Nike will be new kit supplier beginning with the 2020/21 season.
Liverpool join Chelsea and Tottenham as top tier EPL clubs with Nike kits
MIAMI, Fla. (October 28, 2019) —
Liverpool FC have won a legal battle with Boston (MA)-based New Balance in the London Commercial Court and are now free to sign a new deal with Nike.
Pending an appeal by New Balance, it brings to an end the ongoing dispute surrounding which apparel provider would outfit the Premier League side’s kit from the 2020/21 season, which has been unclear since the start of the year.
Liverpool had made clear their intentions to switch to Nike once their partnership with New Balance, which dates back to the 2015/16 season, expired and had held extensive talks with the brand. The club rejected New Balance’s offer of a matching clause proposed for the existing contract over the summer.
New Balance took the European Champions to court over their alleged refusal to honour a £45m-a-year deal (€50.9, $55.9 million), which expires in May 2020. They alleged that under the terms, the footwear firm is entitled to renew its sponsorship if it matches any competitor’s offer, and that Liverpool had breached the contract by not renewing the contract.
Opening the firm’s case last week, Daniel Oudkerk QC said the key issue was whether New Balance had matched “the material, measurable and matchable terms of a third-party offer.”
Liverpool countered that New Balance had not matched Nike’s offer, which includes a commitment to sell licensed products in at least “6,000 stores worldwide, 500 of which shall be Nike-owned”. Guy Morpuss QC, the lawyer representing the Premier League club, set out to show New Balance’s claim it could distribute the club’s kit to 40,000 stores was “a myth”, and that the company had “grossly overstated” the number of stores to which it could distribute. Moreover, Liverpool argued that Nike could deliver far greater total revenue than New Balance could, reflected by Nike reportedly agreeing to pay the Reds a 20 percent royalty on net sales of Liverpool products.
Nike reportedly agreed to pay the club UK£30 million (US$36 million) per year, compared to the UK£45 million (US$58 million) New Balance currently pays. However, it would also promote the team through other high-profile athletes and influencers, including tennis legend Serena Williams, basketball star LeBron James and the musician Drake. Nike would also distribute the new kit through an estimated 6,000 global stores, compared to New Balance’s 3,000.
Chris Davis, New Balance vice-president of global marketing and sports marketing, and Kenny McCallum, New Balance general manager of global football, were both cross-examined extensively during Friday’s proceedings.
Davis’ testimony Testifying in court basically admitted that the company had made “errors” on the number of retail outlets initially planned.
Liverpool’s legal team argued that this was evidence New Balance was unable to match the terms offered by Nike. New Balance would have to double their number of stores, especially in the Far East, where their actual outlets were much lower than planned. Other evidence presented by the club’s barristers was the fact that a large number of New Balance stores sold only the company’s footwear and not replica kits.
Giving his ruling in London, Mr. Justice Teare of the High Court ruled in Liverpool’s favour, finding that “the New Balance offer on marketing was less favourable to Liverpool FC than the Nike offer.” A full written statement from the judge will follow but he told the court: “For the reasons given in the judgment handed down, the claim from New Balance is dismissed.”
In his ruling, Mr Justice Teare said: “Liverpool FC is not obliged to enter into a new agreement with New Balance.”
The court also heard that Liverpool spent more than £555,000 on the case, with 20% to be paid by New Balance.
Liverpool will now move ahead to finalise a five-year deal they have agreed to in principle with Nike, who have apparently already spent nearly UK£6 million (US$7.7 million) on kit design. Liverpool and Nike have worked together for the past two months. [The Reds claim Nike’s offer to them, which they apparently had accepted in principle in August, amounted to a legally binding obligation to contract with Nike.] The two sides have already agreed on designs for the replica kits and training kits for the 2020-21 campaign, while Nike have reserved factory space to manufacture 2.9 million units over the course of next season and have already invested more than $5.8 million in fabric.
While the possibility of an appeal of the court’s dismissal is possible, the relationship between New Balance and Liverpool is irretrievably damaged, and even if New Balance won on appeal, forcing Liverpool to work with them for another five years is not going to happen. The only question would be damages owed by Liverpool for breach of contract. A New Balance spokeswoman said the firm was disappointed, adding: “We believe strongly that we matched the competing offer and would have delivered many more years of record-breaking kit sales.”