Liverpool have come so far in terms of off-the-field deals and commercial revenue over the last couple of years that Nike and New Balance, two of the biggest sports companies in the world, are currently fighting over the Reds in court.
Given the complexities and unknowns as the battle in court continues, the situation is difficult to comprehend, with many factors for the judge to examine before a decision is made.
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Nike are the prefered partners for a new kit deal, with their offer of £30 million plus 20% of revenues, as is explained in detail below, seen as being far superior due to their global appeal and access to the Chinese market, in particular, an area the Reds are keen to expand in.
New Balance, though, believe they are entitled to match the offer as part of their previous deal with the Reds.
If LFC were to win the case and move to Nike for next season, it would be reasonable to expect shirt sales to increase given their much stronger market presence and marketing power. Let's assume a conservative 10% increase in shirt sales, to 3.2m.
— Mo Chatra (@MoChatra) October 18, 2019
20% of that net sales amount equates to £40m. Add that to the guaranteed £30m figure and LFC's earnings from the Nike deal would be £70m- that's before any revenues from other clothing, apparel and footwear is taken into account.
— Mo Chatra (@MoChatra) October 18, 2019
It's no wonder, then, that some projections have pegged LFC's earnings from the Nike deal as high as £100m- that amount of revenue is entirely achievable if the club continues to be successful, picks up more trophies and adds marketable Nike-sponsored footballers to the squad. 👀
— Mo Chatra (@MoChatra) October 18, 2019
LFC is clearly confident in being able to sustain success, however- and grow its following in emerging markets like China and India. Given Nike's much stronger presence in those markets alone, LFC would be confident of blowing the 2.9m sales number out of the water next season.
— Mo Chatra (@MoChatra) October 18, 2019
On that last point, the facts shared about the number of 'doors' New Balance have made available for LFC merchandise only prove the point I was making last year that the club's current New Balance deal is a bad one. Really, their scale can in no way match LFC's current status.
— Mo Chatra (@MoChatra) October 18, 2019
There's still more to come early next week, but if the first day is anything to go by then LFC and Nike are well placed to emerge triumphant. If and when they do, based on the information that was revealed today, a partnership with Nike will be a big game changer for LFC.
— Mo Chatra (@MoChatra) October 18, 2019
With one day of the court battle completed, it is expected to take two more days before the decision is reached and the outcome is known.