Liverpool seek global riches after signing Nike kit deal
Liverpool announced a multi-year kit deal with Nike on Tuesday as the European champions seek to capitalise on their on-field success by boosting global commercial revenues.
Liverpool’s English midfielder James Milner (L) celebrates with Liverpool’s English midfielder Jordan Henderson and Liverpool’s Belgium striker Divock Origi (R) after taking a penalty and scoring his team’s second goal during the English Premier League football match between Liverpool and Leicester City at Anfield in Liverpool, north west England on October 5, 2019. (Photo by Paul ELLIS / AFP)
The US sportswear giant will supply playing, training and travel wear to the Premier League leaders from the 2020/21 season after the club won a court battle with current suppliers New Balance in October.
The Reds look likely to be crowned champions of England for the first time in 30 years this season — they currently have a 13-point lead at the top of the Premier League table.
According to a report in The Athletic in October, Liverpool hope to bank up to £70 million ($92 million) a year in total under the bumper deal.
But it differs from most major kit contracts signed by Europe’s elite clubs because it involves lower guaranteed fees and higher commissions.
Liverpool will reportedly earn a flat fee of £30 million a year from Nike, which is below the £40 million New Balance are thought to pay per season and less than half of the £75 million deal Premier League’s rivals Manchester United signed with Adidas in 2014.
However, Liverpool will also earn royalties of 20 percent on all net sales of merchandise other than footwear, plus bonuses for winning the Champions League and Premier League.
“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 0and globally as we continue to expand our fanbase,” said Liverpool managing director and chief commercial officer Billy Hogan.
New Balance had argued it had triggered a clause in the current deal that would allow it to maintain the contract for another five years if it matched the terms of any competitor’s offer.
But a judge ruled in favour of Liverpool’s case that New Balance, which had been supplying the club’s kit since 2015, could not match Nike’s enormous distribution network and promise to market the club via “superstar athletes and influencers”.
These include LeBron James, Serena Williams and Canadian rapper Drake.
“New Balance were supposedly offering £60 million and Nike have said they are going to pay £30 million, but the difference is that club’s traditionally get 7.5 percent commission from each sale of a shirt and other merchandise,” football finance expert Kieran Maguire told Sky Sports.
“Liverpool’s deal with Nike is that they are going to get 20 percent.
“Liverpool have crunched the numbers and they estimate there is a crossing point where they will be better off with Nike because Nike have got a much larger distribution network.
“They are able to tap into their other global stars such as Serena Williams and Drake and they feel they can make more money because of this deal.”
Bert Hoyt, vice-president and general manager of Nike Europe, Middle East and Africa, said: “Liverpool Football Club has such a proud heritage and strong identity.
“The partnership with Liverpool FC underscores our leadership in global football and with the club’s passionate worldwide fanbase and strong legacy of success — they have a very bright future ahead.”
The deal still lags a long way behind the biggest kit deals in football enjoyed by Spanish giants Real Madrid and Barcelona, with La Liga champions Barca earning at least 150 million euros a season from Nike.
However, should the deal prove successful, Liverpool could be pioneers for other clubs to follow suit with a similar model.
On top of closing in on a long-awaited league title, Jurgen Klopp’s men also remain in contention to retain their European crown as they have qualified for the last 16 of the Champions League.