Liverpool’s Warrior Deal: It’s Not Just About The Minimum Guarantee- Ben Wells
January 20, 2012
By Ben Wells
There has been much coverage this week of Liverpool’s long-awaited kit deal with Warrior Sports. It’s an interesting deal on many levels as Warrior’s expertise is in lacrosse and ice hockey and is a brand little-known outside of the USA – until now. It’s also brought some welcome competition to the adidas-Nike duopoly in UK football and may herald a new way of clubs engaging with their fans in far flung places.
I won’t spend too much time talking about top-line values as these deals are always so complex (guarantee + performance bonuses + royalties) that it is difficult to ascertain exactly what the annual value is but it is clear that on the face of it, it is a good cash deal for Liverpool. Following on from the huge deal with Standard Chartered (which gives LFC good presence in Asia, if perhaps, not a great brand experience for their fans) this deal comes at a very good time for Liverpool as they seek to raise funding for a new stadium (as well as the investment clearly still required for their first team).
Herbert Hainer, Adidas’ CEO has spoken publicly that the values Liverpool were seeking for a renewal were at odds with the team’s moderate on-pitch performances. Certainly in the UK, the success of the team has an impact on the club’s retail operation but internationally, the impact is even more marked. Liverpool have consistently been in the top 5 most popular global kits and there is deeply entrenched support for the club in particular Asian markets. However, their fanbase in these countries is ageing and the research we conducted at Chelsea showed that the gap between them and the others (United are miles out on their own in FAPL terms) was closing (and indeed in some markets, Liverpool were 4th) as younger fans and newer converts to football sought to align themselves with more contemporarily successful teams. No doubt Mr Hainer was looking to the future in terms of valuing a fair deal.
Aside from the cash component, Adidas brought great value to Liverpool in its marketing of the club, especially in the Far East. Liverpool consistently had greater in-store presence in the APAC region than Chelsea and Steven Gerrard was more recognisable a front man than Frank Lampard. On the face of it, you might accuse Liverpool of sacrificing the long-term for short-term cash but it’s interesting to note that in this deal, the club will be permitted to launch its own branded retail outlets, which is where I think the deal becomes interesting.
Manchester United tried the retail route in the late 1990s and found it was not as straightforward as they might have thought, culminating in them bundling up these rights and deferring to the greater retailing expertise of Nike in their huge pre-Glazer merchandising deal. It will be interesting to see what lessons Liverpool have learnt from United’s experience and it is certain that if they can get it right there will be big benefits to the club.
Controlling the environment in which fans experience their club will be a huge boon. I’ve written previously about the United cafe in Mumbai being full of punters watching cricket and the “United” store in Macau actually retails various other Nike club kits – not exactly a proper United experience. A major benefit of being Warrior’s only football client is in having a greater say over kit distribution, product lines (offering lower-priced goods without commoditizing flagship products) and replenishment. The two “big beasts” Nike and adidas have to work to incredibly tight kit numbers ordered via the pre-sales process and replenishing any sold-out stock can take up to six months, which makes little sense in these days of one-year kit cycles.
However, this is not something that Liverpool can run solely from offices in L4 if they’re looking to capitalise fully on this opportunity. It’s long been a bugbear of mine that FAPL clubs think that they can take over the world via TV deals and paying lip service to servicing fans locally. This is a great opportunity to create a genuine footprint in the APAC region, to allow fans who cannot ever visit Anfield to understand what the club is all about, to help address suspicions about online shopping and to build longer-term relationships with the much-needed new generation of fans. It will take time before we are able to judge the merits of this deal but there is definitely an opening for Liverpool to break the mould.
Ben has fifteen years’ experience in the commercial side of sport. Having spent six years at Chelsea FC, where he was Head of Marketing, Ben launched Ishtar Consulting in 2011 with a view to providing specialist sponsorship and marketing support to brands, rightsholders and agencies. Prior to his time at Chelsea Ben spent nearly four years at Redmandarin, the strategic sponsorship consultancy. Follow Ben on Twitter @ben_wells1 or get in touch via ben.wells@ishtarconsulting.com. This Blog appears regularly at http://benwells1.blogspot.com
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