Case Study: Liverpool FC And Its Choice Of Kit Supplier
Liverpool have announced Nike will become the club’s official kit supplier on a “multi-year deal” from the start of the 2020-21 season.
The deal, which begins on June 1, will see Nike replace New Balance as the official supplier for the Premier League club.
Liverpool were sued by New Balance in October after the American kit supplier alleged the club had refused to honour the terms of its reported £40m-a-year deal, which expires in May.
Under the terms of the deal, New Balance was entitled to renew its sponsorship if it matched the terms of any competitor’s offer to sponsor Liverpool’s kit – with Nike reportedly offering a £30m-a-year, five-year deal.
However, Liverpool successfully argued New Balance were unable to match Nike’s offer in relation to the marketing and distribution of products, with a High Court judge ruling in the club’s favour.
Speaking on the new partnership with Nike, Liverpool’s managing director and chief commercial officer, Billy Hogan, said: “Our iconic kit is a key part of our history and identity.
“We welcome Nike into the LFC family as our new official kit supplier and expect them to be an incredible partner for the club, both at home and globally as we continue to expand our fan base.
“As a brand, Nike reflects our ambitions for growth, and we look forward to working with them to bring fans new and exciting products.”
Liverpool feel they’re better off with Nike
01:2401:24 Football finance expert Kieran Maguire explains the reasons behind Liverpool’s decision to partner with Nike instead of New Balance.
There’s two elements to the deal. First of all there’s an agreed annual fee. I think New Balance were supposedly offering £60m and Nike have said that they are going to pay £30m.
But the difference is going to lie in that traditionally clubs get 7.5 per cent commission from the sale of a shirt and other merchandise. Liverpool’s deal with Nike is that they’re going to get 20 per cent.
Liverpool have crunched the numbers and they estimate that there is a crossing point where they’ll be better off with Nike, because Nike have got a much larger distribution network that they’re able to tap into, and their other global stars such as Serena Williams and Drake and so on.
Therefore they feel like they can make more money as a result of this deal.