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How Nike Lost Lionel Messi

Lionel Messi and Cristiano Ronaldo, the world’s most famous athletes, were both signed to Nike sponsorships. Then one got away.

Mon, Oct 17, 2022 8:54amGrey Clock 7 min

When the World Cup kicks off next month, the two biggest stars in Qatar will be Cristiano Ronaldo and Lionel Messi, the players who have defined the modern era of the world’s most popular sport and together achieved a level of fame normally reserved for popes and U.S. presidents.

The rivalry between a diminutive genius from Argentina and a preening superhero from Portugal has played out over the last 15 years as a tale of opposites, right down to the most important tools of their trade: their cleats. With billions of dollars at stake, Mr. Messi wore Adidas, while Mr. Ronaldo was Nike.

But before they were on both sides of soccer’s answer to Pepsi vs. Coke, Mr. Messi and Mr. Ronaldo once played for the same team. For one brief spell before the 2006 World Cup, Nike had both of them.

Through shrewd judgment, canny timing, and a bit of dumb luck, the company had spotted the two players at the dawn of their careers and tied them both to the Swoosh. The same way Nike would later endorse Roger Federer and Rafael Nadal in tennis, or LeBron James and Kevin Durant in the NBA, it had managed to secure a pair of teenage talents who could soon call themselves the greatest players of their generation—only this time it was happening in the world’s biggest sport.

Then Nike lost one.

There are competing versions of just what triggered Mr. Messi’s switch to Adidas. In the end it was a combination of factors, all linked by the single thread of a father deciding that Nike wasn’t treating his son properly. Nike didn’t respond to a request for comment, nor did the Messi family.

The account of how that happened is based on dozens of interviews with former executives at both Nike and Adidas, as well as teammates of Mr. Messi and Mr. Ronaldo, coaches, and entourages—many of whom spoke on condition of anonymity since their relationships, and occasionally their livelihoods, hinged on discretion.

Good vs. evil

The craziest part of this story was that Nike ever had either one of Mr. Messi or Mr. Ronaldo.

Until the 1990s, like most Americans, the company’s executives in Beaverton, Ore. viewed soccer as an esoteric pursuit. Then, in 1994, soccer came looking for America. The World Cup landed on U.S. shores for the first time, smashing records for attendance and ticket revenue. Two centuries after the laws of the game were first written down in a London pub, it looked as though soccer was finally establishing a foothold across the Atlantic. Nike, ranked No. 7 by sales in the world’s No. 1 sport, realised it could no longer afford to sit on the sidelines. One former Nike executive said that people at the time didn’t take the company seriously as a soccer brand.

Changing that perception was the remit of a young ad man named Jelly Helm and a few co-workers as they huddled in an office block in Oregon late in 1995. True, they knew next to nothing about soccer. But they knew a lot about selling shoes. And so they resolved to crack the soccer market by turning to the one group of pitchmen who had sold more shoes over the years than anyone else: all-star teams. “We knew if we could assemble a team of all-star footballers,” Mr. Helm said, “European kids would f—ing freak out.”

European soccer doesn’t actually have all-star teams, but it would take more than that to stop Nike.

To make its vision of a soccer all-star team a reality, the company agreed to bankroll the most expensive commercial in its history. Soon, some of the biggest names in world soccer were jumping on chartered jets and pulling on Nike cleats. In the absence of an opposing team of all-stars to play against, Nike hired the special-effects crew from Apollo 13 to create an army of undead soccer demons, with Satan as their player-manager. The ad would be called “Good vs. Evil.”

The reaction to Nike’s blockbuster ad bordered on hysterical. The spot was denounced by FIFA, banned from movie theaters in Denmark, and later honoured at the Cannes Film Festival. Within six months of the ad’s debut, Nike had inked a deal to become the official sponsor of the Brazil national team, thanks to a 10-year, $400 million contract. It was the soccer industry’s disrupter before anyone knew what “disrupter” meant.

By the early 2000s, it was safe to say that Nike’s late entry into the game had been a success. Manchester United, Brazil, FC Barcelona, and a clutch of the world’s best players were all wearing the Swoosh. Crucially, Nike also had a longstanding relationship with Portugal’s national team, which is how it became aware of a kid born on the Portuguese island of Madeira in the middle of the Atlantic.

As half of Europe vied for Mr. Ronaldo’s attention, he soon joined the one team he would stay with longer than any club. After a brief flirtation and a few dozen pairs of boots, Mr. Ronaldo partnered with Nike in 2003. By then, Mr. Messi was on board too, after moving from Rosario, Argentina to Barcelona while he was still in middle school.

