Lars Becker

Outfitter Bid Contest: The Multi-Million Deal with the DFB Jersey

The jersey for World Cup champion Germany is one of the most coveted assets in the sporting goods industry. On Friday the 18th of March, the multi-million battle for the outfitter contract with the German Football Association (Deutsche Fußball-Bund, DFB) began with a presentation in Frankfurt am Main. In additon to traditional partner Adidas, which still owns the rights until 2018, Nike and up-and-comer Under Armour also want to bid.

Adidas is still outfitter of the DFB – and thereby of the national team – until 2018.
Adidas is still outfitter of the DFB – and thereby of the national team – until 2018.

At any rate, Nike's German representatives won't have far to go to get to the DFB in Frankfurt. The sport industry's world market leader's branch is located at Otto-Fleck-Schneise 7. The DFB resides on the same street at number 6.

At least you couldn't really allege that Nike had a locational advantage as a result in the past. When the outfitter agreement was last renewed in 2007, Nike was rebuffed by the DFB, despite a spectacular 500 million euro bid for ten years. And that, even though the traditional rights holder Adidas doesn't even pay half that much – insiders only speak of a good 20 million euros annually.

Presentation at the DFB on Friday, March 18th

The agreement nevertheless expires in 2018, and begins in Frankfurt am Main on Friday the 18th of March with the presentation of the contenders in the multi-million battle for the new contract. In addition to Adidas and Nike, also appearing will be newcomer Under Armour, the fastest growing sporting goods brand in the world.

The outcome in favor of the rights holder with the three stripes is by no means secure, for at least two crucial reasons. For one, with president-elect Reinhard Grindel, the DFB can't afford any more back-room shenanigans after the scandal surrounding the 'summer fairy tale' of 2006. For another thing, it's still a matter of significantly more money than at the last contract award.

A billion euro bid?

Naturally, no one wants to officially talk about the exact amounts, but in the past few months speculations about a dream bid by Adidas have been making the rounds off and on. Once the talk was of 550 million euros, once even of a billion euros for a contract for the coming decade. The truth could lie somewhere in the middle: business insiders anticipate that, in the end, at least 60-80 million euros will have to be paid annually for the right to outfit the World Champ Germany.

That's why DFB is moving up a gear in the negotiations, because as the champion of champions, for the time being one has the best possible starting position. That initial position could change for the worse after the upcoming European Championship in the summer.

The team of Guangzhou Evergrande with the columbian Superstart Jackson Martinez.
330 million euros have been invested in the Chinese Super League - an all time high. Whilst everybody in Europe is talking about the huge amounts of money provided for the English Premier League through broadcasting revenues, China focusses on spending big time as well. 

Adidas partner since the "Miracle of Bern"

Adidas seems to naturally be the favorite at first glance; ultimately, its partnership with the DFB has already lasted over 60 years. The German national soccer team has taken to the field with the three stripes since the "Miracle of Bern," Germany's sensational World Cup win in 1954. Furthermore, as the current contractual partner Adidas holds a right to a matching offer. If a competitor puts forward a higher offer, Adidas would have to be informed about it, and could then offer the same amount – and would win the bid.

"Of course, we want to carry on our decades-long and successful collaboration with the DFB. We were, and are, partners in good times and bad. The German national team and adidas just belong together," says media spokesman Oliver Brüggen. The traditional brand from Herzogenaurach has recently been intensifying its strategy to bet on premium assets. 

Summer fairy tale scandal could play a role

That's how Adidas outdid archrival Nike as outfitter for Manchester United with Bastian Schweinsteiger – for 94 million euros per annum over ten years. After extending with Adidas until 2030, FC Bayern Munich is now also collecting up to 60 million euros per year, instead of the previous 25 million euros.

Nevertheless, the fact that the money of then Adidas head Robert Louis-Dreyfus played a substantial role in the 'summer fairytale' scandal will argue against an extension with the DFB. Due to the turmoil surrounding the awarding of the 2006 World Cup in Germany, DFB president Wolfgang Niersbach was forced to resign – incidentally, on the same day that Adidas officially presented the German uniform for the 2016 European Football Championship.

Under Armour is descended from sports in the US – but is now pushing toward Europe and into soccer.
Under Armour is descended from sports in the US – but is now pushing toward Europe and into soccer.

DFB a guest at Nike

That could in turn be used by world market leader Nike, which sells the most soccer shoes in Germany even without the DFB contract. A DFB delegation travelled separately to an introductory visit in the company's headquarters in Portland last year, to provide for a better atmosphere between the two parties. It also hasn't been lost on the DFB that Nike pays its flagship national soccer teams in England (approximately 35 million euros yearly) and France (reportedly over 40 million euros per annum) significantly more than Adidas does the DFB.

However, by all accounts Nike does not intend to put forth an official offer on Friday. It's understood from the world market leader that the first step is only a matter of exchanging ideas. A reason for this could be that Under Armour, a completely new player, aims to join in on the fight for the DFB jersey - and could possibly have the last laugh.

Fast climber Under Armour

The company was first founded 20 years ago, yet with a turnover of 3.7 billion euros in 2015, it has soared past Puma as the worldwide number three in the sporting goods industry, behind Nike and Adidas (they've already overtaken adidas in the USA).  The company, erstwhile specialized in martial arts apparel, in already on its way to Number 1 in American football and has grown by a spectacular 28 percent in the past year.

With an aggressive strategy, the newcomer is now attempting to get a foothold in the lucrative soccer business, as well. The brand is already near and dear with Tottenham Hotspur, and will be shirt sponsor for FC St. Pauli starting next season. A deal with the DFB would be the worldwide breakthrough for Under Armour in the soccer industry; ultimately, the business with the (German) jersey is exceedingly lucrative.

"Everything's a question of price"

In the 2014 World Cup, Adidas purchased jerseys, soccer shoes, balls, and memorabilia for the record amount of more than two billion euros. In total, more than three million men's and women's national team jerseys were made. It's entirely possible that, in the near future, three stripes will no longer be found on the German national team jersey in soccer highlights. An insider: "The law that the German national soccer team has to take to the field with three stripes no longer applies. The DFB is developing further, there'll be no more messing around. Everything will be a question of price."

Share article
Lars Becker

Lars Becker