In 2010, Adidas signed an eight-year, $200 million sponsorship deal with Major League Soccer. Now Adidas has extended its sponsorship for six years, and it’s now worth $700 million.
It’s a stunning increase in value. (The $700 million price tag comes from industry sources.) It suggests Adidas believes strongly that MLS will continue to grow as a major American sports league.
That’s a big bet, considering that MLS occupies a distant fifth place behind the NFL, NBA, MLB, and NHL. But Adidas US CEO Mark King, who has helped put the brand on a hot streak in America, is committed to the future of American pro soccer.
MLS, says King, is “the most compelling pro league to be a part of.” That’s quite a vote of confidence.
“If it was a typical league deal, where you only get to put your logo on the jersey, I think we’d still be interested because soccer is our core sport around the world, but it really becomes interesting when you look at all the programs that help build the sport,” says King. “My guess is within 10 years, from a youth participation standpoint, soccer will be the biggest sport. And if kids who play soccer continue to be fans of the sport, then yeah, if you’re talking 20 to 30 years from now, I think MLS can be as big as NFL.”
MLS commissioner Don Garber is well aware of what this extension signifies. He tells Yahoo Finance the deal is “a strong statement regarding where MLS is today and how we are poised and energized for the future.”
The most interesting part of this for Adidas is that in 2015, when Adidas’s 11-year jersey sponsorship of the NBA was expiring, the brand did not bid for the new contract; it let Nike pick up the deal for $1 billion. Adidas had spent $400 million on the NBA jersey sponsorship, and at the end of it all, had little to show: less than 5% market share in US basketball sneakers.
“Having the NBA [sponsorship] doesn’t hurt you, but what we’ve seen is that having it also doesn’t guarantee it will help you,” King told Yahoo Finance. The suggestion was that perhaps having an official league-wide jersey sponsorship isn’t as valuable for a brand as it once was.
Why, then, is it worth having the MLS, and paying nearly $1 billion for it? Because soccer has been core to Adidas’ DNA since its founding.
“We say we dominate soccer from a global perspective,” King says. “When you think of soccer, you think of Adidas.” (Then again, Nike has made gains in global soccer market share in recent years.)
King believes Adidas can help MLS get bigger, through programs like Generation Adidas, in which top draft picks get Adidas contracts and do not count toward a team’s salary cap. Jozy Altidore (of Toronto) and Dax McCarty (Chicago Fire) have gone through the program.
Adidas will also seek to make certain MLS players into more marketable stars in America. The sport will need to produce bigger American stars if it wants to escape its image as a “retirement league” where foreign stars come to wind down their careers.
Daniel Roberts is the sports business writer at Yahoo Finance. Follow him on Twitter at @readDanwrite.