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Manchester United will sell more shirts through Cristiano Ronaldo joining the club.
Just as Paris Saint-Germain have seen Lionel Messi shirts fly off the hangar since his arrival earlier this month at the Parc des Princes, United know that from a marketing standpoint having the most popular athlete on the planet in their colours, with over 500m followers across Instagram, Facebook and Twitter, means that the global gaze will be fixed on them.
Liverpool had long wanted to try and bring in the kind of kit deal money that United could command, the OId Trafford side still leading the way by some distance in the Premier League when it comes to money generated from commercial activity. Liverpool have been seeking, and having some success, in closing the gap in recent seasons.
Part of the plan of Reds owners FSG to make some ground on United commercially was to engage Nike as their kit manufacturer, a deal that was done in 2020 after a legal battle with former partners New Balance in the High Court.
READ MORE: Liverpool player ratings against Chelsea
United command £70m per year guaranteed from Adidas and no royalty shares from merchandise sales. Liverpools Nike deal stands at just £30m per year guaranteed, but with a 20 per cent royalty kick back on sales of licensed Nike/Liverpool merchandise there is the potential, according to some industry analysts, to see that annual sum get hiked up to the £60m-£65m mark.
Much has been made over shirt sales over the past months, with some inaccurate claims that PSG would be able to pay Messis way simply through selling shirts. A report from the i newspaper said that in order for PSG to be able to do that then they would need to sell 12m shirts based upon the figure of around seven per cent that most top clubs receive from a shirt sale. And while there was initial interest in the Messi move the reality is that the French side wont sell anywhere near that figure, especially when you consider that Man Utd sold the most shirts last year, and that was 1.85m.
Man Utd and PSG are locked into guaranteed deals with Adidas and Nike respectively, with PSG using the Nike off-shoot Air Jordan branding on their kits to tie in with their commercial approach and attempts to make it a lifestyle brand.
While signing Ronaldo and Messi will likely see more shirts sold, and some welcome extra revenue, the impact wont be making too much of an impression on the bottom line. The players themselves will do very well out of it given their entitlement to a portion of the sales due to their image rights.
If FSG want their Nike tie-in with Liverpool to reach the kind of levels that they are hoping for then they will likely have to act to generate some more interest in shirt sales.
*Who was your MOTM against Chelsea? Take our quick poll HERE.
In his book Done Deal, sports lawyer Daniel Geey explained: “Before the 2020 Nike deal was signed, the shirt deal structure may have been as follows.
“Suppose Liverpool’s home shirt retails for £50, and that the club is making £10 from each shirt it sells. To recoup the transfer fee spent on Sadio Mané (around £30m – and that doesn’t include his wages and if profit sharing again only kicked in at one million shirts), Liverpool would need to sell four million shirts. Bear in mind that Liverpool averaged 1.13m shirts sold per season from 2014/15 to 2018/19, and you see that it is usually very difficult to recoup the money from large signings from shirt sales alone.
“Interestingly, due to the New Balance v Liverpool High Court case the figures presented in Court by New Balance estimated that actually 2.9m Liverpool shirt units would be sold in 19/20 season. This was a 59 per cent increase on sales from previous year. In contrast to the above Adidas and New Balance examples, Nike’s offer was to pay Liverpool £30m per season plus 20 per cent of net sales of all licensed products (meaning a share for the club from the first product sold rather than in the two above examples from the millionth product onwards). All licensed products included shirts, training merchandise and wider lifestyle products.
“It means that while Liverpool may be receiving a lower ‘guaranteed’ advance of £30m, the club shares in the substantial upside. Analysts have suggested that reasonable estimates for Nike’s 20/21 season and beyond could likely net Liverpool north of £65m-plus.”
The Reds squad is stacked with stars and household names, many of them having committed their long-term futures to the club in recent weeks. Mohamed Salah remains Liverpools most marketable asset commercially and his future is still unresolved, although he is expected to remain at Anfield.
All that would be great, but without a marquee arrival in the next couple of windows the Reds run the risk of not maximising the advantage they have over the likes of United and PSG, where they could earn almost triple what their rivals can when it comes to shirt sales, allowing them to better absorb the cost of a new addition that would sell shirts and bring additional commercial benefit.
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In the wake of Ronaldos agreement to re-join Man Utd, social media was not full of praise for the FSG approach this window, with the Reds having landed only Ibrahima Konate so far while the likes of Jadon Sancho, Ronaldo, Raphael Varane, Jack Grealish and Romelu Lukaku have all arrived at title rivals.
The transfer window closes on Tuesday and it remains to be seen whether Liverpool choose to engage, with some suggestion that they may wait until next summer. Its hard to imagine that approach will appease some fans, however.
The financial accounts for the year ending May 2021 will be published early next year and Liverpool are likely to post far heavier losses than the £46m pre-tax loss that was shown for last year, with a full year of the pandemic to be included.
But there is some hope that the 2022 accounts look much better as fans return, and the contract renewals that Liverpool have undergone recently should significantly lower their amortisation charges on the balance sheet, potentially making room for a big addition.
And if FSG are to really see the value in their Nike deal they will need to give fans around the globe a reason to be excited and to spend their hard earned money. Whether they make a call to address that before the end of this window remains to be seen.
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