‘We knew then. We know now.’ – The rise, fall and rebirth of Adidas.

The slogan in the title was coined for an advertising campaign mounted by Adidas ahead of the Atlanta Olympics of 1996. It was created to emphasise how the company’s relationship with Jesse Owens ahead of the Berlin Olympics had been a key factor in the American athlete’s success and that, remaining true to their principles, 60 years later their relationship with Donovan Bailey also helped him to 100 metres gold. What they knew then, they know now. What worked then, works now.

Those same words however, could also serve as the template for how the company was resurrected to its former glories in 1993 after a period of decline. Following the turmoil and decline of the Tapie years, the organisation’s new owner, Robert Louis-Dreyfus, as well as introducing innovative processes, returned to the established practise of creative marketing and developing relationships with individual athletes and organisations that led to its revival and drive back to the top table of the sportwear businesses.

Famously, Adidas had been formed by Adolf ‘Adi’ Dassler – the company name being an amalgam of the first three letters of his abbreviated Christian name and surname – back in 1947 after a split with his brother Rudolf, who went on to found rial company Puma. For the next decades, each brother sought to outperform their sibling as their businesses battled for supremacy in the sportswear industry. Adidas prospered from their founder’s innovative attitude to the design of sports shoes and the relationships and endorsements that he obtained from athletes for wearing them. It was an approach that would continue to pay huge dividends for Adidas over the coming decades.

When Adi Dassler passed away in 1978, his wife Käthe had taken the helm of the business and their son, Horst Dassler became part of the organisation’s top management. Three years later, when Käthe died, it was Horst Dassler who assumed control of the business. An inveterate marketeer, although still only his mid-forties, Dassler quickly identified the paths the company would need to follow in order to prosper. As well as newcomers to the market – such as the American company Nike whose slick marketing had led to them trebling Adidas’s market share in the USA – Puma, his uncle Rudolf’s company, had shown the way forward by pushing into the consumer market for athletic footwear and increased its sales in that field by 35% in the year before Horst Dassler took control. It was a market that Adidas had largely missed out on, but one that the new company chairman saw great opportunity in.

The new man in charge wasted little time in putting his ideas into practise. He sought to modernise the business and inserted an experienced professional management team to deliver the plan he regarded as essential for the company’s success. Inevitably, it meant a lessening of the influence of family members in the business, a trend that would intensify after his death. With the new regime in place, and with an echo of his father’s initial strategy, Horst Dassler’s Adidas focused on developing long-term relationships with both sporting bodies and the top individual athletes in a range of sports across the globe, using their successes and high-profile images to position Adidas, and their products, as the essential partner for sporting success.

These links were then used to feed marketing into the burgeoning ‘leisure’ sector and make Adidas the sports goods of choice for any aspiring sportsman, whatever their level of ambition. It was an astute piece of marketing, and one that brought major success for the company. By the time of his death on 9 April 1987, Horst Dassler had made Adidas, the world’s largest sporting goods manufacturer, with affiliated organisations in more than 40 different countries across the globe.

In 1989, Adidas became a stock corporation, and the following year, Horst’s children, Suzanne and Adi, disposed of their shares, cashing in on the success of their father’s enterprise and the break from the Dassler family was largely completed, although the strategies of both Adi and Horst Dassler would be revived further down the road. If that break benefitted the heirs of the business’s founder and his son financially, for Adidas, the loss of Horst Dassler and the consequent sale of the business would bring a change of ownership, a dramatic refocusing on strategy, and troubled times both with regard to image and financial stability, leading to record losses by 1992.

Bernard Tapie was a hugely controversial character in French business circles who had accumulated a fortune across the previous two decades by buying seemingly bankrupt businesses, turning them round, and then selling on for a large profit. To some he was considered the epitome of entrepreneurism, the embodiment of the ‘greed is good’ culture, not quite the Gordon Gekko of the ‘Wall Street’ movie of 1987 fame, but many saw the link. To others his business practises lurched towards the parasitic, a perception that the scandals, trials and tribulations of his later life only added supporting evidence to. In 1992, backed by a raft of substantial loans secured through a number of foreign financial institutions, plus part of the French Crédit Lyonnais bank, he raised almost 1.6bliion francs to purchase the shares of Adidas. The company had a new owner. Tapie had large shoes, sporting shoes, to fill. The question was whether his feet, or indeed his feats, big enough to fit them. 

