The Adidas Deal: Inside the Numbers

The big business story in American soccer over the last 24 hours was the announcement that league sponsor adidas has significantly increased its committment to MLS with a new 8 year, $200 million that runs through 2018.  The deal replaces the previously signed 10 year, $150 million deal signed between the parties in 2004.  With four years remaining on the original deal, adidas has increased its annual committment to Major League Soccer by $10 million per year.

In addition to supplying the clubs and league with merchandise and balls, adidas will remain the the official supplier of uniforms and equipment to MLS youth academies and will increase its advertising presence during MLS broadcasts.  The increase in MLS youth academy presence in affluent and urban areas gives Adidas significant opportunities to reach younger players and familes with an entire line of merchandise.  Moreover, the 8 year deal allows MLS to develop and plan its strategies with the knowledge that these funds are coming through 2018.

According to the Sports Business Journal, adidas’ decision to extend the deal,is based, in part, on the 600% increase (over the last five years) in annual MLS merchandise sales to $300 million per year.

With its FSC contract up this year, the Adidas deal may provide a background for further broadcast negotiations.  With promises from adidas to become a greater presence in television advertising, FSC, and potentially Versus,  may have more reasons to consider signing with MLS.  ESPN may also recognize greater return on its long term investment in the league.

This is obviously a great moment for the league, as it ensures a significant commitment from one of the great merchandise and marketing powers in the world of sports.  At the same time, adidas is shrewdly increasing its participation in MLS at a time when the league is devoting increasing resources to youth development.  We

We’ll let Don Garber have the last word:  “One of the major reasons Major League Soccer has become one of the top soccer leagues in the world is due to the support and commitment of adidas. “They have a clear vision for the sport in North America, and they see MLS as a cornerstone of that vision. Our extension with adidas is a major statement by an internationally respected brand that MLS is increasing in value and that our commitments to stadium construction, strategic expansion, player development and improvement in the overall quality of play are playing dividends.”

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