Adidas and Puma empires shaped by family conflict

Two of the greatest brands in sports, Adidas and Puma, grew out of one small town in Bavarian Germany, where they were started by competing brothers, Adolf and Rudolf Dassler. "Sneaker Wars: The Enemy Brothers Who Founded Adidas and Puma and the Family Feud That Forever Changed the Business of Sport" (Ecco, $26.95), by Barbara Smit, tells how the Dassler boys started making shoes in their mother's laundry room after World War I. It traces the growth of the business from that Herzogenaurach shed, its fraternal split into Adidas and Puma, exacerbated by World War II, jealousy and suspicion. And how that competitive fire drove the Dasslers to help create the modern sports industry, for better or worse.

The first 50 years of the 90-year story, capturing the start, splinter and competitive rise, are the book's gem. The early decades show the evolution of the company and amateur sports before both were altered (corrupted?) by bankers and greed.

Smit traces the growth of the company, with Adi the tinkerer/craftsman using tools left by retreating World War I soldiers. Some of the first shoe leather was scavenged from abandoned helmets and bread pouches. Rudi, the charismatic salesman, joined his brother in 1923. By the mid-1930s the Dasslers had a thriving business, buoyed by Adolf Hitler's fascination with sports as a promotional tool for his world view.

World War II drove a wedge between the brothers. It was fueled by envy over Adi's exemption from military service and Rudi's conscription, which he blamed on his brother. Soon after the war they moved to opposite sides of the Aurach River. Adi formed Adidas, merging first and last names. Rudi chose Ruda first, then settled on Puma.

Athletes Inc.

The most successful athletes now are a bit like corporations and, as Smit shows, the Dasslers are partly to blame.

Things were relatively pure in 1936, when Adi showed up at the Berlin Olympics with a pair of handmade spikes, found Jesse Owens and persuaded him to run in them.

For Germany's soccer team, Adi himself would bring his toolbox to tighten screws and add padding to make sure the boots fit right. His idea to use screw-on cleats helped the Germans win the World Cup in 1954 by gaining traction on a rain-soaked pitch. Soon teams were switching to Adidas boots and the company took a lead it still holds.

Free shoes

As recently as the Melbourne Olympics in 1956, Adidas' main marketing expense was sending Adi's son, Horst, to give away shoes. That was a bold move then, when amateur athletes bought their own equipment and shoe advertisements blurred the identity of the athlete. By Rome in 1960, Puma upped the ante, quietly offering 10,000 German marks to lure sprinter Armin Hary into its spikes. It's a fairly short leap from marks in brown envelopes to Air Jordan.

By the 1980s, both brands were losing market share in the United States to Reebok and Nike. That trend worsened when Nike signed basketball player Michael Jordan, who grew up an "Adidas nut," Smit writes. Nike won Jordan over by offering to create his own shoe. Nike sold more than $100 million worth of Air Jordans in their first year.

Eventually, both companies bought out their U.S. distributors to simplify their structure and gain control over marketing. Adidas had to pay more than $120 million to win back distribution rights that Adi had granted with a handshake.

Puma's struggles were exacerbated by weighty endorsements and sluggish sales that found the once-premium brand peddling its shoes at U.S. discounters like Kmart.

From there things worsened. Deutsche Bank seized control of Puma rather than let the German icon go under. It was sold in 1989. Rudi's heirs walked away with $10.6 million between them.