The Real Soccer War

One hot rumor just before the World Cup final said that referee Pierluigi Collina would do his best to make sure Germany won. The reason? That should be obvious to anyone who's seen the ubiquitous Adidas TV spots featuring the bald-headed Collina. The ref worked for Adidas, the company that sponsors the German team! Never mind that FIFA had approved Collina's appearance in the campaign. According to conspiracy theorists, he'd surely work against the Brazilian team, sponsored by Nike. After all, this wasn't just the most important soccer game of the 21st century—it was a showdown between two companies battling for $2.5 billion in worldwide soccer business. Of course, in the end Ni..., uh, Brazil prevailed. But in boardrooms, design studios and sporting goods stores, Nike versus Adidas has only just started to get interesting.

The heated rivalry is something few experts could have foreseen as recently as 1994. Back then Adidas, a 54-year-old company headquartered in Germany, was the undisputed ruler of the soccer world. Meanwhile back in Beaverton, Ore., Nike reflected America's indifference to the sport, spending a mere $5 million a year on marketing and bringing in $40 million in revenue. In recent years, though, the company has changed direction as quickly as DaMarcus Beasley shaking a defender. Nike spent a reported $155 million this year for World Cup marketing, compared with $40 million from Adidas. In August, Nike takes over merchandising for England's Manchester United, arguably the world's most popular soccer club.

Nike embraced soccer when it realized that the sport helps it get a foothold overseas for its entire product line. The 30-year-old company, which generated $9.9 billion in revenue in 2001, expects to do more than half its business outside the U.S. for the first time next year, and while Adidas is still No. 1 in soccer with $700 million in sales annually, Lehman Brothers analyst Robert Drbul predicts that Nike will eventually take the top spot. Sponsoring the World Cup winner gives its efforts "a sense of authenticity?' Drbul says. Still, Adidas, with $6 billion in 2001 revenue, built its business on soccer and is intent on being No. 1 for the 2006 World Cup, which will be held on its home turf. Anything else would be unthinkable—but then, not long ago, so was the U.S. team's reaching the quarterfinals.