Because of their business ties to soccer, the world’s two largest sportswear companies, Nike and Adidas, have been pulled into the ongoing corruption scandal surrounding FIFA, soccer’s governing body. And that’s great news for their competitor Under Armour.
Despite overtaking Adidas last year as the number two sportswear brand in the US, Under Armour is still relatively under-the-radar. It’s been working to build its brand, pushing hard into sponsoring athletes, including basketball star Stephen Curry. But the company has a long way to go. A scandal tarnishing the images of its two main competitors could create an opening to grab a little more market share, both in the US and abroad, where Under Armour has plans to expand.
The problem for Nike is obvious. While it’s cooperating with investigators, it may be the as-yet unnamed company that allegedly paid a $30 million bribe to Brazil’s national soccer federation in exchange for being named its official sponsor.
Nike said in a statement:
The charging documents unsealed yesterday in Brooklyn do not allege that Nike engaged in criminal conduct. There is no allegation in the charging documents that any Nike employee was aware of or knowingly participated in any bribery or kickback scheme.
But until Nike’s name is clear of the scandal, it looks something like the Tom Brady of sportswear, which is not a great position to be in. Depending on what information comes out and how Nike reacts, it could take a serious hit or come off without a scratch.
The blemish on Adidas seems less flagrant. Adidas has deep ties to FIFA, which is why it was the first World Cup sponsor to issue a statement. It supplies all the balls used in FIFA’s World Cup, one of the biggest and most visible sporting events in the world, and will through 2030. Adidas isn’t directly implicated in the FIFA scandal, but as a spokesperson for Adidas was quoted saying (paywall), “These continuously negative headlines are neither good for soccer, nor FIFA, nor FIFA’s sponsors.”
In the global, soccer-obsessed sportswear market, Nike’s and Adidas’ ties to FIFA give Under Armour some room to grow. But of course the real prize is the US market, by far the world’s most valuable and influential. The question there is whether Americans will care enough about a scandal involving soccer, which still isn’t very popular among Americans, to let it affect where they spend their money.
Adidas is already struggling with its brand image in the US. Consumers just don’t think Adidas is cool.
For Nike, currently the most valuable brand in the apparel world, it probably depends on just how dirty the company does or doesn’t look once all the details are out. Even if large numbers of Americans don’t care about soccer, nobody likes a cheater.
Under Armour won’t topple Nike or completely outrun Adidas because of the FIFA fiasco, but it could gain from it. Every bit helps. Kevin Planck, Under Armour’s outspoken CEO, is undoubtedly hoping for the worst.