Mr. Ronaldo’s relationship with Nike proved so fruitful that in 2016 he became one of just three athletes to receive a lifetime deal following Michael Jordan and LeBron James. Mr. Messi’s association with Nike—like Mr. Messi himself—was a little shorter. He was gone in three years.

The golden boy

There never was an official answer inside Nike’s Beaverton headquarters as to how Mr. Messi slipped through the net. But internally, they had a saying, one former executive remembers—a slightly cruder version of, “success has many fathers, but failure is an orphan,” this former executive said.

In this case, the problem was one father in particular. For the first couple of years, Mr. Messi’s father Jorge, a former factory worker who doubled as his son’s agent, had been perfectly content to let his boy trot around in the same Nike gear that Barçelona had always supplied. Nike was more than content: the company felt it had a star in the making.

In 2005, it produced an ad cutting together footage of kids doing tricks on the streets of Barcelona. Right at the end of the 60-second spot, a shaggy-haired teen on a dark practice field sweeps a free kick over some dummies and into the net from 25 yards. He stares straight down the lens and puts the soccer world on notice.

“Recuerda mi nombre,” he said. Remember my name. “Leo Messi.” He’s wearing Nike from head to toe.

That was the year Mr. Messi turned 18. It was also the year that anyone who was anyone in soccer learned that he could no longer be ignored as he led Argentina to the 2005 FIFA World Youth Championship, a World Cup for under-20s.

“Lionel Messi will be my successor,” proclaimed the late Argentine legend Diego Maradona, considered one of the greatest-ever soccer players. “He will be the new golden boy.”

Everyone from Barcelona to Beaverton knew that Mr. Messi’s next stage needed to be the 2006 World Cup in Germany. Nike began getting its stars in order more than a year ahead of time. It arranged a photo shoot with Mr. Messi in Barcelona and had him perform all the tricks in his repertoire, over and over, from every angle. But early the following year, Nike received a call telling them to scrap all of it.

Mr. Messi was an Adidas player now.

Nike executives couldn’t believe what they were hearing. The company had been shipping boots to him since he was 14 years old, and it sponsored the only pro club he had ever played for. If ever there was a natural candidate for a lifelong bond with the Swoosh, Mr. Messi was it.

This flew in the face of decades of soccer dominance by Adidas. The company founded by two brothers in Bavaria had ruled the sport ever since inventing the first modern soccer boot in the 1950s. It later cemented that spot by sponsoring elite clubs, top players, and the World Cup for which it has manufactured every tournament ball since 1970.

But even with all that heritage, it was never obvious that Adidas would be able to pry Mr. Messi away from such a powerful competitor. How it happened came down to a combination of factors, all linked by the single thread of Jorge Messi deciding that Nike wasn’t treating his son properly. In one telling, Adidas had stepped up its game with ever-increasing offers to the Messi camp, reaching $1 million a year, while former Nike executives remember the money men in Oregon declining to go to war over a teenager.

Another person familiar with how Nike lost Mr. Messi remembers it coming down to something a little more trivial. Leo’s father had made a seemingly innocuous request for more athletic gear, only to find that neither Nike Iberia nor Nike South America was getting back to him. That was enough to sour the relationship. Nike, this person said, let Mr. Messi get away for a few hundred bucks worth of tracksuits.

In public, the company wasn’t going down without a fight. As far as Nike was concerned, there was a deal in place for many more years to come. “Nike has got a binding agreement with Lionel Messi,” a company spokesman told reporters at the time. It was prepared to take “whatever measures necessary” to enforce it.

Jorge Messi’s reply was that the dispute would be settled “wherever it has to be settled,” he said, meaning the Spanish courts.

The only problem for Nike was that there was no contract. A legally binding agreement had never (or no longer) existed. What the company had in place with the Messi camp was more of a commitment letter, which Spanish judges ruled over the course of several months wasn’t worth the fax paper it was printed on.

On Feb. 1, 2006, Mr. Messi trotted onto the Barcelona pitch for a Copa del Rey match in a pair of Adidas F50s.

Nike consoled itself with a single detail about the one that got away: compared with Mr. Ronaldo, one former executive remembers colleagues saying internally, Mr. Messi had next to no public personality.

A handful of executives inside Adidas headquarters in Germany privately worried about the same thing. While they had acquired the rights to one of the most talented soccer players in the world, they fretted that their new pitchman might have all the charisma of a silent film star. The shy kid who had bawled for the entire flight from Argentina to Spain at age 12 was now a shy 18-year-old who barely looked like an athlete. Left to his own devices, he fed himself with pizza and Coca-Cola. His jersey billowed around him like he had borrowed it. Mr. Messi hardly knew where the Barcelona weight room was.

