Major League Soccer Kit Supplier Contract

adidas

The sportswear manufacturer agreed in August 2017 to a new six-year extension to its existing contract to be the official apparel supplier for the league, its clubs and their affiliated youth programs.

  • Original Term: 2010 – Dec 2018

  • Contract extension 2017 – 2023.

The six-year term runs through 2023, meaning MLS will be able to negotiate its next league apparel partnership ahead of the start of the 2026 World Cup, which will be played in North America.

Financial Value of Contract

The financial terms of the deal weren’t disclosed, as is the custom of MLS.

Total value: $700 million ($116.67 million USD per year), according to a source with knowledge of the agreement, Ian Thomas of SportsBusiness Daily.

Increase from 2010-2018 contract: The deal represents a 250 percent increase over the eight-year agreement signed with Adidas in 2010, which was valued at $200 million, or $25 million annually. The league did not openly shop the rights, and preferred to renew with Adidas.

Rank in MLS Sponsorships: 1

Represents the largest investment Adidas has made in North American soccer, and the biggest sponsorship deal in MLS history.

More valuable than the league’s current TV contracts: Fox, ESPN and Univision pay a combined $90 million per year on average.

What is included

Adidas will:

  • continue to outfit clubs and with uniforms, footwear, training gear and touchline apparel;
  • outfit all MLS club youth academies, development leagues and youth-affiliated clubs, which total nearly 100,000 players across the country;
  • provide the league’s official match ball;
  • work with MLS to bolster its Generation Adidas venture, which the league operates alongside U.S. Soccer. The program is being expanded to include Canada. The Generation Adidas program has produced the likes of Clint Dempsey, Jozy Altidore and Michael Bradley, along with MLS veterans like Dax McCarty and Darlington Nagbe. Under the new agreement MLS and Adidas will also increase support for Generation Adidas Canada, a similar program for Canadian players that was announced late last year.  See Generation Adidas Program  for more details on this program. 

Adidas also will help MLS build the brand of those potential stars. MLS will provide Adidas with unique content, such as clips from games, films of practice and exclusive interviews, that Adidas will compile and can share via social and digital media.

The company also will expand the way it integrates cultural elements like music and art into its partnerships, similar to recent campaigns it has done with Manchester United, unveiling the club’s new jersey in a music video by rapper Desiigner.

Effect of Expansion: Will the numbers increase?

The deal’s value is not expected to increase as MLS continues its expansion process that will result in 28 teams across the league. The league will have at least 23 teams when this new deal begins, compared with 16 in 2010.

How it ranks compared to Adidas’ other league-wide apparel sponsorships :

The MLS deal is worth nearly 70% more per year than the reported $70 million that Adidas is paying annually for its NHL apparel partnership.

Demographics – Why Adidas Was Interested

  • MLS fans are, on average, the youngest among major American pro sports
  • MLS is a league still in growth mode,
  • Adidas is confident the league has arrived as a major player in the American pro sports scene.

Comments about the Transaction

“It is by far the biggest deal in the history of our league,” says MLS commissioner Don Garber, “This deal, in my perspective, helps solidify our position as the leading soccer property in North America. This is a really strong statement about where MLS is today, and how we’re poised for a very positive and energized future.”

More Garber: “Major League Soccer has built a legacy with Adidas that has been essential in the rise of our League,” said MLS commissioner Don Garber. “Adidas has been a major collaborator with us since the inception of MLS, and we are proud that our partnership with this globally respected brand will continue to enhance the growth of the game in North America for many more years.”

Mark King, president of Adidas North America:

“We need to take these really elite, young players and help develop them,” King said. “The one thing this league does need is homegrown superstars like the way baseball and football do.”

“Our goal is to tell a lot of interesting stories about what’s happening with MLS and Adidas in a very authentic way,” he said. “If we can tell the stories of these homegrown players who came up through the system out of the Generation Adidas program, this is a way to connect those personalities to the fans.”

“We think how our brand intersects sport and culture gives us a big advantage over a few of our competitors,” King said. “That is a big part of what we need to do to continue to grow our brand in the U.S. and MLS — yes, you need to protect the history of the game, but we also want to showcase the American take on it and make it even cooler for the U.S. culture.”

Mark King, says something similar when asked about why Adidas has made such a significant commitment to the league. “At the core of the Adidas brand around the world is soccer,” says King, “And when you look at what’s the opportunity to really drive soccer in the United States, there’s only one option, and that’s MLS.” 

“We love soccer as a company, and we want to dominate soccer around the world — specifically in the U.S. too, and this gives us the best platform to do just that,” King said.

Interestingly enough, King admitted that when he took over his position in 2014, he did not know what a ‘pitch’ was.  “I didn’t even know what the pitch was three years ago,” King said, reflecting on when he was named to his current position in 2014 after serving as TaylorMade-Adidas Golf CEO. “But now I’m a soccer man.”

Youth development is a key component of the arrangement. As Garber notes, much of the league’s success is the result of connecting with future fans in their formative years: “It’s about engaging with them in a way that, when they grow up to become consumers, we would be a part of their lives. From a business-building perspective that’s proving to be true.”

King echoes that sentiment, arguing that MLS provides a unique chance to connect with young fans. “More than any other league, you don’t just get a branding opportunity, but you actually get to work grassroots through the partnership with MLS to be able to reach out to all these kids who are playing and build a lasting relationship with them.”

History of the Partnership

Adidas began its relationship with MLS at the league’s inception in 1996, when it partnered with the Columbus Crew, Kansas City Wiz and D.C. United.

It became a league-wide partner in 2004, before signing its prior, eight-year agreement in 2010. The agreement signed in 2010 was set to expire at the end of the 2018.

Adidas Outpacing Competitors in North American Market

In August 2017, CEO Kasper Rorsted said Adidas will increase its marketing spend by more than $800 million ahead of 2020, mentioning the new MLS deal, as the company’s sales have continued to outpace its competitors, especially in the U.S. In that report, Adidas said sales grew 26 percent in North America year over year and it also will expand its U.S. base in Portland. Comparatively, both Nike and Under Armour recently reported flat North American sales, as well as job cuts.

© 2019 Russo Law & Soccer

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