At the 112 th minute, with the World Cup’s final match only minutes away from the brutal penalties stage, Mario Götze, the German soccer star, charged forward and scored the winning goal resulting in a 1-0 win for Germany against Argentina. The goal marked the end of an impressive World Cup performance for the German soccer team but even as they were climbing the ladder to the top spot, charging forward like a German engine, it was sportswear maker Adidas attempting a similar feat with its soccer clothing business by trying to cash in on World Cup mania. The latest landmark deal for the German sportswear maker may just be Adidas’ way of raising the World Cup Mania to a new level and which could, consequently, affect the dynamics of the stock.
The Manchester United Deal
Rivalries between sport teams is an age old phenomenon while rivalries between sporting goods manufacturers is somewhat less commonplace. Unless, that is, you’re talking about the long-standing rivalry between Adidas and Nike which could heat up in the aftermath of the recently struck, 10-year £750 million deal between Adidas and U.K. football club, Manchester United, or Man U as it is called by fans. This agreement effectively puts an end to the previous deal between Manchester United and Nike, Adidas’ arch-rival. The exclusivity agreement permits Adidas to distribute dual branded (i.e. Adidas and Manchester United) products around the world, but what makes the deal a “big deal” is the huge Man U fan base (659 million supporters are estimated worldwide) which gave rise to sales expectations, worldwide, at £1.5 billion over the 10-year period. Though currently enduring a slump, Man U’s inclusion adds to Adidas’ roster of high profile football teams including Chelsea, Bayern Munich and Real Madrid.
Adidas - Nike Rivalry in Full Swing
Adidas originated in Germany in the 1920s and has been the premier manufacturer of soccer boots since then. U.S. “upstart” Nike is hoping to change that by going toe-to-toe with Adidas for industry dominance. In the wake of the hype from the recently ended World Cup, Nike came out the clear “winner” with six of the ten most recognizable names in football, including Cristiano Ronaldo and Neymar wearing Nike while Adidas outfitted three of the top ten, including this year’s winner of the Golden Boot, Lionel Messi.
Adidas Stock to Charge Forward?
As seen below, amid fierce competition with Nike over soccer dominance, Adidas stock has been in a slide. But will the latest deal with the one and only Manchester United help it turn around and charge forward, Götze style? Is Adidas about to score some important points against its rival Nike? The 76 level of the stock might provide the answer. If the stock is able to close above it, then be prepared because another German player is about to charge forward.
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