Earning More Stripes
August 28, 2007
The German Soccer Association (DFB) and Adidas, the traditional supplier of equipment to the German national soccer team, have extended their association until 2018.
"The partnership is something special, and today is a historic occasion," said Adidas CEO Herbert Hainer after the agreement was made public.
"It was a matter of harmoniously balancing tradition, legal concerns and money," said DFB President Theo Zwanziger.
The two soccer powers have been partners since Germany won its first World Cup title in 1954. But they have been at loggerheads for months, after Adidas rival Nike made a much more lucrative sponsorship offer.
Adidas had claimed that its existing supplier agreement with the DFB was effectively extended in August 2006 until at least 2014. DFB officials, on the other hand, had maintained their deal with Adidas was set to expire in 2011. A court of arbitration was called in, which suggested the two sides reach a compromise.
Tradition trumps Nike millions
Neither side was giving specifics about the new deal. But German news agency DPA reported that, as of 2011, Adidas will pay the DFB 20 million euros ($27.6 million) a year -- up from the current 11 million euros. Adidas has reportedly also agreed to commit 5 million euros to support youth and women's soccer programs.
The deal will cost the DFB millions of euros. In January this year, Nike offered 500 million euros ($648 million) in a proposed eight-year sponsorship contract to the DFB. That would have been some 200 million euros more than the DFB will get from Adidas.
The idea of the US giant taking over the Germany team sent shockwaves throughout the country. Analysts predicted that losing the Germany team sponsorship deal would not only be a commercial blow to Adidas, but would also bring an end to a long tradition and perhaps dent national pride.
But former Germany player and coach Franz Beckenbauer was a high-profile supporter of the potential deal with Nike. He said that times had changed and that national concerns figured less than they might have in the past. The German soccer idol also said that the DFB would be "liable to persecution" if it out and out rejected the offer from Nike.
And in the run-up to the new deal, the DFL -- the organization that represents the 36 professional clubs in first and second-division German soccer -- voiced its displeasure.
DFL President Reinhard Rauball said he viewed the move "with serious reservations." The DFB had a responsibility to the clubs, who get some of the proceeds from the contract, to reach a better financial arrangement, Rauball said.
Germany stars talk with their feet
The national team caused a little friction themselves last year when told by the coaching staff of a DFB directive that made wearing Adidas boots compulsory.
Some of the stars, each with their own personal -- and very lucrative -- footwear deals, were unhappy about giving up their Nikes, Pumas and Umbros in favor of the Three Stripes while on international duty and threatened to strike.
The coaching staff, again presumably under pressure from the DFB, then issued a warning that failure to wear the Adidas footwear would lead to being dropped from the national team.
After some fraught and intense negotiations, the players agreed to play on in Adidas on the proviso that the DFB did all it could to get out of the deal with the German firm by September last year.