08/10/2011 07:54 EDT | Updated 10/10/2011 05:12 EDT

Adidas cancels glitzy party amid pricing row over All Blacks jerseys in New Zealand

WELLINGTON, New Zealand - Sportswear maker adidas cancelled a glitzy celebrity party Thursday as it struggled to contain an escalating public relations crisis over its pricing of All Blacks rugby jerseys in New Zealand.

Adidas had invited hundreds of people, including sports stars and local celebrities, to its "Black is Beautiful" party in downtown Auckland but scrapped the function a day after senior executives apologized on nationwide television for the "distraction" the pricing issue had caused.

The apology came after public figures from Prime Minister John Key to rugby great Sir Colin Meads criticized the company for charging New Zealanders double the price that All Blacks jerseys were selling for overseas.

Adidas is the major sponsor of New Zealand's national rugby team, designing and manufacturing its black jersey which is one of the most recognized uniforms in world sports.

It unveiled a new high-tech All Blacks jersey two weeks ago, at the start of the Tri-Nations rugby tournament, and immediately offered replicas of that jersey, and another "World Cup" version, for public sale.

Anger erupted when it was discovered the World Cup jersey, priced at 220 New Zealand dollars ($180) in New Zealand, could be bought through U.S. websites for as litle as NZ$98 ($80). New Zealand retailers led criticism of adidas' wholesale pricing and recommended retail prices. The country's leading sportswear retailer, Rebel Sport, threatened to stop selling the jersey if adidas didn't bend on price.

Adidas refused to budge and, instead, sought to prevent overseas websites selling to New Zealanders. Rebel Sports cut the price of the World Cup jersey this week to $170 ($140) and of the standard All Blacks jersey to $150 ($125), effectively eliminating its markup to match overseas prices.

Adidas continued to dismiss criticism from retailers and the public and still refused to budge on price when Key said New Zealanders were "offended" that it was cheaper to buy the jersey overseas than in New Zealand. He said the company had mishandled the issue.

"I've always found when you're in the hole, you should stop digging," he said. "It's when you just will not admit that there is a problem that it becomes a massive problem and I think that's the position adidas have got themselves into."

Meads condemned the manufacturer for charging New Zealanders more for a jersey he said belonged to Kiwis.

Adidas apologized to fans Wednesday, defending its pricing policy as "absolutely fair and reasonable" but acknowledging it had handled the issue poorly.

"I recognize there is a lot of frustration from Kiwis out there," the company's New Zealand manager David Huggett said.

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