A town divided by footwear

Kyle James Jul 3, 2006

TESS VIGELAND: Nike’s humble beginnings on a waffle iron are practically legend here in the US. But that legend pales in comparison to the one involving two of Nike’s rivals in the athletic footwear industry. The legend of Adidas and Puma comes into stark relief tomorrow as Germany takes on Italy in the World Cup semifinals. Germany’s sponsor, Adidas, says sales of soccer-related goods are booming and will bring in more than $1.5 billion this year.

The Italian team is sponsored by Puma. Both brands hail from a small town in southern Germany. Kyle James has the story of a corporate split worthy of Solomon.

KYLE JAMES: The Bavarian town of Herzogenaurach, population 24,000, looks positively idyllic. Those pictures of Germany on postcards? You know, with the half-timbered houses and medieval towers? They could have been taken here.

Adding to all the quaintness is a little river that gurgles through town.

But for years, that meandering river separated two sportswear giants, Adidas and Puma, whose headquarters were a stone’s thrown away from one another on opposite banks of the river. It also separated the city’s population, which was strictly divided into two camps. It was all about footwear.

BARBARA SMIT: The town became known as the town where people tend to look down because you’d always look at what shoes the person is wearing before you strike up a conversation.

Barbara Smit is a financial journalist who’s written a book about the Adidas-Puma saga. It tells the story of two brothers, Adolf Dassler and his older brother Rudolph. They went into business together making shoes in their mother’s laundry room in the 1920s. Their new, lightweight sports shoes started getting noticed. And in 1936 they found themselves outfitting American Jessie Owens at the Berlin Olympics.

But then the war came and soon thereafter the brothers had a serious falling out. No one’s really sure why, although speculation has ranged from differences over Nazi party links to meddling wives. The Dassler Brothers Shoe Factory was split in two.

SMIT: They were on the southern side of the river together and then in 1948, more or less in the middle of the night, Rudolf Dassler packed his bags and moved on the other side of the little river. And he established Puma on the other side. From there on in, the town was really split in two like a sort of mini-Berlin with this little river as a partition in the middle.

On one side there was Puma, on the other, Adolf’s new company, Adidas, or Adidas as the Germans say. And like with that wall that once stood in Berlin, you weren’t really supposed to cross, or things could get ugly.

FRANK DASSLER: Sure, it was common knowledge that this is the right side for the Puma people or the right side for the Adidas people.

Frank Dassler is the grandson of Rudolf Dassler, the founder of Puma. He remembers the days well when two shoe camps existed, and each lived their own separate lives. Going to separate stores, playing on separate soccer teams — just avoiding mixing if at all possible.

DASSLER: At least you tried to avoid to be in the same classroom with an Adidas person, with my being a Puma person. Certainly there were bakers or butchers who specialized in a certain brand, so to say.

But right now, he’s sitting in his office at the Adidas world headquarters. Two years ago, this Puma descendant accepted the job as head legal counsel for the Adidas Group — even as recently as this, the local papers called it a betrayal.

Over at the town hall, 65-year-old Mayor Hans Lang remembers those days when shoe loyalty meant everything. He says that while the family feud was a tragedy on a personal level — the brothers never did make up — for his humble town, it turned out to be a blessing.

HANS LANG [interpreter]: These companies grew like they did because of the rivalry between them. It made them come up with new ideas almost on a daily basis. That intense competition is what made them great and it was definitely a positive force for us.

Herzogenaurach has an unemployment rate of just 2.6 percent. That’s at least 8 points lower than the German national average.

These days, those once intense loyalties have faded somewhat. The over-40 crowd might still stick to their brands, but younger people don’t seem so concerned. At a street festival, 14-year-old Teresa’s wearing Puma shoes but carrying an Adidas bag.

TERESA [interpreter]: No, it’s not such a big deal anymore. It was before, but most people today don’t care so much. Sometimes Puma has something better, sometimes Adidas. It just depends.

That kind of attitude might have the Dassler brothers turning in their graves. But if they could see the numbers of people here wearing sport shoes by Nike, they’d likely start spinning.

In Herzogenaurach, Germany, I’m Kyle James for Marketplace.

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