Liverpool’s technical supplier New Balance has taken legal action against the club in a bid to retain the kit rights when the current contract expires in May 2020.
According to The Athletic sports news service, New Balance believes the club disregarded its ‘matching offer rights’ following a bid from sporting goods rival Nike for the period after the 2019-20 season.
New Balance insist that the matching offer clause in the current contract obliges Liverpool to give the incumbent brand an extension. Liverpool reportedly disagrees, hence New Balance’s filing of a dispute at the High Court earlier this month.
A Liverpool spokesman said: “We can confirm that our kit supplier, New Balance, has commenced a legal dispute against the club. We will not be making any further comment during these legal proceedings.”
The Athletic further reports that Liverpool does not accept New Balance’s bid as a contractually-binding matching offer “because they [New Balance] can’t offer the same kind of global distribution network that Nike possesses. The Anfield hierarchy favour going with Nike as they will provide them with a greater presence in key markets across the world.”
Michael Lister, sports and sponsorship lawyer at the law firm Harbottle & Lewis, told SportBusiness Sponsorship that the case demonstrates the danger of including matching rights and first rights of refusal in club sponsorship contracts and kit deals.
“Once very popular, increasingly these provisions prove problematic and are avoided as what constitutes a ‘matched offer’ is difficult to define and the process that must be followed under the contract may not be practical in reality, or justifiable commercially, and this can lead to disputes,” Lister said.
“Such disputes are particularly undesirable in the context of kit, sponsorship and sports marketing deals more generally as the dispute invariably takes place during the contract term, while the relationship is still ongoing and each party is still heavily reliant on the other to achieve full commercial value from the arrangements.”
The new kit deal with the European champions is eagerly awaited with Liverpool seeking to get close to the £75m ($93.4m/€85m) per year generated by Manchester United in its 10-year deal with adidas, from 2015-16 to 2024-25.
Liverpool’s current deal is thought to be worth about £25m ($32m/€29m) per year, which puts the club behind Premier League rivals Arsenal, Chelsea Manchester City and Manchester United in the kit supplier money league.
Arsenal’s deal with adidas and Chelsea’s deal with Nike are worth about £60m per year each. Manchester City receives about £50m per year from Puma.