Liverpool set to rival Man United with £450m kit deal as Billy Hogan speaks out
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As well as being fierce rivals on the pitch, Man United and Liverpool are in a constant battle for supremacy in terms of their commercial income.
The two North West clubs are unquestionably the Premier League‘s biggest exports, with United alone claiming to have 1billion followers worldwide.
Both Fenway Sports Group (FSG) and the Glazer family have spied the opportunity to capitalise on their respective club’s global ‘brands’ and tap into huge revenues overseas.
Sir Jim Ratcliffe is now pulling the strings at Man United as the club’s single largest individual shareholder, but the emphasis on leveraging the badge for commercial income remains the same.
United’s annual commercial income has stagnated somewhat in recent yeas but, standing at more than £300m at the last count, was still among the very biggest in world football.
Under FSG meanwhile, Liverpool have reached a new plane in terms of the revenue they generate from sponsorship, merchandise and events.
Commercial income has almost trebled in the last decade, from £104m in 2013-14 ago to £272m in the last financial year.
Supporters of the two famous old clubs may tired of hearing about their various commercial triumphs, and understandably so. They are more concerned with the traditional metric of success: silverware.
But Liverpool’s ownership model and United’s dalliance with the upper limit of Profit and Sustainability Rules (PSR) mean commercial income is central to what they can spend and how they fare on the pitch.
Liverpool to draw level with United’s Adidas deal?
Liverpool’s kit is currently supplied by Nike, but that contract expires at the end of the season.
There will be no official announcement until at least next year, but Liverpool are set to sign with Adidas in what will reportedly be a five-year deal.
The Nike deal was worth £30m per season to Liverpool on base terms, with Liverpool accepting a lower upfront fee from the American company in favour of a greater commission on units sold.
The new Adidas partnership looks to have been agreed with a more conventional deal structure.
As part of an interview with Liverpool CEO Billy Hogan, FC Business magazine report that Liverpool’s take-home from the new deal could see them equal the £90m Adidas pay Man United per season.
Over a five year contract, that could see Liverpool trouser up to £450m from the Adidas partnership.
In what appears to be a nod to the new deal, Hogan said: “Our partnerships have to be succesful for us but also commercially viable for our partners.
“It is about building out that long-term strategy. We are very conscious about making the right decisions for the club moving forward and continuing to grow revenues.”
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The truth about Man United and Liverpool’s Adidas deals
For Adidas, the real value of their commercial relationships with Man United and Liverpool lies in the brand association.
Relative to what the German sportswear titans earn elsewhere (revenue in the last financial year was over £18bn), the income generated by Liverpool and United shirt is pretty modest.
But the brand exposure, ensuring that the three stripes remain in the public’s consciousness, makes the £90m per year they are set to hand the two clubs a valuable investment.
For the clubs themselves, they finer points of the Adidas deals are not known. But elite clubs will typically take a 7-15 per cent of profit on units sold.