The tycoon would later describe his ownership of the business as “his greatest business coup”, although others would take a different view. His ethos was to maximise profits, and be sales orientated, rather than focusing on marketing to develop the business – perhaps an appreciation of the ‘fast buck’ over and above the prospects of sustained growth is an apt paraphrase. Despite his self-anointed success, reports suggest that by 1992, the French businessman was unable to pay the required interest to service the loans he had used to acquire the business and this, coupled with pressure to disinvest in a business that may otherwise hamper his political aspirations, led to him requesting Crédit Lyonnais to arrange a sale.

The bank agreed to purchase the company from Tapie for a sum widely reported to be worth around €315 million euros. Around twelve months later however, Adidas was then sold on by Crédit Lyonnais for more than twice that amount. Furious that very little had changed at Adidas between Tapie’s sale to the bank and the subsequent moving on of the business Tapie cried foul. With claims and counterclaims of fraud, bad faith and dishonesty, abounding between the two parties, what became known as L’Affaire Tapie had begun. In such matters, inevitably, only lawyers prosper. Fortunately for Adidas, the distance between themselves and the complicated affairs of Bernard Tapie, French corporate law and decades of legal wrangling grew more and more distanced. Although now free of Tapie’s control, the business was far from being put of the woods, as record losses imperilled its future. Fortunately, after a period of mismanagement a saviour would appear.

Robert Louis-Dreyfus was a 53-year-old Parisian and graduated from the Harvard Business School before joining the family trading business S.A. Louis-Dreyfus in Brazil. In 1982, he was employed as Chief Operating Officer and Chief Executive Officer of the American medical marketing business, IMS International. In just half-a-dozen years of time there, he developed the business into the second largest market research company in the world. Impressed by his success, Maurice Saatchi identified him as the ideal corporate officer to join the marketing agency he had founded with his brother Charles. Saatchi & Saatchi had started life with a ballooning portfolio of celebrated clients, and booming financial success. Of late, however, their fortunes had withered and the agency hit difficult financial times. Louis-Dreyfus’s was charged with returning the business to profitability, and an upward curve of success. Despite inheriting a balance sheet that had shown losses across a number of successive years, the new man’s strategies had the agency back in profit by 1993.

Since the death of the founder’s son, Adidas had laboured through a period financial decline, wherein their once all-powerful brand had fallen behind its competitors through incoherent policies and muddled marketing by a group of ill-equipped managers, Tapie included, bereft of the expertise, or perhaps the inclination, to identify and rectify the causes of decline. Market share had been eaten away by the likes of Nike and Reebok, competitors much more orientated to the modern world and feasting on Adidas’s on the easy fare of Adidas’s decline. In 1992, the company returned losses of some $100 million. Its very existence would soon be called into question unless the spiral of decline could be reversed.

In April 1993, Louis-Dreyfus took control of Adidas as owner, CEO and chairman. Much as he had achieved with both IMS and Saatchi & Saatchi, he would revive a business that had declined during the years since the death of Horst Dassler and return it to its former glories. Decisive action was required and the new man at the top wasted little time in enacting it. Anyone resistant to change was removed and a group of hungry, young and innovative management was moved in to replace them. Identifying where Adidas had fell behind its competitors, and the road back to sustained success, Louis-Dreyfus doubled the marketing budget of the company. The fightback was on. Horst Dassler had grown Adidas through marketing and Louis-Dreyfuss had adopted a similar approach. He began buying up majority stakes in the previously independent businesses that distributed Adidas products around the world. From now, all the marketing would be coordinated and brand identification would be once more to the forefront.

