Nike Ousts Adidas as French Soccer Team's Sponsor

Feb. 22, 2008 (Bloomberg) -- Nike Inc., the world's largest maker of athletic shoes, ousted Adidas AG as uniform supplier to France's national soccer team, breaking up a 37-year relationship.

The new contract starts in 2011 and runs through 2018, Jean-Pierre Escalettes, head of the French Football Federation, said today at a press conference in Paris. Nike will pay 42.7 million euros ($63 million) annually for 7 1/2 years for the rights, and may make further payments based on France's performance in the 2014 and 2018 World Cups.

Nike seeks to topple Adidas as the top maker of soccer apparel by the 2010 World Cup. Sporting-goods companies compete for sponsorships to boost revenue by selling replica jerseys, and place their logos on team gear. Nike, which supplies Brazil's national soccer team, tried last year to end Adidas's five-decade status as uniform sponsor for the German national team.

``It hurts the image, but I wouldn't overestimate the negative impact on the Adidas brand,'' Tim Burkhardt, an analyst at Landesbank Baden-Wuerttemberg in Stuttgart, Germany, said in an interview. Burkhardt, who recommend investors buy Adidas shares, sees support for the company as it repurchases stock.

In addition to Nike and Herzogenaurach, Germany-based Adidas, the contract was contested by French sports company Airness. ``These were three offers of high quality, and there was only the price to separate them,'' Escalettes said.

Nike rose 27 cents to $60.59 at 4:01 p.m. in New York Stock Exchange composite trading. The shares declined 5.7 percent this year. Adidas fell 50 cents, or 1.2 percent, to 42.54 euros in Germany.

Adidas Contract
Adidas, Europe's biggest sporting-goods maker, is paying 10 million euros a year under its current contract, which began in 2004, Escalettes said.

``It's a great day for Nike football,'' Charlie Denson, president of the Nike brand, wrote in an e-mailed statement. The Beaverton, Oregon-based company also makes uniforms for Arsenal and Manchester United of England's Premier League.

Adidas outfits soccer clubs from England's Liverpool to Los Angeles Galaxy, whose roster includes star midfielder David Beckham. The company replaced Umbro Plc as uniform supplier to Premier League club Chelsea in 2006 and is set to take over this year from Admiral as sponsor to England's national cricket team.

France won the World Cup as host nation in 1998 and lost the final to Italy in the most recent competition in Germany in 2006.

Nike agreed to acquire Umbro Plc, which supplies uniforms to England's national team. The 285 million pound ($567 million) purchase, which won Umbro shareholder approval last month, may be completed by April.

By Gregory Viscusi and Holger Elfes

Source : Bloomberg.com