nytimesbusiness: Competition Comes to a Head for World Cup Sponsors

PARIS — The first decisive marketing goal of World Cup 2010 was scored nearly three years before the opening match of the soccer tournament, in which Mexico will face South Africa on Friday.

It came when Nike, the American sports shoe and clothing maker, acquired Umbro, a British supplier of soccer gear that is a longtime sponsor of the English national team. The deal signaled a new determination by Nike to challenge Adidas, the German soccer apparel powerhouse, on its European home turf.

Now the companies’ lineups in the international soccer sponsorship arena are more evenly matched than ever. At stake are hundreds of millions of dollars’ worth of sales of World Cup replica shirts to fans around the world, as well as a claim on their loyalty when the time comes to buy a new pair of shoes.

With 12 of the 32 teams — including Argentina, France, Germany, Spain and the host nation, South Africa — set to wear shirts with the Adidas logo on them, that company has a slightly broader World Cup presence than Nike. And unlike Nike, it is also an official sponsor of the event.

But Nike, which planted itself firmly on the international soccer scene only in 1996, when it signed a landmark agreement with Brazil, includes several of the most prized teams among its 10 World Cup contenders. The deal between England and Umbro, which Nike maintains as a separate brand, is the most lucrative in international soccer, valued at €34 million, or $40.7 million, a year, according to Sport+Markt, a research firm. It is followed by Nike’s continuing relationship with Brazil, worth €22 million a year.

“On awareness, Adidas is still slightly ahead of Nike,” said Hartmut Zastrow, executive director of Sport+Markt. “They have defended themselves well, but Nike is pushing aggressively.”

Nike has already potentially bolstered its position for the next tournament, in 2014 in Brazil, by signing France to a seven-year deal in which it will pay the country’s soccer federation more than €40 million a year. The agreement will leapfrog France past England, making its shirts the most lavishly sponsored uniforms in international soccer.

The deal more than quadruples the value of France’s existing sponsorship by Adidas. It is not the only inflationary effect of Nike’s push into Europe. Just before buying Umbro in 2007, Nike tried to snatch Germany away from Adidas. Nike reportedly offered almost as much as it will pay France, but the German national team eventually decided to stick with Adidas. In doing so, Germany settled for a mere doubling of its previous deal, to €20 million a year.

The fat checks from Nike and Adidas have not entirely priced rivals out of the market. With Nike and Adidas playing the equivalent of a possession game, the third-biggest soccer sponsor, Puma, has exploited unexpected openings in its rivals’ defenses — an opportunistic strategy modeled on the playing style of Italy, Puma’s biggest sponsorship.

Puma is spending an estimated €30 million this year to sponsor teams in the 2010 World Cup, compared with €104 million for Nike and Umbro together and €85 million for Adidas, according to Sport+Markt.

But Puma gets good value out of these deals. Italy is the reigning World Cup champion, and the team has a strong international following. The body-hugging Azzurri shirts, popular with style-conscious fans, are consistent with Puma’s effort to transform itself from a pure supplier of gear into a “sports lifestyle” company.

“With shirt deals, it’s all about picking a winner,” said Nigel Currie, director of brandRapport, a sponsorship agency in Guildford, England.

Puma was also forward-looking in its recognition of the marketing potential of aligning itself with African national teams, long before South Africa was chosen, in 2004, as the first World Cup host on the continent.

In 1997, Puma signed up Cameroon, and it has strengthened its ties to Africa since then. At the 2006 World Cup, Puma had all five of the African teams in the competition. This time, it has four of the six African countries involved; South Africa and Nigeria are with Adidas...pleasse continue reading here nytimesbusiness