The World Cup is more than just the premiere event in the world's biggest sport – it's also a massive marketing opportunity, particularly for companies that focus on soccer-related products. Companies such as Adidas (NASDAQOTH:ADDYY) and Nike (NYSE:NKE) are involved on multiple levels, including jersey rights, sponsorships with individual players, and deals with FIFA itself. Their return on advertising investment rises and falls with the fortunes of their partners.
An eye on Adidas
Adidas is a sponsor of the World Cup, as well as the maker of the jerseys worn by Germany, Argentina, Mexico, and Spain. Adidas seems well-positioned to stay ahead of rivals like Nike in total soccer sales, but it has dealt with a couple of problems already in this Cup.
Spain's Adidas-wearing team, favorites to win the whole tournament, are already out. More disturbingly, Luis Suarez, generally accepted to be among the best players in the world, bit an opponent in the shoulder in his last match. Adidas has a big sponsorship deal with Suarez, which left it in the rather awkward position of having one of its oldest brand partners -- FIFA -- investigate another partner for misconduct. FIFA has already announced a massive four-month ban. It's unclear how likely it is that Adidas cuts ties with Saurez entirely, but reports indicate that the option is on the table.
There's no question that it's been a bit of a mixed bag for Adidas this time around, but it remains the tournament's oldest and best-known sponsor. With its logo all over the billboards and promotional material, it remains well-positioned. As for Suarez, he may be about to see if all press really is good press.
Nike's good showing
Nike may remain second to Adidas in total soccer sales, but it has to be enjoying this World Cup. First, Nike won the rights to make jerseys for the host country, Brazil. Brazilian star Neymar has the Cup's best-selling jersey so far -- including sales among American purchasers. Everyone sporting one at a bar or game-watching party will also be sporting a Nike logo -- not to mention that the shirt itself retails for around $100.
On top of that, Nike is the producer of the United States' 2014 World Cup kits. The Americans, who were once presumed to be inevitable also-rans in the so-called "Group of Death," managed to move into the knockout round despite a loss to Germany in their final game. The U.S. team's last prime-time game, against Portugal, garnered some of the highest television ratings ever for an ESPN broadcast of a soccer game – a 9.6 on the Nielsen scale. Nike got exposure with every shot of every player sporting a Nike jersey, and it got bonus advertising when the U.S. advanced to play Belgium on Tuesday, a game that, according to Nielsen, had the highest overnight rating ever for a World Cup match on ESPN or ESPN2.
More than just soccer
These rising ratings are good news for other sponsors, including those that are less directly tied up in the business of soccer itself. Budweiser (NYSE:BUD), for instance, is the official beer of the World Cup. That sponsorship promised to help its brand internationally, and no doubt still will. But now the company also stands to gain advertising viewers here in the United States. The 9.6 rating that the ESPN broadcast earned is comparable to the average 2014 NBA Finals game rating of 9.3, as well as the 8.9 average for last year's World Series games. Budweiser is a sponsor of Major League Baseball as well; few observers would have guessed that their sponsorship of soccer would give them as bright a spotlight, even for just a short while.
Of course, the growth of soccer in the United States is hardly the only reason that sponsors are pleased to be associated with an international juggernaut like FIFA's World Cup. Still, the United States is the most populous country involved in the tournament -- beating out Brazil by more than 100 million people -- as well as one where the sport still has plenty of room to grow. If FIFA's sponsors were secretly rooting for Clint Dempsey, Tim Howard, and the rest of the Americans, we couldn't blame them.
Stephen Lovely has no position in any stocks mentioned. The Motley Fool recommends Nike and Walt Disney. The Motley Fool owns shares of Nike and Walt Disney. 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.
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