The Fight Club

If you are wondering why the sportswear giants made a big fuss about cricket celebrities' endorsements in India, it's because the success or failure of such deals have made or broken their global fortunes. A David Beckham endorsing Adidas goods is a sure-fire guarantee for higher product sales, not just in England but all across east Asia. Italian sportswear firm Fila remained a dominant player in the 1980s as its sales piggybacked on the sporting success of tennis icon Bjorn Borg, who was, at that time, the brand's ambassador. But soon after Borg's exit from professional tennis, Fila lost its edge and was pushed out to the periphery by its competitors. This explains why, relatively, sports lifestyle firms spend disproportionately high sums on marketing, advertising and endorsements. While the expense on such items is less than 15 per cent forFMCG firms like Unilever and p&g, the figure for sportswear companies like Nike and Adidas is 25 per cent.

A decade ago, in its bid to retain its numero uno position, Nike had signed on the hottest football property—the Brazilian national team—for a whopping $200 million. Nike executives in India don't miss the parallel between the Brazil deal and the deal with the Indian cricket team. "We were nowhere in the football business. Now we are right on top. Here, too, the sky is the limit for things that we can do with Team India," says Mehra. But will the Team India deal translate into higher sales for its products?

Several experts think the answer is no. "In India, the market for cricket merchandise is non-existent. Even among the youth there is no big craze to wear the Indian colours except, for instance, when somebody is actually going to the stadium to watch the team play. If Nike has factored in (higher) merchandise sales in its Rs 200-crore deal, then I'm not too sure they'll succeed," explainsKSA Technopak's Singhal.

Add to that the fact that competition too is gearing up to take on Nike. Andreas Gellner, the MD of the Germany-based Adidas, has also identified India as a growth market and feels that she can convert India into Adidas' third biggest arm in Asia, after China and Japan. "The business environment here is certainly very positive. If everything goes well, India could be our number three market in Asia, and that is my present mandate," Gellner said.

But the Adidas' top brass realises that the Indian market is quite different from others in southeast Asia. Therefore, they need to devise specific strategies to expand operations here. In addition, they plan to allocate higher budgetary resources. In the next two years, Adidas plans to set up 60 exclusive showrooms, in addition to its 75 existing ones in India's top 10 cities. It is also planning to triple its advertising expenditure in the same period. Another indicator of the importance of the Indian market can be gauged by the fact that the Indian subsidiary has been separated from the parent's south-east Asia business cluster and the Indian management now reports directly to the regional headquarters in Hong Kong.

Reebok, Adidas' global subsidiary, too, expects to grow rapidly in India and achieve a turnover of Rs 500 crore by 2007. "We hope to keep growing by 50 per cent annually," predicts Subhinder Singh Prem, MD, Reebok India. In November 2003, Reebok India was also recognised as the parent's best subsidiary since it is only in India that Reebok is ahead of the traditional global rivals, Adidas and Nike.

So, over the next few months, it will be a race between the trio to grab as many celebrities as possible to endorse their brands. Especially for Adidas, which was desperate to get the cricket sponsorship rights. In the past, Adidas has found it difficult to sign more cricketers, apart from Tendulkar and Sehwag, but now, it will go all out to woo them. The German company also lost in its attempt to sign on tennis star Sania Mirza (who was bagged by the Italian firm, Lotto). With such defeats, Adidas as well as Reebok are likely to put their best foot forward to outpace Nike.