Premier League club Liverpool has signed Nike as its official kit supplier from the 2020-21 season for a basic fee of £30m (€35.3m/$39.5m) per season, SportBusiness understands.
The multi-year partnership, which begins on June 1, 2020, will see Nike manufacture and supply Liverpool’s playing, training and travel wear for its men’s, women’s and Academy squads, as well as coaching staff and the Liverpool FC Foundation.
The agreement comes after Liverpool won a court case against the incumbent supplier New Balance, which had claimed matching rights to Nike’s bid.
The basic deal of about £30m per year is not that much higher than New Balance’s current figure of £25m per year.
The multiples on the new number reported today in the national press are projections against royalty payments and are unlikely to be realistic.
The Liverpool Echo reported the club will be paid 20 per cent royalties on net sales, but this would still leave Liverpool well short of the £80m per year estimated by the Daily Mail newspaper and others.
According to industry experts contacted by SportBusiness this morning, net sales of about £100m per year would be a safe minimum estimate for an elite club like Liverpool, which would take the minimum value up to about £50m per year.
A figure of £80m per year, however, would seem unrealistic over the short-term, despite the belief among many in football that the football-licensed category is immature, especially when compared with the NFL and NBA.
One industry source said that the size of the licensed business for even the elite clubs is still driven by the home market and Europe.
“Neither adidas or Nike have cracked the US or China with the football-licensed business and for LFC to make big money from this deal that is critical.
“Supply chain is the key problem for Nike and adidas, which is why Fanatics and Amazon are taking a big slice of pie.”
The source is also sceptical that Liverpool can replicate the demand created by Nike’s bespoke range – using the Jordan sub-brand – at Ligue 1 club Paris St Germain.
“Growth is very dependent on growing and diversifying the range and I am dubious as to whether the PSG/Jordan range is credible with LFC, or whether Liverpool can compete on the ‘cool’ factor with other clubs – an area that UK clubs struggle with, in general, versus Europe’s elite.”
Piracy is also a problem in China, according to another source, who added: “Licensing deals are notorious for over-claiming because they are built around minimum guarantees and royalties.
“There can be massive variations in returns depending on success, size of ranges and global distribution.”
The short-term limitations on Liverpool’s likely royalty payments mean that Manchester United’s £75m-per-year deal with adidas is likely to remain the biggest kit deal in English football for a while longer.