Adidas Has a Problem
Plus Puma steals another Nike athlete and Napoli President wants to do deal with Netflix, Apple or Amazon.
Welcome to Athletic Interest.
This post could change the sports industry.
What are we talking about? Well, it would appear to confirm previous reports that Erling Haaland is about to re-sign with Nike as his boot sponsor.
Not only is this set to be one of the biggest individual sponsorship deals in football history, but it could also shift the balance of the sports apparel industry for the next few decades.
In the Messi/Ronaldo era, Adidas had Messi and Nike had Ronaldo. A perfect balance.
If Haaland does sign with Nike, and joins Kylian Mbappé, the Swoosh has arguably the two biggest talents in world football.
To understand why Haaland chose Nike, and the significance this could have for the company's bottom line, be sure to watch our latest YouTube video.
🍎 Sports Business Bites
📉 While Nike celebrates, things are going from bad to worse for Adidas.
In a recent statement, Adidas warned that 2023 could see an operating loss of around €700m.
This is also thanks to Kanye West. The end of the Yeezy deal, which was abruptly cut after West’s antisemitic remarks, has left the company with around €500m of unsold product.
According to the Washington Post, Adidas is likely to destroy the shoes.
But CEO Bjørn Gulden maintains that Adidas will return to profitability in 2024, with the company planning to reduce inventory, cut discounts and rebuild its internal culture.
“We will work on strengthening our people and the adidas culture,” explained Gulden. “Motivated people and a strong adidas culture are the most important factors to build a unique adidas business model again.”
🐈⬛ While Adidas struggles, just across the river, Puma is up to its old tricks.
Jack Grealish has just been announced as a Puma athlete in a $12 million per year deal. This is significant for two reasons. Firstly, it’s a record for a British player (more than double what Bale got with Adidas) and secondly, it’s yet another case of a Nike athlete signing for Puma.
Some of football’s (and Nike’s) biggest names, from Neymar to Jorginho have signed with Puma in recent years.
So, what is going on? Well, it’s not that Puma is necessarily offering more money, or that the athletes have any problems with Nike. Rather, it’s a symptom of a wider shift in the sports industry.
There was a time when Nike would try to sign almost every talent in football - they currently have almost 50% of the players in the big five leagues - but the Swoosh is shifting strategies and trying to focus on just the best young talent.
Meanwhile, Puma is actively looking to increase its stable of the biggest names under the ‘forever faster’ mission.
Nike letting go of several big names while Puma is searching them out has created a perfect storm for this transition.
📺 That’s enough about the apparel industry for one newsletter. Let’s talk about something that is just as interesting, media rights…hold on, let us explain.
Pretty much all of the top football leagues in Europe, apart from the Premier League, have been trying to sell shares of their TV revenues to investment companies.
Essentially, they grant the investor a percentage of future TV revenue in return for an upfront cash injection.
This is something that many of these leagues feel they need to do to keep up with the financial juggernaut that is the Premier League.
La Liga and Ligue 1 were the first to do this, selling significant stakes of future revenue for a combined €3.5 billion.
Now the Bundesliga and Serie A are working on their own deals, but not everyone is impressed.
Napoli owner, Aurelio De Laurentiis, has come out against the plans and argued that Serie A should retain the rights and try and get a better distribution deal.
The current domestic deal is with DAZN and runs until 2024, but De Laurentiis seems to think that streaming services like Amazon, Apple, and Netflix could provide competition and raise the future price.
This could actually be a smart strategy. Amazon is already providing competition to the likes of Sky and DAZN, with Apple also making some noise with its MLS deal and a potential bid for the Premier League rights. This new competition will likely increase prices.
The question remains, will Serie A want to wait for a potential pay rise, or simply take the cash now?