Money doesn’t make the world go round... marketing and distribution do – Nike and New Balance clash over Liverpool FC kit deal

30 October 2019

Author: Allan Owen

In the modern era, Premier League kit deals are big business. Manchester City’s 10-year deal with Puma is worth £60 million a year and even this is overshadowed by Manchester United’s deal with Adidas, which is worth an eye-watering £75m per year.

Sportswear manufacturers are all too aware of the considerable value in providing kits to the country’s biggest clubs. The combination of kit sales (including training wear and even certain ‘fashion collections’) and global advertising via the Premier League’s worldwide audience, make such deals highly profitable.

It is unsurprising, therefore, that the upcoming expiry of Liverpool FC’s kit deal with New Balance has created quite the stir in the sportswear market. On the pitch, Liverpool FC have begun to relive the glory days of old, having won the Champions League in 2019 and currently sitting at the top of the Premier League. As one might expect, the right to provide their kits for the foreseeable future is a highly attractive proposition.

Off the pitch, this proposition was so attractive that it has led to a High Court battle being fought between New Balance and Liverpool FC.

Liverpool FC had accepted a £150 million 5 year offer from global heavyweight brand, Nike, to provide their kits. For a top-tier kit deal, this is a relatively modest sum but Liverpool FC are thought to have been attracted by Nike’s unparalleled marketing and distribution services.

Eager not to lose out, New Balance commenced court proceedings to enforce a “matching clause” in its current deal with Liverpool FC, which entitled New Balance to renew the agreement, provided that it matched any competitor’s offer.

New Balance’s case was dismissed by Mr Justice Teare in the High Court on Friday. He stated that New Balance’s offer did not adequately match that of Nike, mainly due to the superior marketing and distribution reach of Nike.

Though financially similar, when taken as a whole, Nike’s offering far outweighed that of New Balance. This was a product of Nike’s ability to call upon superstars such as Serena Williams and LeBron James to promote Liverpool kits, combined with their commitment to sell licenced products in not less than 6,000 stores worldwide. New Balance’s inferior store network and its inability to call upon a range of international superstars meant that it could not truly match Nike’s offer.

This case is interesting in that demonstrates the significant role which kit deals and sponsorship arrangements play in sport today. Moreover, from a legal perspective, it is a useful reminder that the value of a particular offer is not always simply the basal monetary amount; wider factors often play a part in the calculation of an offer’s overall worth.

This article is for general awareness only and does not constitute legal or professional advice. The law may have changed since this page was first published.

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