Nike vs. Adidas: Who Wins When the World Cup Ends?

The World Cup is getting closer to the final match, and Nike and Adidas have battled hard. Now, which of these two sports behemoths is a better play for Foolish investors seeking long-term growth after the World Cup is over?

Jul 6, 2014 at 10:00AM

Adidas Football Via Adidas
Source: Adidas.

The World Cup is under way and getting closer to the grand finale. In addition, this globalmatch-up is pitting Nike (NYSE:NKE) and Adidas (NASDAQOTH:ADDYY) against each other for best long-term value after the tournament ends. The world cup is expected to have more viewership than any other televised event in the world. American Nike and German Adidas went head to head on the field as these companies' home teams battled last Thursday. Unfortunately for U.S. fans, the German soccer team won the day with a 1-0 victory over the U.S. But for interested investors, the game is still going. For Foolish value seekers, is Nike or Adidas a better play for the long term?

Espn World Cup

The world cup will be the most viewed event in history. Which team, or business, will win the most this summer? Source: WorldSoccerTalk.

Sponsoring the World Cup: Which team had the strongest play?
FIFA's World Cup partners pay a hefty price for the privilege to be so closely affiliated with the event. These companies reportedly pay some $25-50 million this year for the honor, of which Adidas is doing to continue its partnership started in the 1970's. Next in line are FIFA's World Cup sponsors, which pay in the range of $10-$25 million per year. However, while Adidas is paying this hefty amount, competitor Nike is not an official partner or sponsor. All of Nike's publicity at the event is coming from creative marketing and team or player sponsorship.

Nike and Adidas have each spent a significant sum sponsoring individual players and promoting teams for the World Cup. The two companies are the major players in these team sponsorships, together sponsoring 19 of the 32 teams in the tournament. Nike sponsors 10 teams, including Brazil and the United States, while Adidas sponsors nine, including the last World Cup champion, Spain, which unfortunately for Adidas was knocked out of the competition relatively early on.

Other than bragging rights, a strong bet in sponsorships and creative marketing could lead to increased sales momentum. In this way, Nike is already winning, as its choice to save on the hefty price of an official partnership with FIFA means it is already $25-$50 million ahead of Adidas, while so far getting seemingly just as much publicity. But beyond marketing dollars for the World Cup, which team is the best play for long-term investors?

Adidas Soccer Ball

Source: Fifa Store.

The incumbent victor: Adidas
Adidas has one major head start in this tournament having sponsored the last World Cup champion, Spain. Unfortunately for Adidas, Spain was already beat out, but the company still has some interesting prospects. 

Adidas chief executive Herbert Hainer recently commented that he estimated his company to generate approximately $2.8 billion from the soccer segment during this year, helped by the publicity of the World Cup. So, with what should be a strong return on investment from this World Cup, let's decide if the company's valuation makes sense.

At a P/E ratio of over 22, Adidas is a little pricey compared to the overall market, and it does not pay a dividend. However, the share price is near the bottom of its 52-week history, and World Cup revenues are still yet to come to balance out the large investments it's had to pay in the last couple of quarters getting ready for this summer. Still, to support this price, investors should ask if there is something coming that will cause future growth in this company, other than the same World Cup sponsorship it has played for the last four decades.

Nike Sponsored Atheletes Via Nike

Just some of the athletes Nike is sponsoring this summer. Source: Nike.

The next line up: Nike
Nike reported approximately $2 billion in soccer sales last year, a number that should climb substantially this year with the addition of extensive World Cup exposure in 2014. Additionally, this was only a small part of the company's total 2013 revenue of $25.3 billion.

One way Nike is up on Adidas already in this game, is that the company did not "officially sponsor" the games, meaning that its marketing tactics have less to make up before getting a good return on investment. Instead, the company is focusing on smart marketing and player or team endorsements. 

But more important than just throwing its name around on players jerseys, Nike has done an exceptional job of getting its name on players' feet. Soccer cleats, one of the only major innovative parts of the game, is one area where Nike is the unchallenged leader. With its newest soccer boot, the Magista, the company is proving it is the company continuing to drive product innovation, with more than just a marketing scheme.

This innovative company is not cheap, and Nike's P/E ratio of 26 is even more expensive than that of Adidas. However, for this higher P/E, investors are getting a 1.3% dividend yield, as well as rising revenues in 2013 and the start of 2014 as the company continues to drive product innovation.

