07/02/2024 – 16:24
Sportswear companies like Adidas spend millions every year on sponsoring football kits. But is it worth it? Football is a huge money-making machine worth billions, starting with the sale of shirts. For some companies, using football to promote their brand is worth a lot of money.
The objective is to make brands better known and improve their image among customers.
For example, major sports equipment suppliers such as Adidas or Nike pay hundreds of millions to equip teams. In return, their logo appears on the uniforms, which can boost sales of other sports products they produce.
Adidas and Nike compete for German selection
Sports marketing on kits is a very lucrative source of income for football teams. “Shirts are the most purchased items by fans. That is why they play the most prominent role in the sales of merchandise associated with teams and national teams,” explains sports marketing consultant Peter Rohlmann. According to him, no other team receives such high amounts of sponsorship for sports equipment as Germany.
Adidas has been supplying sports equipment to the German Football Association (DFB) for 70 years. After Nike agreed to spend significantly more on the German team than its competitor, the American company won the competition and will replace Adidas as the official supplier from 2027.
It is unclear how high the amounts involved will be. The parties have chosen to remain confidential, according to the DFB website. However, DFB director Andreas Rettig said Nike’s offer was impossible to reject.
According to reports from outlets such as German business magazine Handelsblatt, Adidas recently paid 50 million euros (R$305 million) to the DFB, with Nike expected to invest double that in the future.
Contracts with record value
Even higher amounts are paid to the big teams, says Rohlmann. Adidas has extended its ten-year contract with Manchester United in England for an estimated 120 million euros, while in the case of Real Madrid the company is paying around 150 million.
These high sums are due to the fact that clubs play at least four times more than national teams, which means that their shirts are seen more frequently on football pitches.
“No sports equipment supplier will be able to earn this amount from sales alone,” notes Rohlmann. It is largely about improving their visibility, since national teams are particularly at risk of being eliminated early in the tournaments they participate in.
“What is more questionable than ever is whether such sponsorship is really worthwhile for companies,” says Professor Markus Voeth from the University of Hohenheim. “It rarely has any direct effect on purchases. Only around 12 percent of people surveyed first look for brands that sponsor the European Championship when consuming products or services.”
The partnerships with major football associations have not met the manufacturers’ expectations over a 15-year period. Adidas CEO Bjørn Gulden told German newspaper Frankfurter Sonntagszeitung in June that “all suppliers are losing money from these contracts, if you look at it from a commercial point of view. Previously, it was thought that shirt sales would skyrocket, but that didn’t happen,” Gulden said.
“That’s logical. Let’s assume that Germany wins the European Championship. Does that mean that the whole world will buy German national team shirts? No, it’s mainly Germans who buy them.”
Adidas’ bubble-busting marketing strategy
The German price comparison platform Check24 is not one of the biggest sponsors of the European Championship. Without paying any money to the DFB, the portal managed to get involved in the football business with a very simple idea: to distribute German national team jerseys, regardless of the fact that they do not have the DFB logo. These jerseys feature the eagle symbol of the Federal Republic of Germany and the logo of the sports equipment company Puma. On the chest, in large size, the Check24 logo appears.
Interested parties paid for the shirts using their personal information – address, phone number and email – when they downloaded the platform’s app on their cell phones. After receiving the information, the company sent the shirts. After distributing around five million units, Check24 ended the campaign.
The platform’s founder, Henrich Blase, told Finance Forward magazine that this was the biggest marketing campaign ever carried out by the company.
Sascha Raithel, a marketing professor at the Free University of Berlin, estimates that production and shipping cost at least 10 euros per shirt. “For five million shirts, we can calculate something like 50 million euros just for the production of the shirts and logistics.”
Check24 also ran an advertising campaign, including commercials on several television channels. According to Raithel, this could have increased costs to as much as 100 million euros.
Data, downloads and media attention
In return, Check24 has become the talk of the town, including in the press. The website’s app became the most downloaded app in the country for weeks. The platform has collected a huge amount of data that it can use to target potential customers. This data can easily be sold to other companies, says Rohlmann.
Check24 offers price comparisons for financial services, insurance companies, energy companies, telecommunications, travel, shopping and more. The service is free of charge for users. The company finances itself through commissions from the deals it closes.
Raithel believes that the biggest danger for the platform will be the lack of new promotions. “If there is no sensible promotion to retain customers, there is a high risk that a large part of this investment will end up being thrown out the window. People will forget about the whole thing and there will be no loyalty on the part of customers,” he warned.
Adidas sales on the rise
According to a survey by the University of Hohenheim, one in five people in Germany would like to buy a German national team jersey. It is questionable, however, whether Adidas sold fewer jerseys as a result of the Check24 campaign.
The company’s best-selling item to date is the white Germany national team jersey. “The pink jersey is the second best-selling kit in the history of DFB kits,” Adidas spokesman Oliver Brüggen confirmed to German broadcaster ZDF. The fact that some models have sold out means demand may have been higher than expected.
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