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Nike have already spent $6m on the new kit...

Discussion in 'The Football Forum' started by FoxForceFive, Oct 19, 2019.

  1. FoxForceFive

    FoxForceFive Administrator Administrator

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    Liverpool insist their differences with New Balance are irreconcilable as it emerged that Nike have already spent nearly $6 million on material for next season’s kit.

    The European champions found themselves dragged to London’s Commercial Court on Friday for the opening day of a case brought by their current kit supplier. New Balance claim that they have triggered a “matching clause” in the current deal which means they should retain the lucrative contract for another five years come June 1, 2020.

    However, Liverpool are adamant that New Balance have failed to replicate the terms on offer from Nike regarding distribution and marketing.

    Court papers seen by The Athletic show that Anfield officials will argue that Nike’s contract offer became legally binding in mid-August when New Balance’s renewal proposal was rejected out of hand.

    Liverpool and Nike have since worked together for the past two months. They have already agreed designs for the replica kits and training kits for the 2020-21 campaign, while Nike have reserved factory space to manufacture 2.9 million units over the course of next season and have already invested more than $5.8 million in fabric.

    Court papers show that they are also close to finalising designs for the 2021-22 kit. Nike has received pre-orders from around 8,000 stores globally for next season.

    “In under two months Nike have more than doubled the distribution figures achieved by New Balance in their eight years as kit sponsor,” read a document compiled by Liverpool’s counsel Guy Morpuss QC. “These actions can’t be unwound without Nike incurring significant expense and disruption to their supply chain for which New Balance may be responsible.”

    If New Balance win the case the Boston-based sportswear firm want the relationship with Liverpool to continue for the next five years.

    However, Liverpool will argue that “trust and confidence” has evaporated and that even if the judgment goes New Balance’s way then the remedy should be damages rather than forcing them to continue working together.

    The full terms of the offer from Nike can also be revealed for the first time. They will pay Liverpool a flat fee of £30 million per season as well as offering royalties of 20 per cent (reduced to 5 per cent for footwear) on all net sales of merchandise. They have also pledged to give the club £2 million worth of licensed products per season plus a 19 per cent discount on standard UK wholesale prices for additional products.

    There is also a £4 million bonus for winning the Champions League, £2 million for being Champions League runners-up and £2  million for clinching the Premier League title.

    The Athletic understands that under Liverpool’s projections, in terms of ambitious global sales and continued on-field progress, that would bank a windfall of between £60 million and £70 million per year. The current deal with New Balance is worth around £40 million per year.

    The court case, which will resume at 10am UK time on Monday, hinges heavily on whether it’s deemed that New Balance can match the distribution guarantees provided by Nike.

    Liverpool, who earlier in the year also held talks with Puma and adidas, say they sought a contractual commitment to distribution as a result of repeated failings from New Balance over the past seven years.

    Nike have vowed to sell the club’s kit in at least 6,000 stores worldwide of which 500 are Nike owned or controlled.

    New Balance insist they can also offer that figure but Liverpool managing director Billy Hogan will argue that “their attempt to match was not a genuine one”.

    New Balance have never managed to distribute Liverpool kit into more than 3,000 stores globally. The company have around 600 shops of their own with a further 3,500 franchise stores but many of those just sell shoes.

    Chris Davis, New Balance vice-president of global marketing and sports marketing, and Kenny McCallum, New Balance general manager of global football, were both cross-examined extensively during Friday’s proceedings.

    Liverpool’s counsel argued that the figures which concluded that New Balance could distribute club merchandise to 6,300 stores around the world (a total subsequently adjusted to 6,146) was based on unreliable data provided by regional managers which was taken on face value.

    It would involve huge percentage leaps in territories such as China (2,200 per cent), Japan (330 per cent) and Brazil (2,009 per cent) which Liverpool deem to be completely unrealistic.

    Arthur Ang of NB China promised an increase from 22 to 638 stores, Shinichi Kubota of NB Japan promised a leap from 93 to 400 and John Cullen of NB Latin America from 107 to 445.

    “New Balance has around 40,000 retail doors in total so it can do 6,000,” insisted New Balance’s counsel Daniel Oudkerk QC.
    “The club view the renewal agreement as inconvenient but we say that New Balance has matched the measurable terms so they’re bound to a new contract.”

    Morpuss countered that the claims that New Balance could get kit into 6,000 stores was “utterly fanciful”.

    Nike have also vowed to promote Liverpool’s brand through non-football global superstar athletes and influencers like LeBron James, Serena Williams and Drake.

    Liverpool insist that New Balance don’t have any athletes of that calibre in order to do likewise but New Balance have dismissed Nike’s promises dismissed as “entirely subjective and vague”.
     
  2. Rosco

    Rosco Worse than Brendan Honorary Member

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    Guy Morpuss QC.

    He sounds like a Bond character
     
    darkstarexodus likes this.
  3. Dirty Sanchez

    Dirty Sanchez I Moustache You a Question Member

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    Roscoe McNugget QC sounds like a Dukes of Hazard character.
     
    doctor_mac likes this.
  4. Dreambeliever

    Dreambeliever Looking on the brightside Member

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    Can’t see New Balance winning this
     
  5. Rosco

    Rosco Worse than Brendan Honorary Member

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    It would be Rosco McNuggett XXL
     
    darkstarexodus likes this.
  6. JurgenKlopp

    JurgenKlopp Very Active Member

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    Nope, even if win we will agree on payment, more than likely Nike will pay it
     
  7. StevieM

    StevieM SCM's resident Beer Nazi, Wine Snob & Comic Geek Honorary Member

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    Maybe they’ll cash out before the end of the trail...
     
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  8. Dreambeliever

    Dreambeliever Looking on the brightside Member

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    If they get offered half the price it would be a smart move
     
  9. FoxForceFive

    FoxForceFive Administrator Administrator

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    They just want a settlement, the club will pay them off to make it go away.

    The details of the deal are really good though, if those projections the club have made end up being correct it's a helluva deal.
     
  10. Dreambeliever

    Dreambeliever Looking on the brightside Member

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    As long as we stay successful
     
  11. Hyena

    Hyena Well-Known Member

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    I think it's a really shit deal. I'd much prefer a guaranteed 50m or 60m.
     
  12. Insignificance

    Insignificance Bad to the bone Member

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    So much much wisdom on this forum...
     
  13. FoxForceFive

    FoxForceFive Administrator Administrator

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    Do you think there's a reason our owners & their staff have grown the club as a business so successfully?

    I'll give you a clue, it's not cos they're niave & make stupid business decisions.

    Looking at this in simple terms, we're potentially risking 10-20m a season if we don't perform as well as they expect or hope us too, but potentially gain at least that much more if we do attain what they hope.

    In fan terms, it's great news, because it's more incentive for them to invest in the side & make sure we keep winning shiny things.
     
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  14. Rosco

    Rosco Worse than Brendan Honorary Member

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    We just have to keep our mouths shut about Hong Kong and we're golden
     
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  15. HC

    HC Very Well-Known Member

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    It looks like NB outright lied to the club in regards to it's it's ability to stock merchandise in certain countries , promised 400 stockists  or whatever in whatever market but in actuality had access to half as many with some purely being footwear etc

    Internal documents showed they internally didn't believe they could get close to the numbers promised to the club
     
  16. MaBigTip

    MaBigTip Very Active Member

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    Is there scope to get into the selling Nike gear that isn't Liverpool branded? The 19% discount on wholesale rates for Nike merchandise makes me think there is a way to make money cutting a deal with a retailer or promoting any and all gear through our marketing channels.
     

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