The biggest sponsorship
agreement in MLS history just got bigger.
Despite having four years
left on a 10-year, $150 million agreement with MLS, Adidas opened the contract
and agreed to new terms that will see it remain the official athletic sponsor
and licensed product supplier to MLS through 2018. An announcement is expected
today.
Sources valued the deal at more than $200 million, making it one
of the sporting apparel company’s largest investments in the sport worldwide.
The deal, which is worth $25
million annually, represents a 66 percent increase per year from Adidas’
10-year, $150 million agreement signed in 2004.
In addition to maintaining its position as the official
supplier to all MLS clubs and youth academies, Adidas will continue to provide
the league’s official ball and remain the only athletic brand with advertising
rights for all MLS games. It also plans to increase its marketing support of
MLS teams and broadcast partners, and make a mutual commitment with the league
to player development.
“Our new agreement with Major League Soccer will shape
the future of the sport in
America
and create new opportunities for the next generation of American soccer stars,”
said Patrik Nilsson, president of Adidas North
America. “We’ve enjoyed a successful partnership with MLS during the last five
years and are eager to build on that success.”
MLS Commissioner Don Garber said, “Beyond the financial
benefits, this is an important new agreement because the extension is a major
statement by an international company that MLS is increasing in value. Our
commitments to stadium development, strategic expansion, player development and
improvement in overall quality of play are paying dividends for us.”
The deal will keep Adidas as MLS’s official licensed
product supplier through 2018.
The original Adidas deal signed in 2004 was a landmark
agreement for MLS. It came just three years after the league contracted by two
teams and served as a vote of confidence at a time when many questioned if the
fledgling
U.S.
soccer league would survive.
Since then, MLS has added seven new franchises, expanded
into
Canada
’s three biggest
cities, built seven soccer-specific stadiums, added television-rights
agreements with ESPN and Univision, and increased annual attendance by 24
percent to more than 3.6 million spectators across North
America.
Because designing and producing uniforms requires two
years of planning, Adidas and MLS officials planned to begin renewal talks as
early as next year. Sources familiar with negotiations said discussions began
earlier largely because Adidas recognized that MLS had expanded and the
U.S.
consumer’s
interest in soccer, as illustrated by 2010 World Cup viewership, continued to
flourish.
Two weeks ago, Adidas CEO Herbert Hainer
flew to Boston from
Germany
and joined Nilsson and David Baxter, Adidas
America
’s head of sport
performance, for a meeting with Garber and Kathy Carter, Soccer United
Marketing’s executive vice president. What was supposed to be a two-hour
meeting became a six-hour renegotiation session that resulted in the new deal.
The results from the first six years of the
Adidas-MLS partnership supported the company’s decision to extend it. Since
2005, MLS merchandise sales reportedly have increased more than 600 percent
annually, to $300 million.
Those
sales increases have been aided by the league’s push to sign more designated
players, who are often international stars such as English midfielder David
Beckham or French striker Thierry Henry. Beckham remains the biggest designated
player signed to date, and Adidas sold 300,000 of his jerseys when he joined
the league in 2007.
While
outfitting elite players in Adidas jerseys was important, the prospect of
outfitting youth players was equally important to the new deal. MLS clubs have
begun developing youth academies for soccer players ranging in age from 9 to 18
years old and currently work with more than 20,000 youth soccer players
nationwide. Most wear MLS replica jerseys made by Adidas.
The
structure of the new deal guarantees that Adidas will have a direct pipeline to
some of the most talented young soccer players in the
U.S.
and
Canada
as teams such as FC Dallas
expand their youth ranks from 2,500 to 5,000 players in the coming years.
“The
part of our strategy that resonated most with Adidas is our commitment to youth
and player development,” Garber said. “It’s their commitment to that with us
that we’re most excited about.”