Liverpool have had a significant victory off the pitch, as the Reds have been granted the go-ahead to sign a bigger deal with Nike. The High Court has dismissed the case brought forward by current sponsors, New Balance, who believe that they can renew the contract if it matches an offer from a competitor.
It is understood that Nike have offered a whopping £30 million a season to become the kit manufacturer for the Reds. Only a few years ago, Liverpool were down in the pecking order and Adidas decided to drop out since the brand did not seem valuable enough. Now, however, two major sportswear giants are fighting for a slice of Liverpool’s success.
Interestingly, Nike’s current offer is slightly lower than the £40 million year deal with New Balance but the American sportswear giant should be able to offer greater returns for the club by sheer volume of kit sales. New Balance were able to sell only around 2.9 million units last year and this was the peak operating capacity. Nike will initially start with the same capacity that they have the potential to ramp up production even more. This combined with a 20% royalty on all LFC goods should ensure a hefty return for the club.
One of the main centres of the court case was the marketing potential between the two manufacturers. Liverpool claim that Nike have offered to push shirt sales through their officials to network, which numbers more than 6000 around the world. Even though New Balance tried to claim a similar number, it is quite obvious that the existing sponsor does not have that muscle. Further, the judge was also left impressed with how Nike offered the opportunity to collaborate with stars like LeBron James and Serena Williams.
All these factors have weighed in heavily on Nike.
Liverpool may have run out of space for negotiation, as the club have seen two of the primary competitors go to court. Nike are paying substantially more for the likes of Tottenham and Chelsea. Both clubs are making around £50 million per season while PSG are way out in front with £75 million per season. Spurs have been unable to enjoy any title success in recent times while PSG have failed to win the Champions League even after multiple attempts. In comparison, Liverpool have added yet another European Cup to the collection.
Even with Nike’s primary competitor, Adidas, the sponsorship feels undervalued. Manchester United haven’t had a lot of success in recent times and they are being paid £75 million per season by the German sportswear giant.
Every club has a cycle of success and Liverpool are just entering into a new wave. The likes of Mohamed Salah, Sadio Mane, and Roberto Firmino have contributed immensely to the club’s success over the last couple of years. They are still at the peak of their powers and the Reds can expect more of the same going forward. The club must milk as much potential from sponsorships in order to retain the successes.