May 13, 2016

    Game over between adidas and Chelsea


    ADIDAS is ending its shirt sponsorship deal with English football side Chelsea six years early as part of a shift to partner with fewer clubs.

    The German firm has poured cash into football deals as it fights to retain its leading position in the sport in the face of increased competition from Nike as well as relative newcomer Under Armour and German rival Puma.

    It agreed in 2014 to pay £750 million (S$1.5 billion) to replace Nike as sponsor of Manchester United for a decade, a record kit deal for the sport that adidas says is paying off despite the club's dip in form since then.

    That deal has prompted sports marketing experts to warn of an inflationary spiral as other clubs push for more, with Real Madrid reported to be seeking to force adidas to top the United deal when it comes up for extension.

    Adidas has the four most expensive shirt deals, with Bayern Munich and Real behind Manchester, and Chelsea in fourth place on an estimated £30 million a year, according to sports blog Total Sportek.

    Adidas said the Chelsea move was in line with a shift in strategy last year to partner with fewer teams.

    It has also been moving spending away from sports federations and towards individual stars who can promote the brand on social media.

    It added that it wants to cut the portion of its marketing budget for sports deals to below 45 per cent in 2020 from about half now as it increases spending on pushing the brand directly on social media, in stores and at grassroots sporting events.

    Adidas, which has sponsored Chelsea since 2006, said it had reached agreement to end the deal in 2017, instead of 2023.