German sportswear company Adidas AG

Athletics-Adidas to cut short IAAF sponsor deal – BBC

Analyst reaction to German sportswear company Adidas AG reportedly ending its 11-year sponsorship deal with the International Association of Athletics Federations (IAAF) almost four years early, according to media reports.

BEIJING, CHINA (REUTERS) – German sportswear company Adidas AG is to end its 11-year sponsorship deal with the International Association of Athletics Federations (IAAF) almost four years early, the BBC reported on Sunday (January 25).

The BBC said Adidas, the biggest sponsor of the sport’s governing body, decided against continuing with the contract as a direct result of the doping and corruption scandal that emerged in December last year and continues to dog athletics.

The BBC also said Adidas considers the accusations of corruption within the organisation a breach of their agreement with the IAAF.

Reuters has been unable to independently confirm the report.

Calls placed late on Sunday to Adidas and the IAAF were not immediately returned. Neither organisation commented to the BBC on the report.

The BBC, citing anonymous sources, said the sponsorship deal, signed in November 2008, was worth around $8 million (5.61 million pounds) per year.

Matthew Beesley is from Henderson Global Investors.

“If this is true and Adidas are pulling out on their sponsorship with the IAAF this will clearly be a sign of them baulking in the face of what has been a continual stream of very negative news flow in the athletics industry which of course is potentially important for Adidas given where they sit relative to Nike. More interesting I think as an equity investor is the appointment of a new chief executive at Adidas, the former CEO of Henkel. Adidas has been a company that has generally lagged Nike both in terms of profitability returns and indeed growth. So the opportunity for Adidas to steal a march on Nike under new leadership, perhaps reposition itself away from some of these controversies as relates to athletics, clearly could be quite meaningful,” he said.

Adidas is one of the IAAF’s “Official Partners” along with Canon, Toyota, Seiko, TDK, TBS and Mondo.

If confirmed, the disclosure represents the latest in a series of setbacks for the Monaco-based IAAF.

“Football is a much larger business than athletics. Football is one of those sports that truly touches every country around the world. And the importance for some of the largest brands to remain associated with football has been seen very much in their inability to distance themselves from FIFA, from world football even in the face of immense scandal during 2015. So athletics, while important as a business, is a business that some companies like Adidas could indeed perhaps contemplate stepping away from. Whereas football is a business that quite frankly is far too important for anybody to turn their nose up at,” Beesley said.

Late last year an independent commission for the World Anti-Doping Council (WADA) revealed widespread, state-sponsored doping in Russia. Last week the commission released a second report on its investigations that accused the IAAF of having “embedded corruption” at the very top of the organisation under former president Lamine Diack.

Diack and his son, Papa Massata, are both under investigation by French police over corruption allegations. Both men have denied wrongdoing.