Liverpool's decision to partner with sportswear giant Nike back in 2019 was taken with the aim of significantly improving their revenue streams in the longer term.
So willing were the Reds to link up with the US firm that they headed to the High Court in a bid to end their deal with former kit partner New Balance, who had argued that a clause in their deal whereby they could extend if they matched competitors on the value of the deal meant that they were offering more than Nike.
New Balance's deal with Liverpool was reported to be in excess of £40m per year, the deal with Nike considerably less per annum at around £30m. But it is what Nike could bring that New Balance couldn't is what prompted the decision to be ruled in favour of Nike, with the deal finally beginning at the start of the 2020/21 season.
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Nike's ability to get product to all markets on the globe, physically and online, is unparalleled in sport, and being able to leverage the Reds' position as a football club with a global brand, one that has continued to grow as success on the field has become more frequent, provided Liverpool with a huge opportunity.
The £30m flat fee is half of what Arsenal will now get from their new eight-year deal inked with existing partner Adidas, with the Gunners set to land around £60m per season.
While the Gunners will undoubtedly view that as a success, with the value of the deal seeing them second in the Premier League in terms of the value of such a partnership - with Manchester United leading the race with a £70m per year deal with Adidas - Liverpool's deal with Nike is predicted to be on a par with United, despite the £40m gap in the guaranteed sum.
That's because Liverpool's deal with Nike is that they received 20 per cent from the sale of Nike/Liverpool merchandise globally, meaning that they can monetise the consumer relationship to a far greater extent than their rivals, and tap into marketing tools that others don't have.
Basketball star LeBron James is Nike's most prominent client globally. He is also a one per cent stakeholder in Liverpool owners Fenway Sports Group. His positioning, particularly in the US, as being an athlete that can transcend sport, offers the potential for the Reds to market Liverpool product to consumers who may not necessarily have an interest in Liverpool or football.
The partnership between Nike and Liverpool is one for the long-term, a five-year deal beginning in 2020. But while the plan for growth for Liverpool's revenue streams has Nike as a key component, the five-year deal means that there will be a review of the partnership so that market forces and the club's global positioning can help better determine what the true value of a kit partnership will be worth from 2025 onwards.
For Arsenal, while the deal is a particularly strong one in the current market and affords them some longer term revenue security, they are locked in until 2030. With the changing pace of sport and everything from team values to commercial partnerships rising exponentially, what seems a great deal now may mean they end up selling themselves short at a time when the likes of Liverpool will be at the table to renegotiate in a landscape that will be delivering more revenues and exposure to top clubs than ever thanks to the new TV deals being in their cycles and the reform of the Champions League in 2024 having come online.
For Liverpool, while the plan for Nike is likely to be one that stretches on well beyond its initial deal, the ability to keep options open when it comes to renegotiating during a period when market conditions will likely change could be hugely beneficial.
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