The 2018 FIFA World Cup in Russia is nearing its climax, with the final set to kick off this Sunday on Fox (FOXA - Free Report) . And although the final matchup isn’t set and the victorious nation has not hoisted the trophy, Nike (NKE - Free Report) already beat its rival Adidas (ADDYY - Free Report) at the World Cup.
When the tournament began on June 14, Adidas held the early lead over Nike. Not only is the German sportswear giant one of just seven official FIFA partners along with Coca-Cola (KO - Free Report) , Visa (V - Free Report) , Hyundai/ Kia, Chinese conglomerate Wanda, Russian giant Gazprom, and Qatar Airways, the company also edged out Nike in terms of total team sponsorships.
Adidas has been a FIFA partner since 1970, and will be the official ball of the world’s biggest sporting even until at least 2030. The company also sponsored 12 of the 32 teams at this year’s tournament, including three favorites Germany, Spain, and Argentina. But, Germany didn’t make it out of the group stage and Spain and Argentina were eliminated in the round of 16.
Oregon-based Nike spent heavily to become a soccer powerhouse since the U.S. hosted the World Cup in 1994. Since then, Nike has successfully infiltrated every level and nearly every league in the world. Nike began the 2018 World Cup with 10 teams sporting its iconic swoosh, including Brazil.
More importantly, three out of the four teams that made it to the semi-finals of the World Cup were Nike teams. Furthermore, France defeated Belgium, the lone Adidas team, in the first semi-final game Tuesday. Now, even before England play Croatia on Wednesday in the second semi-final, the World Cup winners are guaranteed to be wearing Nike—all of whom are currently on the front page of Nike’s website.
This is great exposure for Nike, especially since Adidas pays millions to be an official FIFA partner, which according to The Telegraph costs between $25 million and $50 million annually.
Although the three most famous soccer stars on the planet, Cristiano Ronaldo, Lionel Messi, and Neymar, are all out of the World Cup, there are certainly some big names left.
Adidas’ only remaining star is France’s Paul Pogba, who sports a Nike kit for France. The third biggest team sponsor, with Under Armour (UAA - Free Report) notably left off this list, was Puma. The German sportswear company’s biggest individual star, Antoine Griezmann also happens to play for France (also listen to: A Sportswear Industry Overview Amid Puma's Basketball Push).
Meanwhile, two of Nike’s rising soccer stars are England’s Harry Kane and Kylian Mbappe of France, both also play for Nike-sponsored club teams. Nike tweeted from its main Twitter (TWTR - Free Report) account for the first time in a month to congratulate Mbappe on Tuesday.
Nike noted that Kane’s Tottenham and the World Cup were two of the big places the company spent money. “Fourth quarter demand creation increased 25% primarily driven by investments in new sports marketing assets such as Chelsea, Tottenham and the NBA, brand marketing around key global sporting events such as the NBA Finals and the World Cup,” CFO Andy Campion said on Nike’s recent quarterly earnings call.
Some people might say that sports sponsorships don’t matter, and maybe they are less quantifiable to Budweiser (BUD - Free Report) or McDonald’s (MCD - Free Report) , which are official 2018 World Cup sponsors. But for sportswear companies such as Nike, they are important, especially since the company is actively expanding its reach in the sport. Investors should also note that Nike’s overall soccer revenues climbed 8% to $2.15 billion during its recently completed fiscal year, trailing only sportswear and basketball in terms of growth.
The World Cup also offers the chance to reach billions of people around the world, as well as across social media channels such as Instagram (FB - Free Report) and YouTube (GOOGL - Free Report) in highlights that will live for years to come. The 2014 FIFA World Cup in Brazil reached 3.2 billion people total, with one billion reportedly tuned into the final. And while Americans might not love the sport, 60% of Nike’s revenues come from outside of its domestic market.
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