Fifa World Cup

Source: IBTimes.

Which one is a winner?
With great operations from this year's World Cup, and interesting investment catalysts, both companies deserve a Foolish investor's look. But for investors looking for a long-term win, Nike seems to win this match up.

Though Adidas is cheaper now, the company doesn't have the same growth catalysts Nike has. For 2013, Adidas drove sales up 3% on a currency-neutral basis, well below Nike's 9.7% revenue growth for its 2013 fiscal year.

Most of all, Nike has the innovation to back up its price, as is evident in how much more prominent its soccer cleats are in this year's tournament. However, Nike is certainly not cheap right now, and for value investors, it might still be too expensive to get in now. Fortunately, this next company might be a much cheaper long-term play on innovation.

This might be the way to bank on innovation, before everyone else does
Imagine the multibillion-dollar sales potential behind a product that can revolutionize the way the world shops and interacts with its favorite brands every day. Now picture one small, under-the radar company at the epicenter of this revolution that makes this all possible. And its stock price has nearly an unlimited runway ahead for early, in-the-know investors. To be one of them and hop aboard this stock before it takes off, just click here.  

Bradley Seth McNew has no position in any stocks mentioned. The Motley Fool recommends Nike. The Motley Fool owns shares of Nike. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

1 Key Step to Get Rich

Our mission at The Motley Fool is to help the world invest better. Whether that’s helping people overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we can help.

Feb 1, 2016 at 4:54PM

To be perfectly clear, this is not a get-rich action that my Foolish colleagues and I came up with. But we wouldn't argue with the approach.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich" rated The Motley Fool as the #1 place online to get smarter about investing.

"The Motley Fool aims to build a strong investment community, which it does by providing a variety of resources: the website, books, a newspaper column, a radio [show], and [newsletters]," wrote (the clearly insightful and talented) money reporter Kathleen Elkins. "This site has something for every type of investor, from basic lessons for beginners to investing commentary on mutual funds, stock sectors, and value for the more advanced."

Our mission at The Motley Fool is to help the world invest better, so it's nice to receive that kind of recognition. It lets us know we're doing our job.

Whether that's helping the entirely uninitiated overcome their fear of stocks all the way to offering clear and successful guidance on complicated-sounding options trades, we want to provide our readers with a boost to the next step on their journey to financial independence.

Articles and beyond

As Business Insider wrote, there are a number of resources available from the Fool for investors of all levels and styles.

In addition to the dozens of free articles we publish every day on our website, I want to highlight two must-see spots in your tour of

For the beginning investor

Investing can seem like a Big Deal to those who have yet to buy their first stock. Many investment professionals try to infuse the conversation with jargon in order to deter individual investors from tackling it on their own (and to justify their often sky-high fees).

But the individual investor can beat the market. The real secret to investing is that it doesn't take tons of money, endless hours, or super-secret formulas that only experts possess.

That's why we created a best-selling guide that walks investors-to-be through everything they need to know to get started. And because we're so dedicated to our mission, we've made that available for free.

If you're just starting out (or want to help out someone who is), go to, drop in your email address, and you'll be able to instantly access the quick-read guide ... for free.

For the listener

Whether it's on the stationary exercise bike or during my daily commute, I spend a lot of time going nowhere. But I've found a way to make that time benefit me.

The Motley Fool offers five podcasts that I refer to as "binge-worthy financial information."

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. It's also featured on several dozen radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable ... and I don't say that simply because the hosts all sit within a Nerf-gun shot of my desk. Rule Breaker Investing and Answers contain timeless advice, so you might want to go back to the beginning with those. The other three take their cues from the market, so you'll want to listen to the most recent first. All are available at

But wait, there's more

The book and the podcasts – both free ... both awesome – also come with an ongoing benefit. If you download the book, or if you enter your email address in the magical box at the podcasts page, you'll get ongoing market coverage sent straight to your inbox.

Investor Insights is valuable and enjoyable coverage of everything from macroeconomic events to investing strategies to our analyst's travels around the world to find the next big thing. Also free.

Get the book. Listen to a podcast. Sign up for Investor Insights. I'm not saying that any of those things will make you rich ... but Business Insider seems to think so.

Compare Brokers