Adidas CEO Herbert Hainer didn’t seem worried about it. Poaching Mr. Messi from Nike was a coup so momentous that he highlighted it in the middle of the company’s earnings call that May. Top of the company’s list of recent achievements, he said—ahead of selling 15 million soccer balls and 750,000 pairs of boots—was “the signing of the world’s top-ranked footballer under 21 from Argentina…who many claim has the potential to be the next Maradona.”

This article is adapted from the book “Messi vs. Ronaldo: One Rivalry, Two GOATs, and the Era That Remade the World’s Game,” by The Wall Street Journal’s Joshua Robinson and Jonathan Clegg, to be published on Nov. 1 by Mariner Books, an imprint of HarperCollins (which, like the Journal, is owned by News Corp).


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A new trading year kicked off just weeks ago. Already it bears little resemblance to the carnage of 2022.

After languishing throughout last year, growth stocks have zoomed higher. Tesla Inc. and Nvidia Corp., for example, have jumped more than 30%. The outlook for bonds is brightening after a historic rout. Even bitcoin has rallied, despite ongoing effects from the collapse of the crypto exchange FTX.

The rebound has been driven by renewed optimism about the global economic outlook. Investors have embraced signs that inflation has peaked in the U.S. and abroad. Many are hoping that next week the Federal Reserve will slow its pace of interest-rate increases yet again. China’s lifting of Covid-19 restrictions pleasantly surprised many traders who have welcomed the move as a sign that more growth is ahead.

Still, risks loom large. Many investors aren’t convinced that the rebound is sustainable. Some are worried about stretched stock valuations, or whether corporate earnings will face more pain down the road. Others are fretting that markets aren’t fully pricing in the possibility of a recession, or what might happen if the Fed continues to fight inflation longer than currently anticipated.

We asked five investors to share how they are positioning for that uncertainty and where they think markets could be headed next. Here is what they said:

‘Animal spirits’ could return

Cliff Asness, founder of AQR Capital Management, acknowledges that he wasn’t expecting the run in speculative stocks and digital currencies that has swept markets to kick off 2023.

Bitcoin prices have jumped around 40%. Some of the stocks that are the most heavily bet against on Wall Street are sitting on double-digit gains. Carvana Co. has soared nearly 64%, while MicroStrategy Inc. has surged more than 80%. Cathie Wood‘s ARK Innovation ETF has gained about 29%.

If the past few years have taught Mr. Asness anything, it is to be prepared for such run-ups to last much longer than expected. His lesson from the euphoria regarding risky trades in 2020 and 2021? Don’t count out the chance that the frenzy will return again, he said.

“It could be that there are still these crazy animal spirits out there,” Mr. Asness said.

Still, he said that hasn’t changed his conviction that cheaper stocks in the market, known as value stocks, are bound to keep soaring past their peers. There might be short spurts of outperformance for more-expensive slices of the market, as seen in January. But over the long term, he is sticking to his bet that value stocks will beat growth stocks. He is expecting a volatile, but profitable, stretch for the trade.

“I love the value trade,” Mr. Asness said. “We sing about it to our clients.”

—Gunjan Banerji

Keeping dollar’s moves in focus

For Richard Benson, co-chief investment officer of Millennium Global Investments Ltd., no single trade was more important last year than the blistering rise of the U.S. dollar.

Once a relatively placid area of markets following the 2008 financial crisis, currencies have found renewed focus from Wall Street and Main Street. Last year the dollar’s unrelenting rise dented multinational companies’ profits, exacerbated inflation for countries that import American goods and repeatedly surprised some traders who believed the greenback couldn’t keep rallying so fast.

The factors that spurred the dollar’s rise are now contributing to its fall. Ebbing inflation and expectations of slower interest-rate increases from the Fed have sent the dollar down 1.7% this year, as measured by the WSJ Dollar Index.

Mr. Benson is betting more pain for the dollar is ahead and sees the greenback weakening between 3% and 5% over the next three to six months.

“When the biggest central bank in the world is on the move, look at everything through their lens and don’t get distracted,” said Mr. Benson of the London-based currency fund manager, regarding the Fed.

This year Mr. Benson expects the dollar’s fall to ripple similarly far and wide across global economies and markets.

“I don’t see many people complaining about a weaker dollar” over the next few months, he said. “If the dollar is falling, that economic setup should also mean that tech stocks should do quite well.”

Mr. Benson said he expects the dollar’s fall to brighten the outlook for some emerging- market assets, and he is betting on China’s offshore yuan as the country’s economy reopens. He sees the euro strengthening versus the dollar if the eurozone’s economy continues to fare better than expected.

