Adidas AG (ADS) declined to renew its apparel deal with 18-time English soccer champion Liverpool because the price was too high given the team’s poor performance, the chief executive officer of the world’s second- biggest sporting goods maker said today.
Liverpool, which is also a five-time European champion, has replaced Adidas with a club record, 6-year, 25 million pound ($38.3 million) contract with Warrior Sports, a subsidiary of New Balance Athletic Shoe Inc. The accord, Warrior’s first major soccer contract, begins next season and is worth almost double the current agreement with Adidas.
Liverpool has struggled to recapture glories that made it the dominant team in English soccer during the 1970s and 80s. It hasn’t won a league championship since 1990 and was overtaken by Manchester United as the holder of most championships last season. Still, its famous red shirt remains among the most popular. Liverpool didn’t make the Champions League, the region’s top club competition, for this season. It’s seventh in the Premier League, 13 points behind leader Manchester City.
“The gap between their performance on the field and what the number should be is not in balance,” Adidas CEO Herbert Hainer said in an interview in Munich today. “Then we said, ‘Okay we will not do it. That’s the end of the story.’” Liverpool didn’t respond.
The team’s lack of success hasn’t stopped it signing other commercial agreements. London-based bank Standard Chartered is paying a record 81.5 million pounds to have its logo displayed on its jerseys for four years and the team’s sales department has also signed new sponsors like Turkish tourism.
Benefits?
The contract with Warrior may benefit the team further because it allows Liverpool to retain control over all merchandise not related to the clothing the team wears, something that it had ceded to Adidas. Still, it will no longer be able to rely on the sports-makers vast global supply chain.
“ It all depends on the success and the effort and the popularity, the exposure on TV, revenue you can generate by merchandising,” Hainer said. “This all has to be brought in line between what you offer and what you get. We thought their asking and the delivering is not in the right balance.”
Adidas faces a big year ahead. It’s a main partner to the two biggest sports events taking place, soccer’s European Championship and then the Olympic Games in London. Hainer said from a commercial point of view the soccer event will be a bigger boost, while the Olympics is the biggest platform the company has to show its commitment to sports. The company enjoyed record 1.5 billion euro ($1.9 billion) in sales in 2010 because of the World Cup in South Africa. He says it will do even better this year.
“We will definitely beat the 1.5 billion euro revenue target in 2012: there’s no doubt for me,” said Hainer.
http://www.bloomberg.com/news/2012-01-16/liverpool-s-on-field-performance-didn-t-warrant-price-adidas-head-says.htmlSo dose this mean the like of Chelsea are selling more jerseys then us.
