A recent marketing victory for Nike has resulted in a business win for Adidas. The German Football Federation (DFB) made a commercial decision to replace Adidas with Nike as the supplier of kit for the German football team from 2027 to 2034. This decision was met with strong emotional reactions from Germans, who lamented the end of a 77-year-old all-German partnership. The health minister, Karl Lauterbach, expressed concern that commerce was destroying a piece of “Heimat,” a German word that evokes the idea of home, belonging, and place. The economy minister, Robert Habeck, and Bavaria’s premier, Markus Söder, also voiced their disappointment with the decision.
Despite the outcry, Bernd Neuendorfer, head of the DFB, defended the decision, citing the organization’s dire financial situation. Nike’s offer of €100m to kit out the Nationalmannschaft was twice as much as Adidas’ offer, making it a clear choice for the DFB. For Nike, this amount is pocket change, given its annual operating profit of $6bn, while it would have burnt a hole in Adidas’ pocket to match this offer.
Adidas’ chief executive, Bjorn Gulden, prioritized finance over football, despite his background as a professional player. Under his leadership, Adidas is showing signs of recovery, with a 40% rise in share price over the past 12 months. Analysts were pleasantly surprised by the company’s operating profit, which is expected to reach €500m this year.
2024-03-27 09:12:31
Source from www.economist.com