World Cup 2018: What does Germany loss means for sponsors, advertisers?

Germany Vs South Korea - InsideSport

Germany are out of the FIFA World Cup 2018. The first round exit is not just a loss of credibility and face for the defending champions, but the brands which have invested millions of dollars on the FIFA World Cup 2014 champions too have suffered a major financial blow.

Much to the shock of football fraternity and fans, the defending champions Germany have made an early exit from the World Cup after a pitiful 0-2 drubbing at the hands of South Korea. In their worst showing since 1930, Germany could not even clear the first hurdle leaving the entire nation and German fans in mourning.

Under manager Joachim Low, the 2014 World Cup champions have at least reached the semi-finals in the last five major tournaments, while they have never been eliminated at the group stages before Wednesday.

With this lacklustre showing, the biggest losers are not just the German team and their passionate fans. Their losses are more emotional. The sponsors who have committed millions of dollars to the German football team, hoping their brand presence till the FIFA World Cup final, suffer pure commercial losses. Not just the opportunity is gone, the brands also bear negative influence on account of emotional backlash following such major disappointments.

Adidas, who have a $32 million kit sponsorship deal, are the biggest losers from the team’s dismal showing in Russia. The deal with the German team is one of the highest kit sponsorship agreements for any of the 32 FIFA World Cup 2018 teams. Only teams which scored more than Germany for their kit deal this World Cup are France ($54 Million) and  England ($46 Million).

The FIFA World Cup was the biggest occasion for the brand to gain from its on-field presence.  A mere three matches or 270 minutes of action in the most precious and highly valued event is far below Adidas’s assumption for ROI on their sponsorship commitment to the reigning World Cup champions.

The German sportswear brand, over the period of 60 years in the alliance, has jointly shared the success of the team with four World Cup titles in 1954, 1974, 1990 and 2014 along with European Championship titles in 1972, 1980 and 1996. On June 16, 2016, the German Football Association (DFB) and Adidas had further announced the extension of their partnership until 2022.

Another top-tier sponsor Mercedez Benz, leveraging the team’s success for its global market position, had prematurely renewed the contract, that were to expire in 2012, contract by six years in August 2011. Threat is looming large over DFB as their deal ends this year and possibly an end to a whopping $70 million cash flow from the German company Daimler-owned luxury car division.

German National Football Team were considered the favourites for the FIFA World Cup 2018 title, not just among the fans, but also among the top-notch analysts and statisticians representing global financial powerhouses like UBS, Goldman Sachs etc. Much to their dismay, all the advanced statistical and econometric tools, AI prediction models used in the efforts for predicting the winners have gone in vain.

In the premium category partner, Coca-cola has remained a loyal German team sponsor since 1981. The aerated beverage brand has also remained a long-standing FIFA partner along with Adidas for decades. Among others in the same category of sponsors are some of the top German brands including, Bitburger, Deutsche Post, Deutsche Telekom, Commerzbank and SAP.

Even when these sponsors were hoping to get strong ROIs from the team they expected to emulate its feat of World Cup 2014, some may reconsider their future investments while others will have to wait for the Qatar 2022 edition where the participating teams’ roster will be raised from 32 to 48.