Exclusive: New Balance and Liverpool head to High Court in battle over kit deal
By James Pearce
The battle to be Liverpool’s kit supplier is heading for London’s High Court as New Balance fight to retain the lucrative contract.
Rival sportswear giant Nike looked set to be announced as the club’s new partner from the start of next season after agreeing a bumper deal with the European champions, understood to be worth around £70 million per season — a £25 million per season increase on the current arrangement and comfortably the biggest in the club’s history.
However, The Athletic can exclusively reveal that New Balance are desperately trying to stop Liverpool from cutting their ties and linking up with Nike instead.
The current suppliers are adamant that they have triggered their right to match Nike’s offer and should therefore be granted a contract extension with the Premier League leaders beyond May 2020. But Liverpool insist that is not the case and, as a result, New Balance have filed the dispute at the High Court.
A Liverpool spokesman said: “We can confirm that our kit supplier, New Balance, has commenced a legal dispute against the club. We will not be making any further comment during these legal proceedings.”
Written into the current deal with New Balance was a ‘matching clause’ which meant that Liverpool were legally obliged to inform them of Nike’s bumper bid and give them the chance to offer the same.
Having initially looked like they would be priced out of the race, The Athletic understands that New Balance then declared that they would stump up the cash — a sign of how determined the Boston-based company is to keep on board the biggest club in their sponsorship portfolio.
Liverpool responded by informing New Balance that their improved bid still didn’t measure up to their rival because they can’t offer the same kind of global distribution network that Nike possesses. The Anfield hierarchy favour going with Nike as they will provide them with a greater presence in key markets across the world.
Documents show that New Balance filed the case at the commercial court of the High Court on September 10. A statement from the company to The Athletic read: “New Balance is proud to be the official kit sponsor of Liverpool Football Club. Since 2011, when we entered into a record breaking sponsorship with the club, we have delivered two of the biggest selling home kits for Liverpool fans and we continue to match the ambition and achievements of the club as it grows from strength to strength.
“As a long standing and committed sponsor, we are keen to continue our strong partnership with Liverpool Football Club and renew our agreement in 2020. In line with our current contract, we have matched the offer made by Nike.
“As part of the contract renewal process, LFC has called into question elements of the agreement and as such we are asking the courts for clarity on this case. Both we and the club are keen to resolve any contractual challenges as quickly as possible and have agreed to an expedited process in the courts.
“New Balance is eager and confident to maintain its sponsorship of Liverpool Football Club and we look forward to continuing our record of success as LFC’s playing kit provider.”
Liverpool managing director Billy Hogan has led the pursuit of a new kit deal over the course of 2019 with the team’s continued resurgence on the field both domestically and in Europe strengthening his hand in negotiations. An announcement had been expected by the end of September but it now appears certain to drag on.
Daniel Geey, football lawyer at Sheridans, told The Athletic: “These matching clauses are common, whether it’s in apparel or boot deals with individual players or clubs. It’s a way of ensuring that the brand has the opportunity to match any third party offer.
“Usually a company gets the chance to negotiate a renewal during an exclusivity period and then if that offer is rejected the club can go to market for a set period of time. Then if a new bidder makes a better offer, the club has to take that back to the incumbent and give them the chance to match it.
“It’s not just about matching a certain figure financially. There are various commercial requirements and conditions that have to be met for it to qualify as a matching offer. One may be distribution and what, for example, Nike could offer in terms of their breadth of distribution channels globally.
“This is where the finer details of the deal become very important. For example, in sports shops around the country the visibility and the prominence of, for example, the Nike branding may be greater than the one given to New Balance because of the deals with particular sports retailers.
“Another important element is that commercial conditions may differ depending on whether a club has the autonomy to sell its merchandise in its own stores or around the world and the margins that are negotiated for different products.”
Jürgen Klopp’s side have worn New Balance shirts since 2015 with the club having previously worked with their affiliate company Warrior for the previous three seasons. The partnership has proved successful with last season’s home kit the highest selling in the club’s history.
As they wait for the legal dispute to be resolved, New Balance are pushing on with their preparations for next season. The Athletic understands that they have already designed and created all three kits for the 2020-21 campaign. However, whether they ever see the light of day remains to be seen.
Barcelona’s £100 million per season deal with Nike is the biggest in football followed by Real Madrid’s £98 million per season arrangement with Adidas.
In terms of the Premier League, Manchester United currently lead the way, pocketing around £75 million per season from Adidas. Next are Arsenal (Adidas, £60 million), Chelsea (Nike, £60 million) and Manchester City (Puma, £50 million).
From The Athletic