Outfitter bidding: How Adidas won the battle for the DFB jersey against Nike

At least Nike's German representatives don't have far to go to the German Football Association (DFB) in Frankfurt am Main. The branch of the world market leader in the sporting goods industry is located at Otto-Fleck-Schneise 7, while the DFB resides on the same street, at number 6.

So far, Nike has not been able to claim that it has an advantage in terms of location. When the supplier contract was renewed in 2007, Nike was rebuffed by the DFB despite a spectacular 500-million-euro bid for ten years. And that was despite the fact that the traditional rights holder Adidas was paying just half that amount - insiders talk of around 25 million euros a year.

DFB will now collect at least twice as much

But long before the end of the contract in 2018, it was clear that the Herzogenaurach-based company would no longer be able to get away with such a bargain. And indeed, Adidas had to dig much deeper into its pockets for the contract extension until 2022. How much the new contract will really bring the DFB is unclear. The "FAZ" writes of 50 million euros annually, "Sport Bild" even of up to 70 million euros.

The outcome in favor of the rights holder with the three stripes seemed by no means certain. There was one reason in particular: After the scandal surrounding the 2006 summer fairytale, the DFB and its new president Reinhard Grindel wanted to avoid any suspicion of further backroom wheeling and dealing.

And so, after the successful contract extension, he emphasized: "These were the most transparent, demanding and, in the end, economically successful negotiations for the DFB in the history of our association."

Germany's biggest sports federation had officially opened the battle of millions for the new contract in March 2016 with the presentations of the contenders. In addition to Adidas and Nike, newcomer Under Armour, the world's fastest-growing sporting goods brand, also wanted to get in on the action.

Adidas announces production in Germany

Adidas' overall concept was ultimately convincing. The three-stripe brand promised the DFB broad support that would also benefit their shared homeland. "As part of our long-term strategy, we will bring more production back to Germany," announced Adidas CEO Herbert Hainer. "The plan is to then also manufacture the DFB jersey directly in our home market."

Whether it's 50 or 70 million euros a year, it's a hefty sum for sponsoring a national soccer association. DFB President Grindel promises soccer fans: "We will use the money to make the DFB and German soccer better."

Best equipment deal of all soccer associations

The DFB is thus clearly ahead in a Europe-wide comparison. According to sports business insiders, the Nike deal with the Fédération Française de Football (FFF) was previously considered the most lucrative at around 42 million euros. The English FA extended its deal with Nike in December 2016 and will collect around 39 million euros from 2018.

Why did the DFB press ahead with the negotiations and officially confirm the contract extension in the middle of the preliminary round of the European Championship on June 20, 2016? Probably because, as the reigning world champions, they were in the best possible negotiating position.

Adidas has been a partner since the "Miracle of Bern

The partnership between the DFB and Adidas has now lasted for over 60 years. The German national soccer team has been wearing the three stripes since the "Miracle of Bern," Germany's sensational World Cup victory in 1954.

However, the "matching offer right" no longer exists: if a competitor submitted a higher bid, Adidas had to be informed of this and could then follow suit to win the contract. "For reasons of transparency, we wanted to have the option of concluding a contract without such a right in the future," Grindel told kicker.

But it's not just with the DFB jersey that Adidas has outdone its archrival. Most recently, the traditional brand from Herzogenaurach secured a partnership with England's biggest soccer club, Manchester United. For an alleged 94 million euros per annum over ten years.

Adidas is consistently pursuing its strategy of focusing on premium assets. "We stand for everything that the 'made in Germany' seal of quality stands for: we are successful, we are innovative and we deliver quality," Hainer emphasized after the DFB deal.

Summer fairy tale scandal clouds the mood

The involvement of former Adidas CEO Robert Louis-Dreyfus in the summer fairy tale scandal seems to be over. The DFB's rapprochement with world market leader Nike - in 2015, an association delegation traveled to visit their corporate headquarters in Portland - was probably just a brief flirtation.

But in the battle for attractive soccer teams and players, another US company is increasingly coming to the fore: Under Armour. The company was only founded 20 years ago, but in 2015, with sales of 3.7 billion euros, it rose past Puma to become the global number three in the sporting goods industry behind Nike and Adidas. In the U.S., they have already overtaken Adidas.

Rising star Under Armour

The company, which once specialized in martial arts clothing, is already on its way to becoming number one in American football and grew by a spectacular 28 percent last year.

With an aggressive strategy, the newcomer is now trying to establish itself in the lucrative soccer business. The brand is already on the chest of Tottenham Hotspur and will be the shirt sponsor of FC St. Pauli from next season. Under Armour is also already represented at the German Football Association (DFB) - as the personal supplier of the young defensive talent Jonathan Tah.

Shirt sales pay off for both sides

Adidas sold jerseys, soccer shoes, balls and fan merchandise for a record sum of more than two billion euros in the 2014 World Cup year. In total, more than three million national team jerseys were sold. DFB and Adidas - a lucrative relationship for both.