Adidas Sees World Cup Jersey Sales Setting Record Despite Russia
(Bloomberg) -- Adidas AG expects its sales of team jerseys to set a record around the World Cup in Russia this year, despite the host country being sanction-hit and several big-name contenders not qualifying.
Experts predict the absence of traditional soccer powers Italy and the Netherlands, along with the failure of the U.S. and Turkey to qualify, will hold back sales of World Cup merchandise. Adidas has said the overall financial impact from the tournament won’t match that of the Brazil edition four years ago. Still, for shirts, the most prominent seller among such gear, unit sales will outpace the 8 million Adidas sold in 2014, Chief Executive Officer Kasper Rorsted predicted.
Adidas will also sell 10 million official tournament balls, down from 14.5 million four years ago, according to German soccer consultant PR Marketing. The firm forecasts sales of 14.9 million replica team jerseys across the 32 nations participating, down from 17.7 million in 2014. Rorsted said Adidas won’t give forecasts for balls or shoes, adding that in the U.S. alone, the company expects to sell 1 million jerseys this year, despite the nation not competing. The U.S. team is sponsored by archrival Nike Inc.
“The U.S. are becoming more and more football-crazy,” Rorsted said in an interview at the company’s headquarters in Herzogenaurach, Germany. “America is the next frontier in football, and then China is behind that and will eventually get there.” The Asian country has vowed to fight obesity and made the sport a priority on its political agenda.
The German company leads Nike and smaller competitors including Puma SE in shirt sponsorships for the competition in Russia. Adidas has 12 such deals with national teams in the tournament, two more than the Beaverton, Oregon-based company. Puma, also based in Herzogenaurach, trails with four, while newcomer New Balance Athletics Inc. has two.
Another factor that’s expected to weigh on sales of World Cup-related merchandise is the economic crisis of tournament host Russia. Amid sanctions following President Vladimir Putin’s move to annex Crimea, Adidas sales in the country have fallen by nearly half since 2014. That will remain a challenge until sanctions are lifted and oil prices recover, Rorsted said, though current prices of about $75 a barrel should provide some tailwind for the nation’s economy.
Growth at Adidas has been fueled in recent years by sales of retro sneakers like the Stan Smith tennis shoe, as well as so-called athleisure wear that’s worn off the sports field. The World Cup will also spark sales of products beyond shirts, shoes and balls, as fans around the world may opt for an Adidas hoodie next time around if the brand comes across well, Rorsted said.
Adidas is focusing on the biggest teams in terms of fan reach and success on the field, Rorsted said. Despite price inflation to sign top clubs in Europe’s leagues, the ones with the biggest price tags are also the ones generating the best return for Adidas as a sponsor, he said. In Germany’s elite Bundesliga, that narrowed focus leaves Adidas sponsoring only Bayern Munich, as its contract with Schalke 04 ends and Hamburger SV has been relegated.
Puma has Germany’s Borussia Dortmund under contract for another two years and owns a stake in the club, making it unlikely that Adidas will lure it away, Rorsted said. However, London’s Arsenal, one of the English Premier League’s biggest names, is an attractive target as Puma’s deal with it expires next year, the executive said.
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