app by five times.

During that same edition, Nike broke with their own tradition of betting on one big advertisement. A strategy that was successful during both the 2010 and 2014 World Cup. Instead, they chose multiple stories optimised for different devices, platforms, and fan segments.

Ultimately, partnerships and marketing campaigns are sportswear brands’ strategy to spread their message and connect with fans. The rising prices of these affiliations will not make it easier for them in the coming years. It requires efficient spending on the right partners, events, and campaigns. However, the FIFA World Cup, with its enormous reach, is still deemed an ideal place to make an impact.