July 3, 2018 / 10:13 PM / 4 months ago

UPDATE 1-Nike favored to beat soccer juggernaut Adidas at World Cup

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2, replaces graphic)
    By Noel Randewich
    July 3 (Reuters) - In a World Cup brimming with upsets, Nike
Inc looks on track to defeat soccer juggernaut and
archrival Adidas AG in the closely watched jersey
sponsorship battle.
    The Nike swoosh decorates the outfits of Brazil, France and
England, the sides in the quarter-finals most favored by betting
websites to win the World Cup, plus Croatia. 
    Top German sports brand Adidas has Belgium, Russia and
Sweden in the quarter-finals, with the group of eight rounded
out by Uruguay, sponsored by Puma SE.
    The combined accomplishments of Nike-sponsored teams in
Russia mark a major success for the U.S. sports apparel maker as
it pushes to increase global soccer-related sales that reached
more than $2 billion in fiscal 2018.
    "While Adidas dominates the European leagues and the U.S.
professional league, certainly any market share that Nike can
pick up in a nontraditional U.S. sport can only bode well for
the stock price and brand," said Jake Dollarhide, chief
executive officer of Longbow Asset Management in Tulsa,
Oklahoma. 
    Sports brands typically sell the bulk of their fan
merchandise ahead of the World Cup, but a team's success on the
field can generate extra demand for gear emblazoned with its
emblems and colors, especially if its progress is unexpected.
    Nike kitted out more teams than Adidas for the first time in
Brazil in 2014. Adidas fought back this year, sponsoring 12 of
the 32 participating teams, including strong early contenders
Germany and Spain, along with host Russia.
    Nike supplied shirts for 10 countries this year.   
     
    The tournament took a disastrous turn for Adidas last
Wednesday, with the unexpected elimination of 2014 champion
Germany. Shares of Adidas, Germany's team sponsor, fell 2.7
percent in the following session.
    In 2014, Germany accounted for a third of Adidas' roughly 9
million team jersey sales, Wedbush analyst Christopher Svezia
wrote in a recent client note, with an incremental 10 percent of
those sales resulting from Germany's tournament victory. 
    Over the weekend, high-profile Adidas-sponsored teams
Argentina and Spain were eliminated. Likewise, Mexico lost to
Nike-sponsored Brazil on Monday.
    Heading into this year's World Cup, Adidas downplayed the
sporting event's potential effect on sales, pointing to Russia's
tepid economy.
    But the World Cup remains a major marketing opportunity for
Adidas, which is one of seven FIFA partners and the supplier of
the World Cup match ball since 1970. 
    As well as team jerseys, sponsorship of top individual
players is critical for the promotion of soccer shoes. Ahead of
the World Cup, Nike expected 60 percent of players heading to
Russia to use its footwear.
    Since the start of the World Cup on June 14, Nike's stock is
up almost 3 percent, helped mostly by a strong quarterly report
and sales outlook last Thursday. Adidas has lost about 5
percent.

    
 (Reporting by Noel Randewich in San Francisco
Editing by Bill Rigby and Matthew Lewis)
  
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