While national football teams still in the race for the ultimate prize are battling for advancement in this year’s World Cup, Adidas and Nike, two of the worlds most powerful sports merchandise manufacturing brands are dueling for fans’ spending money.
Adidas AG is one of the seven partners for the 2018 tournament as evidenced by the Adidas logo that can be found on every game ball and other equipment. The company also sponsors Mexico, Russia, Colombia, Argentina, Germany and other countries, while Nike Inc. on the other hand sponsors some teams including Brazil, Portugal, Nigeria, England and France.
Nike leads sales
After a week into the tournament, Nike had a higher sellout rate, having depleted 28 per cent of its World Cup merchandise within the first seven days according to Thomson Reuters research. Adidas, meanwhile had sold six per cent of its FIFA geared goods during that same time.
Interestingly, neither company discounts much of its World Cup merchandise because the tournament's popularity means they don't have to but a research conducted by StyleSage Co., titled “Adidas vs. Nike, Who Will Score More World Cup Goals” makes the distinction that little World Cup merchandise had been discounted. Nike had a higher average price point for its shirts and jerseys at $75.09 compared to Adidas $56.32.
According to the report, Nike's inventory days are lower than Adidas' and are down slightly from the previous quarter, while maintaining a stable level of inventory days. Both companies also have healthy operating profit margins above the industry standard. The research showed that companies with high returns tend to have a higher probability of sustaining earnings in the future.
Adidas is still much smaller than Nike: Adidas brought in $5.3 billion in 2017 compared with Nike's $15.2 billion. But Adidas has a better sense for what consumers want to buy which is making Nike sweat.
The World Cup value
In terms of most valuable sports events brands, the FIFA World Cup ranks fourth with US$229 million, with the Super Bowl taking top honours, followed by the Summer Olympics and the Winter Olympics, according to a 2017 Forbes survey.
This years tournament has US$791 million in total prize money at stake. Brazil leads the world in terms of most World Cup wins with five titles. And Argentina’s Lionel Messi and Brazil’s Neymar lead the charge for players with the highest market value at $180 million, according to Statista.
Exciting times are ahead as the tournament progresses because depending on which teams fight their way into the finals, product sales may tilt either way. — GB