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After Paysandu shows the way, Brazil’s smaller clubs reap dividends of white-label kit deals

  • Paysandu Sport Club end agreement with Puma to enter white-label deal with garment maker
  • Share of shirt sales increases from 10% to between 25 and 30%
  • But model might not work for clubs with ambitions to be global brands

After missing out on promotion to Brazilian football’s top-tier Série A in 2015, directors at Paysandu Sport Club set about for ways to grow revenue and push again in 2016.

Their solution was an uncommon one: in January 2016, club president Alberto Maia decided kit suppliers Puma had to go. He had other plans: Paysandu would make their own uniform.

The club believed that it could significantly increase revenues by bypassing the established apparel manufacturers directly, and its belief was borne out. “In [2015] we received $127,000 (€112,000) in royalties from the kit suppliers. That figure rose to $825,000 in our first year as our own suppliers,” says Maia, who adds that 111,000 units were sold in 2016.

Like many relative minnows in Brazil, Paysandu didn’t enjoy the pampering from major manufactures reserved for their bigger competitors – many clubs actually buy their uniforms from established suppliers and do not receive money from them as sponsorship.

It’s a similar story for Série B side Juventude. “We are a small team for the big sportswear companies and in the past, we actually lost money in contracts with them,” says Matheus Antunes, the club’s business director. The club cancelled a two-year contract with Italian brand Kappa in 2016 after a series of delivery problems affected the supply to athletes and retail.

Under its Puma deal, Paysandu enjoyed a 10-per-cent share of each shirt sold. Their white-label deal with garment maker Bomache Material Esportivo is more generous, ranging from 20-35 per cent, according to the company’s commercial director, Alexandre Dalla.

The white-label partnership model has spread among small- and medium-sized clubs around the country. Three years later, at least 16 other Brazilian teams have become their own kit suppliers.

Most are lower-league sides, but top-flight Bahia launched its own brand in August 2018, and two members of ‘Own Brand FC’ – Fortaleza and CSA – were promoted to Série A this year. Bahia announced in November that new shirt sales had generated $270,000 in the first month of release, according to the club surpassing an entire year of royalties under its previous supplier, Umbro.

Methodology & flexibility

Most Brazilian clubs are member-owned non-profit entities with limited cash stores, which makes it difficult for them to take the entire kit supply chain – including distribution and sales – in-house, and explains why white-label deals with manufacturers like Bomache have become the go-to for Brazilian clubs following this model. These companies will provide services from simple kit production to distribution and 360-degree contracts that include marketing consultancy.

Bomache now works with eight other Brazilian clubs, including 1985 Brazilian champion Coritiba, which created brand 1909, named after the year of its foundation.

Dalla claims that these deals “unshackle” the clubs, pointing to Paysandu’s decision to launch a special kit to celebrate the 2018 World Cup that sold out its 10,000-unit limited batch in 20 days.

Similarly, Juventude made headlines in October for launching a kit celebrating the international breast cancer awareness month.

“With our own brand we are able to come up with special commemorative shirts in only three weeks, something really not feasible under a traditional contract,”Antunes explains.

Last December Bahia used the flexibility of its new arrangement to launch a more affordable version of its kit for fans with less disposable income: at about BRL 100 (€23/$27), it is considerably cheaper than the average BRL 249 for replica shirts in Brazil in 2018 prices.

The north-eastern club also found a creative way to tackle counterfeit material: supporters could trade in fake kits while purchasing the new Esquadrão brand material.

Conclusions/who it works for

Dalla says the advantages of the own-brand model have not gone unnoticed by Brazil’s bigger clubs, and claims Bomache has been in negotiations with “five big teams” whose shirt deals expire in the next few months.

“I don’t see why a big team would not like to make more money with shirt sales, especially the ones in Brazil that have more national appeal, such as Flamengo and Palmeiras,” he said.

These sides are in a different place vis-à-vis kit deals: Série A champion Palmeiras will this year begin a two-year deal with Puma worth about $7m per season; and Flamengo, the best-supported club in the country, has a deal with adidas worth just under $10m per season.

Brazilian football finance analyst Amir Somoggi thinks it is premature to imagine a big migration to club-owned brands, but that the model is perfect for small- and medium-sized teams in a scenario where big sportswear companies “are not throwing money at clubs like before”.

“These companies have noticed that their investment was not generating sales returns. A shirt sponsor might be happy with image return but for a kit supplier, sales are quite important,” Somoggi explains.

“This own-brand model could be perfect for medium-sized clubs because it gives them a higher profit margin and more control over sales. But this is not the core business of a football club and involves logistics challenges in terms of retail and distribution that are proportional to the club’s size.”

“There is a reason why Manchester United and Real Madrid are not doing it. They want to be big global brands and they need the distribution channels and the expertise of partners like adidas and Nike.”

Paysandu is a well-supported club – in 2015 their 14,000 average attendance was the 18th highest in the country – but that fanbase (and thus customer base) is concentrated in its home state of Pará. Somoggi believes the more powerful Brazilian clubs could be killing their chances of internationalisation if they followed the own-brand model.

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