In October 2019, the High Court ruled against New Balance and Liverpool were officially green-lighted for their lucrative contract with Nike. It is expected that the new deal will meet or even surpass Manchester United’s deal with Adidas, which is the most expensive in English football. But beyond economic benefits, there are other reasons why Liverpool chose the Oregon-based company over New Balance...
Liverpool and Sponsorship – A Brief Background
In 2012, Liverpool signed a six-year deal with Warrior Sports. Warrior had no previous experience in football – they were more invested related in Hockey and Lacrosse teams in the USA. Warrior Sports is part of the New Balance brand and, in February 2015, their parent company announced their entry into the global football market. On this account, All the football sponsorship under Warrior Sports became New Balance’s assets. The Boston-based company wanted to turn into one of the key players in the football market, but things didn’t go as it was planned. There was still the global duopoly of Adidas and Nike. It was clear that Liverpool were a big fish in New Balance’s relatively small pond. Athletic Bilbao, Porto, and Leyton Orient were the other clubs picked up by New Balance.
Despite the aforementioned information, Liverpool’s market activity under New Balance deal could be evaluated as satisfactory. The American company were very successful in increasing shirt sales. Also, they made some of the notable shirt designs highly favoured by the fans. Ultimately, the figures did the talking. During the last five seasons, the Reds averaged 1.13 million sold shirts. An accomplishment that saw Liverpool rise to the fifth-most popular shirt-sellers among the top clubs.
New Balance were eligible to renew their deal with Liverpool if they could meet the criteria introduced by other kit suppliers. Therefore, the European champions were brought to court over accusations that they were rejecting to fulfil the agreement. As I mentioned, the High Court decided in favour of the English club. It was mainly due to New Balance’s inability to supply distant markets around the globe. Nike’s global reach is obvious. The deal essentially happened so that Liverpool can achieve their goals of establishing themselves as the biggest football team. On and off the pitch.
How Nike can help Liverpool achieve their ambitions
Some maths. The base-rate figure is not even close to the previous deal, but 20% of royalties and access to the ‘promised land’ is a pretty good option. It’s projected that this would come close to Manchester United’s deal with Adidas. The Athletic’s James Pearce indicates: Nike can distribute the club’s merchandise “in at least 6.000 stores worldwide, including 500 of their own.” This was impossible under New Balance deal, they’ve only managed to supply around 3.000 stores and additionally, most of their stores are just selling shoes, not kits.
Nike has, of course, already proved that they can work with the elite clubs. Take the case of Paris Saint-Germain. The marketing campaign was solely targeting the North American audience. PSG’s deal with Air Jordan is one of the most prominent examples of a successful campaign in football. According to Le Parisien, They sold more than a million shirts during the 2018/19 season.
This number is fascinating. Even though PSG aren’t a successful force on the European stage, their shirts were on street corners and in parks more than any other. Nike’s key to success was their links to heavy hitters such as Travis Scott, Daniel Hernandez (known professionally as 6ix9ine) and many NBA stars (among them was Michael Jordan), who were posing in PSG shirts. This culminated in a roaring success; in the United States, PSG ranks only behind Manchester United and Barcelona in shirt sales.
Liverpool have nothing to worry about, advertising wise. We will likely see famous people posing in Liverpool shirts. Lebron James, Drake and Serena Williams have already been linked with the upcoming advertising campaign. There will be no question that the campaign eventually will increase shirt sales in the USA and around the world. A huge move.
What Nike get from Liverpool
Of course, Liverpool will get a profit from the deal, but what about Nike? Nike’s revenue growth in Asia illustrates that the brand is on the right track, despite Nike’s revenue share from North America dropping. This is because of an increase in international sales. Still, their main target market is China. The growing middle class in the most populated country on the planet attracts global brands from all over the world. Thereafter, Nike need the product and non-product advantage against its rivals and Liverpool will be their major force in this competition. Furthermore, as economic relations between the United States and China worsen, Nike need to lay foundations in mainland China for future success.
As Brand Finance’s article says, “56% of all Chinese fans follow a Premier League club, exceeding other major European leagues”; this figure shows that the English first division is extremely popular in China. The increasing popularity of the Premier League in Asia manifested itself in lucrative TV deals and growing fan bases. Take the Carabao Cup for example. The draw is done at time that suits the Chinese audience. In this region, both side’s interests coincide with each other. The Reds were trying to expand their fan base in Asia and Nike are the correct choice.
Part and parcel of the deal, we may see Liverpool tour around Asia in next summer’s international tournaments (would be their first since 2017). There’s no doubt that the kits will be on show. A partnership with the Champions of Europe and probably, at the time when the deal kicks in, Premier League Champions, is a wonderful investment. £30 million-a-year deal worth every penny Nike pays for it. .
What to expect from Liverpool in the future?
The reign of Jurgen Klopp has already turned out to be pretty successful (to say the least). After failures domestically and continental competitions, Klopp created a monster of a team. Back-to-back Champions League finals gave the team momentum en route to ascend into the ranks of the greatest teams of recent years. But to fulfil their ambitions, they need something more…
Intending to gaining more supporters beyond the UK, Liverpool supposedly need one of their top-class players. Firmino, Salah, Mane. All these players have become stars under Jurgen. Signing Alisson from Roma for a fee of nearly £67 million is a good sign that they are going to spend money on world-class players. But keepers are not the ones depicted in youngsters posters pinned at their rooms’ wall. They need a cult player, an already established star, and there is no second thought about it: This star should be Kylian Mbappé. Past his footballing prowess, if Mbappé signs for Liverpool, it will be one of the most economically profitable deals in football history. No doubt.
Finally, Liverpool’s new Nike deal is surely the best one in the club’s history; It’s also one of the greatest deals in football. We don’t know what it will be at the end of the deal, but one thing is certain: It should mark a new era in Liverpool’s history…
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