Armchair Archaeologist

Hainer on whether Reebok and adidas endorsers would ever switch brands: "Allen Iverson, for example, I think fits perfectly to Reebok, but might not fit as good to the adidas brand. I don't see a big switch when we come together in athletes because everybody has selected their athletes based on the brand positioning in the market … sometimes there are too many athletes in one category. A few years ago, we had 15 football [soccer] teams in Germany, which definitely was too much. So we'll talk to each other. But don't forget, we also have to talk to the athlete."

Fireman on whether adidas branding could replace the Reebok vector on NBA, NFL and NHL jerseys: "We haven't met with the leagues yet, so it would be presumptuous to assume that something could happen before we talk to three commissioners."

Fireman on whether the Reebok or adidas brand will ever get into sponsoring the ever-growing sport of NASCAR: "We were approached a couple of years ago by NASCAR because of everything we were doing in the NFL, NBA, NHL. It's a very complicated sport because the sport is not combined under one leadership. So there's a family that has a certain amount of tracks and runs NASCAR (the Frances), but each owner of each team runs their own thing and has their own contracts and each driver has their own entitlements and rights. So they asked to put it all together. We did a six-month process for them and we looked it over and we came to the conclusion that over 50 to 60 percent of the business was done at the Walmart level. We stay in contact with them a great deal, but it's a business that's much too complicated." Adidas has not invested in Formula One, either.

Fireman on how Reebok's strength in quickly turning around jerseys will help out adidas: "If it were announced that Wisconsin was going to the Rose Bowl, we would have adidas product out within 24-36 hours. That's what we do in the NBA and NFL. We deliver the product to the Super Bowl, West Coast or East Coast, we have product on the market at 6 a.m. the next morning in the stores. So if UCLA (an adidas team) is scheduled to win or get hot and win a championship, we have the ability to ship their goods with adidas on it."

8 August 2005, 10:00pm ET

PAUL KANGAS: Shares of German sporting goods maker Adidas Salomon fell almost 2.5 percent in Frankfurt today. Investors took profits after last week`s rally on news Adidas is buying rival Reebok. Adidas CEO Herbert Hainer and Reebok CEO Paul Fireman met with investors today in New York. The pair also sat down with New York bureau chief Scott Gurvey, who began by asking Hainer what benefits Reebok brings to Adidas.

HERBERT HAINER, CHAIRMAN & CEO, ADIDAS-SALOMON: I think Reebok brings a lot of values to Adidas and can help us in a lot of different areas. But when we look to the U.S. market, for example, we will get well established here, to know in and out, the business in the U.S. are very close together with the American sports like football, baseball, basketball. There is a lot of opportunities where they can help us.

SCOTT GURVEY, NIGHTLY BUSINESS REPORT CORRESPONDENT: Mr. Fireman, Reebok had been going along very well and had been a good story in the last couple of years, a lot of good effort on your part and your team, why, why a combination now?

PAUL FIREMAN, CHAIRMAN & CEO, REEBOK INTERNATIONAL: It`s just a moment in time when -- when the two of us met and we had a brief conversation that lead to another one. And you just realize this is a perfect opportunity to bring two companies together that will in fact, have great additional value to each other. We`re not completely aligned. We have overlaps. We are different in different ways but we compliment each other perfectly.

GURVEY: How will the structure work? I mean you are going to maintain separate marketing, separate brands. They are all going to, the lines are going to continue, correct?

HAINER: Yeah, we will definitely keep the brands separate because each and any brand has a lot of values. We have invested a long time as Paul said. Reebok is more than a hundred years old, though they have invested so much money into the brand, the consumer have a perception for the Reebok brand. It would be stupid in my opinion to bring them both together. So the brands will be separated. But of course, we`ll try to get the synergies from the back offices which is obvious.

GURVEY: What is actually going on in the shoe business in general? Because we -- a lot of people are saying this is the beginning of what we will see in terms of consolidation.

FIREMAN: Nike recently only in the last year consolidated Converse which is a strong basketball company, doing about $350 million. And they brought it into Nike. You have Stride Rite just took Socony`s (ph), a women`s running shoe business and consolidated. So consolidation has been going on. And there are still plenty of brands. There are over a hundred brands worldwide when you add up all the different sports. So this is a move that won`t be out of the ordinary. It`s pretty standard in our industry at this moment.

GURVEY: And this would put you as a solid number two, but you know, very close to Nike in the United States, correct?

HAINER: First and foremost, we should concentrate how to grow the two businesses. Integrate the two businesses, position them well, and then try for the two brands. And if we can do this, faster than our competitors that we grow faster, then yeah, one, we definitely will make the gap closer and will shrink the gap. But it is not our primary target just to focus on the competitor. Of course we have to look at them, but first and foremost the target of our company is to grow our own brand.

GURVEY: And are there differences between different geographical areas in the world in terms of, you know, how you view them? Do you market differently in Europe than you would in the United States or in Asia?

HAINER: It would be different sports which are popular in the individual areas of the world. And therefore you have different consumers and different fans. And you have to cater to their demands. For example, in the U.S. you have American football, baseball. These two are definitely not strong in Europe but in Europe we have soccer.

GURVEY: And will the increased size help you in terms of negotiations with, you know, the Footlockers of the world and the advertising agencies and things like that, if you can combine the, shall we say the heft of the combined company?

HAINER: I think we definitely can offer a better variety on (INAUDIBLE), on concepts, on marketing concepts and work closer together with the retailers to really exploit the market because this would be the target for all of us. Because our competitor is not only just the other sneaker brands. Our competitor also the iPods, the video games. They all take disposable money away from the young consumer. And this is where we have to make sure that they stay in the sporting good industry.

FIREMAN: Children in the United States, children and even into young adults, they don`t need more than two or three shoes in their closet. But they average something like 12. So there is a -- that is their Mercedes or their sports car or their motorcycle or their iPod. They are buying because they want to possibly be in the game of buying products. That is what makes it fun in the world. We trained them and they are good at it, the young kids.

GURVEY: Thank you, gentlemen. Thank you very much for joining us tonight.

FIREMAN: Thank you, it is a pleasure.