The Business Page: Nike, adidas dominate endorsement world
When Denver Broncos' linebacker Von Miller tattooed the adidas logo on his arm this spring, he proved a point: Getting an endorser to personally buy into a brand has exponential worth.
"No, we did not pay for that," said Chris McGuire, director of sports marketing for adidas. "That was funny and came out of the blue. That goes right back to how we look at athletes, trying to partner with them and their values and the belief they have in the brand."
As one of the giants in the athlete endorsement world, adidas wants as much buy-in as it can muster from its 250-plus athletes, garnering individualized, natural support in the process. They're competing with Nike, after all.
Industry experts agree that Nike serves as the leader in endorsement contracts, spending hundreds of millions of dollars every year just on athletes. Add in sponsorship deals with leagues and universities and other advertising expenses and Nike easily spends more than $750 million a year on all sports marketing and advertising, according to financial documents available as part of a publicly traded company.
And while neither Nike nor adidas discuss the specific amount they spend on athletes, the two giants far surpass the next closest competitors, likely Coca-Cola, Pepsico (which includes Gatorade), McDonald's and Subway. Other companies likely in the top-10 include mobile companies Samsung and Sprint, financial companies such as American Express, Visa and Credit Suisse, fine watchmakers Rolex, Tag Heuer and Audemars Piguet and of course some other sports apparel companies, such as Under Armour and Puma.
But nobody touches Nike or adidas in athlete volume or amount of money spent on individual athletes (Coke or McDonald's, for example, will drop hundreds of millions on event sponsorships, such as the $600 million Coke spent on the World Cup). The two apparel competitors have hundreds of athletes signed to contracts across a spectrum of genres, not just the big name sports. Nike has 21 skateboarders and 27 snowboarders, for example, some with their own lines of shoes and apparel. They also have athletes stretching from cricket to track and field. But signing eight new rookie NFL players immediately before the draft shows the value they put in the "sports that matter most to the consumers and fans," said Nike spokesperson Brian Strong.
Even with the hundreds of athletes signed globally, Nike and adidas both have signature athletes they build entire marketing campaigns, shoes and clothing lines behind. Maybe it's Kobe Bryant, Lebron James or Kevin Durant in basketball for Nike, whereas adidas counters with Derrick Rose, John Wall and Dwight Howard. Nike has Cristiano Ronaldo; adidas has Lionel Messi and David Beckham. Nike features Adrian Peterson; adidas has Robert Griffin III. Roger Federer vs. Andy Murray, Alex Morgan vs. Heather O'Reilly, Maria Sharapova and Serena Williams vs. Caroline Wozniacki. The lists go on.
"We look at having the right guys to tell a story from our peak categories," said McGuire about adidas' strategy of choosing athletes. "Basketball, football and soccer are drivers for our core consumer of high school kids, those aspiring professional athletes looking to emulate the pros. We want guys that fit a certain profile and are in line with our brand values."
Strong says Nike doesn't look at having a certain percentage of athletes in a given sport or sampling of sports, instead using people to track talent to get the right person on board. "We are looking for pinnacle-level athletes that represent the brand appropriately," he says.
And getting the top in the sport -- Nike just signed the top three WNBA draft picks on May 7 -- works two ways. The athlete gets the benefit of being involved in the sports culture these companies create (athletes enjoy hobnobbing with athletes from other sports) and they share performance insights that Nike and adidas both attempt to capitalize on by creating updated product, both for athletes and money-spending consumers.
McGuire says that athletes also see this partnership model as a way to improve their personal standing. "Some athletes see our global reach and what that can mean for them individually," he says. "Maybe a basketball player sees working in the Far East or Asia or a European soccer player sees getting into the U.S. market."
David Carter, director of USC's Marshall Sports Business Institute, says that athletes see their first deal with Nike or adidas as an arrival point. Wall agrees, saying that after wearing adidas throughout the 2012-13 season and then debuting his own shoe: "I'm happy to have my first big thing with the adidas family."
While Nike and adidas will both be the first to say that having an athlete wearing product as it was intended for use serves as the best value for their endorsement dollar, McGuire says that nowadays connecting athletes to consumers outside competition is a key component, whether television commercials or social media use. Even if that mention comes in the form of a tattoo.