Corporate Governance at Adidas-Salomon

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Case Details:

Case Code : CGOX010
Case Length : 11 Pages
Period : 2002-2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Adidas-Salomon
Industry : Sporting Goods
Countries : USA

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Introduction

adidas-Salomon (adidas) was famous for its athletic shoes - tennis, running, and basketball. adidas also offered apparel and other jock-type accessories. The #2 maker of sporting goods worldwide, behind NIKE, adidas had sponsorship deals with popular US football and basketball stars, as well as the ¹New York Yankees.

Its purchase of Salomon, the French maker of ski and golf gear, steered the company into the equipment arena. In 2002, adidas reported revenue of $6,837.2 million and a net income of $239.6 million. In early 2003, adidas was delisted from the Paris Euronext SA Stock exchange due to low trading volume. The company remained listed on the Frankfurt Stock Exchange.

Corporate Governance | Case Study in Management, Operations, Strategies, Corporate Governance, Case Studies

Later that year, top sales executive Timothy McCool admitted to cooking the books for adidas. He reported to auditors that the company owed $2.2 million to footwear retailer 'Just For Feet', when the actual number was less than $50,000.

Background Note

adidas had grown out of a rift between German brothers Adi and Rudi Dassler, who created athletic shoe giants adidas and Puma. As WWI was winding down, Adi scavenged for tires, rucksacks, and other wastage to create slippers, gymnastics shoes, and soccer cleats at home.

His sister cut patterns out of canvas. By 1926, the Dasslers had built a factory. At the 1928 Amsterdam Olympics, German athletes first showcased Dassler shoes to the world. In 1936, American Jesse Owens sprinted to Olympic gold in Dassler's double-striped shoes...

Excerpts >>

1] The New York Yankees have won a record 26 World Series titles (including three straight from 1998 to 2000) and 39 American League pennants (including the 2003 championship) since 1903, making the team the most successful professional sports franchise in history. Stars such as Derek Jeter, Roger Clemens, and Bernie Williams follow in the footsteps of past Yankee icons such as Babe Ruth, Lou Gehrig, Joe DiMaggio, and Mickey Mantle. The Yankees have been very successful off the field as well, generating huge sums from regional media deals. George Steinbrenner, who bought the team in 1973, also owns 60% of new sports cable channel Yankee Entertainment and Sports.