—Caitlin McCabe

Stocks still appear overvalued

Even after the S&P 500 fell 15% from its record high reached in January 2022, U.S. stocks still look expensive, said Rupal Bhansali, chief investment officer of Ariel Investments, who oversees $6.7 billion in assets.

Of course, the market doesn’t appear as frothy as it did for much of 2020 and 2021, but she said she expects a steeper correction in prices ahead.

The broad stock-market gauge recently traded at 17.9 times its projected earnings over the next 12 months, according to FactSet. That is below the high of around 24 hit in late 2020, but above the historical average over the past 20 years of 15.7, FactSet data show.

“The old habit was buy the dip,” Ms. Bhansali said. “The new habit should be sell the rip.”

One reason Ms. Bhansali said the selloff might not be over yet? The market is still underestimating the Fed.

Investors repeatedly mispriced how fast the Fed would move in 2022, wrongly expecting the central bank to ease up on its rate increases. They were caught off guard by Fed Chair Jerome Powell‘s aggressive messages on interest rates. It stoked steep selloffs in the stock market, leading to the most turbulent year since the 2008 financial crisis. Now investors are making the same mistake again, Ms. Bhansali said.

Current stock valuations don’t reflect the big shift coming in central-bank policy, which she thinks will have to be more aggressive than many expect. Though broader measures of inflation have been falling, some slices, such as services inflation, have proved stickier. Ms. Bhansali is positioning for such areas as healthcare, which she thinks would be more insulated from a recession than the rest of the market, to outperform.

“The Fed is determined to win the war since they lost the battle,” Ms. Bhansali said.

—Gunjan Banerji

A better year for bonds seen

Gone are the days when tumbling bond yields left investors with few alternatives to stocks. Finally, bonds are back, according to Niall O’Sullivan of Neuberger Berman, an investment manager overseeing about $427 billion in client assets at the end of 2022.

After a turbulent year for the fixed-income market in 2022, bonds have kicked off the new year on a more promising note. The Bloomberg U.S. Aggregate Bond Index—composed largely of U.S. Treasurys, highly rated corporate bonds and mortgage-backed securities—climbed 3% so far this year on a total return basis through Thursday’s close. That is the index’s best start to a year since it began in 1989, according to Dow Jones Market Data.

Mr. O’Sullivan, the chief investment officer of multi asset strategies for Europe, the Middle East and Africa at Neuberger Berman, said the single biggest conversation he is currently having with clients is how to increase fixed-income exposure.

“Strategically, the facts have changed. When you look at fixed income as an asset class…they’re now all providing yield, and possibly even more importantly, actual cash coupons of a meaningful size,” he said. “That is a very different world to the one we’ve been in for quite a long time.”

Mr. O’Sullivan said it is important to reconsider how much of an advantage stocks now hold over bonds, given what he believes are looming risks for the stock market. He predicts that inflation will be harder to wrangle than investors currently anticipate and that the Fed will hold its peak interest rate steady for longer than is currently expected. Even more worrying, he said, it will be harder for companies to continue passing on price increases to consumers, which means earnings could see bigger hits in the future.

“That is why we are wary on the equity side,” he said.

Among the products that Mr. O’Sullivan said he favours in the fixed-income space are higher-quality and shorter-term bonds. Still, he added, it is important for investors to find portfolio diversity outside bonds this year. For that, he said he views commodities as attractive, specifically metals such as copper, which could continue to benefit from China’s reopening.

—Caitlin McCabe


Find the fear, and find the value

Ramona Persaud, a portfolio manager at Fidelity Investments, said she can still identify bargains in a pricey market by looking in less-sanguine places. Find the fear, and find the value, she said.

“When fear really rises, you can buy some very well-run businesses,” she said.

Take Taiwan’s semiconductor companies. Concern over global trade and tensions with China have weighed on the shares of chip makers based on the island. But those fears have led many investors to overlook the competitive advantages those companies hold over rivals, she said.

“That is a good setup,” said Ms. Persaud, who considers herself a conservative value investor and manages more than $20 billion across several U.S. and Canadian funds.

The S&P 500 is trading above fair value, she said, which means “there just isn’t widespread opportunity,” and investors might be underestimating some of the risks that lie in waiting.

“That tells me the market is optimistic,” said Ms. Persaud. “That would be OK if the risks were not exogenous.”

Those challenges, whether rising interest rates and Fed policy or Russia’s war in Ukraine and concern over energy-security concerns in Europe, are complicated, and in many cases, interrelated.

It isn’t all bad news, she said. China ended its zero-Covid restrictions. A milder winter in Europe has blunted the effects of the war in Ukraine on energy prices and helped the continent sidestep recession, and inflation is slowing.

“These are reasons the market is so happy,” she said.

—Justin Baer

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