By Ruiqi Chen, Editor at LinkedIn News
Lionel Messi’s decision to sign with Inter Miami FC might deliver the financial kick that Adidas needs, according to Forbes. The German sportswear giant has sponsored the Argentine soccer star since 2006 and in 2017 struck a lifetime contract with Messi worth an estimated US$1 billion. Messi’s Major League Soccer debut later this summer is “likely to drive U.S. market share” for Adidas, Bernstein analysts write, boosting the company’s stock by up to 30%. That would be a welcome turnaround for Adidas, which has struggled with financial fallout from its terminated partnership with rapper and designer Ye.
- Messi’s Miami contract, estimated to be worth US$125 million to $150 million, reportedly includes profit-sharing agreementswith Adidas and Apple.
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Messi’s Miami Move Could Help Send Adidas Shares Up 30%, Analyst Says
forbes.com • 1 min read
Lionel Messi’s high-profile migration to the U.S. will help justify tens of billions of dollars in added market capitalization for Adidas, according to Bernstein analysts, upgrading its rating for Major League Soccer’s apparel partner ahead of Messi’s stunning move to Inter Miami FC this summer.
In a Sunday note to clients, analysts led by Aneesha Sherman upgraded Adidas from a hold to a buy, raising their price target for the German apparel giant by 23% to $112.
That implies 30% upside for Adidas from its $86 share price at Friday’s market close, projecting the stock to hit a 14-month high and for the company to tack on roughly $10 billion to its market value.
Bernstein said Messi joining MLS is “likely to drive U.S. market share” for Adidas, citing the brand’s sponsorship of the superstar, the American soccer league and Inter Miami’s celebrity co-owner David Beckham, as well as Inter Miami’s astronomical growth on social media in the wake of Messi’s announcement.
The Messi-related upside was just one component of Sherman’s bullishness for Adidas, as also contributing to the upgrade were above-consensus profit estimates thanks to improving margins and signs of increased popularity for the brand in China as well as a steadiness in the popularity of its former Yeezy line.
BIG NUMBER
5%. That’s how much Berlin-listed shares of Adidas jumped Monday, a bump largely tied to Bernstein’s bullishness.
SURPRISING FACT
Adidas will pay Messi a portion of its profits directly tied to his move to MLS, according to the Athletic. Apple, which streams MLS games on its paid streaming service, is under a similar revenue-sharing agreement with Messi, according to the Athletic and the Wall Street Journal.
KEY BACKGROUND
Adidas riding its Messi alliance to significant stock gains would follow a brutal last year for its partnerships with celebrities. The company’s October severing of ties with rapper Kanye West, who oversaw Adidas’ highly successful Yeezy line before he spewed various antisemitic tirades, led to hundreds of millions of dollars in losses as its brand reputation suffered. Adidas registered a $635 million loss during 2022’s final quarter, a period in which sales slipped 2% year-over-year and 16% compared to the same time in 2020. Shares of Adidas are down more than 50% from their mid-2021 peak.
Marketing, in its essence, is about storytelling – and who better to tell a compelling tale than a celebrity? Their very existence is a narrative in the public eye, one that carries an emotional impact, and one that we, as an audience, are already invested in.
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In the end, it’s not about leveraging the celebrity but about leveraging the story. Your story. Told beautifully, authentically, and powerfully.
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