There were also echoes of Horst Dassler’s approach as Louis-Dreyfus again sought to have Adidas identified with sporting success at the highest-level, developing relationships with high-profile athletes. The advertisement relating to Donovan Bailey, using the ‘We knew then. We know now’ slogan cited above, being just one example. Relationships were also forged that made Adidas indispensable partners at global sporting events such as the Olympic Games and FIFA World Cup tournaments.

That desire to develop relationships also extends to organisations as well. The top football clubs among Europe’s elite leagues were targeted and, to this day, the likes of Manchester United and Arsenal in England’s Premier League, Bayern Munich in the Bundesliga, La Liga’s Real Madrid, Serie A’s Juventus and Ajax of the Dutch Eredivisie wear Adidas kits. Adidas have also provided the footballs at every World Cup since 1970, every European Championship since 1992, and every Olympic Games since 1996. The company also sponsors the National Hockey League (NHL) in the USA and the Canadian Hockey League (CHL), plus the MLS (Major League Soccer). Adidas targeted and achieved relationships that identified them with sporting success,

After his first year at Adidas, Louis-Dreyfus had transformed the business. After recording losses, in 1993, the business returned a profit of $4.7 million. It was just the beginning. That figure had exceeded $100 million by the end of the next period. During the following year, so strong was Adidas now performing, that an IPO (initial public offering) was organised on the Paris and Frankfurt stock exchanges to raise investment for further expansion. In 1997, Adidas added the French sporting goods company Saloman and successful golf equipment manufacturer TaylorMade to its stable. In the same year sales grew by 23% and nett income totalled $255 million. It was also during Louis-Dreyfus’s tenure that Adidas moved to their new home as World of Sports in Herzogenaurach was chosen as the location of the Group’s Headquarters.

‘We knew then. We know now’, was just one of their marketing successes. Others would follow and slogans, simple phrases that quickly and erringly associate the observer with the brand, would be a key element in Adidas’s marketing. ‘Impossible is nothing!’ is probably one of the best remembered. Erich Stamminger, a member of the Executive Board of Adidas-Salomon AG, once described the phrase and its essential link to the brand by lauding, ‘“Impossible is Nothing” as a brand and an attitude that is known and shared by all athletes around the world. “Impossible is Nothing” is the concept behind Adidas’ brand positioning “forever sport” that clearly and emotionally communicates our passion for sport.’ He continued, “As an athlete you always strive to go further, break new ground, and surpass your limits. So do we as a brand, to achieve our mission to be the leading sports brand in the world.”’

Louis-Dreyfus left Adidas in 2001, but the work he had completed together with business partner Christian Tourres meant the journey ahead had been planned out, and other campaigns would follow the marketing roadmap he had created. Later, there was the ‘Long Run’ video of the early 2000s, that again invoked the ‘Impossible is nothing’ mantra. It featured a video of Muhammed Ali training run from 1974, with technical wizardry brilliantly splicing the images with one of seven contemporary athletes – Zinedine Zidane, David Beckham, Ian Thorpe, Tracy McGrady, Haile Gebrselassie, Maurice Green and Ali’s daughter Laila – as if they were running alongside the legendary heavyweight champion. Positioning the brand alongside perhaps the most iconic sportsman of all time was typical of the Adidas approach to marketing.

The word ‘Adidas’ is never spoken in the Long Run video, it only appears in the closing frame. Stating the obvious was hardly necessary. When the words ‘Impossible is nothing,’ appear on the screen as Ali shadow boxes throwing a few mock punches towards the camera, it says it all. When Robert Louis-Dreyfus took control of Adidas back in 1993, the road to success looked like a ‘Long Run’ of its own, but with the attitude that ‘Nothing is impossible’ he delivered by adding modern management and marketing strategies to the tried and trusted methods of Adi and Horst Dassler. He proved the slogan ‘We knew then. We know now.’ Was a very apt way to describe the rise, fall and rebirth of Adidas.

(This article was originally produced for the “Adidas” magazine from These Football Times).

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