Over the next year, Liverpool will begin the process of engaging Nike to expand the existing partnership between the two.
Back in 2019, the Reds won a battle at the High Court in London to get out of their previous deal with New Balance after the Boston firm tried to activate a clause that would allow them to extend the partnership if they match a rival offer.
In the end, it was determined that while Nike paid a lower guaranteed annual sum of around £30m, it was the world’s biggest sportswear company’s ability to deliver at scale, and the commitment that the Reds would receive 20 per cent of the proceeds from Liverpool/Nike-branded merchandise, that proved key. Throw into the mix the influence they wielded through a star-studded client list that included the likes of rapper Drake, tennis star Serena Williams and basketball icon and Fenway Sports Group partner LeBron James, and it was a deal that opened up huge opportunities for Liverpool.
The contract is set to run until the end of the 2024/25 season, but discussions will start on how to move forward during the coming season. There is a desire on both sides to extend the partnership well into the future to make it a long-term collaboration given how valuable it has been to the club so far and how the extensions to the deal, such as the LeBron x Liverpool collection and the tie-up with Nike-owned Converse, have been received and opened up the club and Nike to new markets.
READ MORE: Liverpool to seize their £80m chance no-brainer transfer that will transform their midfield
READ MORE: Midfielder left in tears after Liverpool £18m transfer Steven Gerrard gave ‘blessing’ to collapse
The commercial benefits for Liverpool are now being seen. While the individual breakdown of commercial income does not specify how much the Nike deal has earned, compared to 2019/20, the last season with New Balance, Liverpool’s commercial income has increased by £30m to £247m in 2021/22, the latest financial accounts. It is expected that a truer value of the partnership will be seen when the accounts for 2022/23 are published early next year for the year ending May 2023. However, with the new collaborations with James and Converse only starting in earnest in the 2023/24 financial period, it will not be until then that the true value of it will be seen, with the potential for annual sums not exceeding £80.
There are simpatico relationships that exist between Liverpool and Nike. James is Nike’s most key client and someone who has a stake in FSG, and who will have a more prominent role in the company’s future as they look at an NBA expansion franchise in Las Vegas in the coming years, which James is earmarked to lead. Then there’s the investment FSG made, along with Nike and RedBird Capital, 11 percent stakeholders in FSG, in James’ SpringHill Entertainment Company in 2021.
Liverpool is one of the world’s biggest football clubs and most recognizable sporting brands, one that has a story to tell and is compelling to partners. Having the ability to connect relationships between people like James and the clubs is important to both, and as interest in the game grows, especially in the United States, so will the potential for the relationship.
The view from inside Anfield is that the partnership has worked extremely well so far, with record kit sales delivered and the club able to reach their global fan base more effectively through Nike’s large physical and online presence, with the company making a hugely successful push in terms of their online direct to consumer offering during the pandemic. But the pandemic pumped the brakes on how much could be achieved given that physical retail globally was closed for so long, meaning there has been an element of catch-up and some of the initiatives may not have been as quick to arrive as originally planned.
“The relationship with Nike is really good,” Liverpool vice-president of merchandising Mike Cox told the ECHO earlier this year.
“As time has gone on, we have become more used to working together and have a greater understanding of them as a brand and how they operate. Likewise, they have gotten to know us more as a club and how we operate and what the opportunity is.
“The launches we’ve had to date have been really successful. We’ve had the launch of home and away record sets and more recently some of the third sets that we’ve launched with them. From a commercial perspective, it has been very successful.
“I think there’s a lot of opportunity going forward, whether it’s expanding what we’re doing from a lifestyle perspective. Some of these things take time because the lead time from design to manufacturing to the fan can take up to 18 months in some cases. Over the next season or so, you’re going to see some interesting more lifestyle products come through that you might not have expected to see from a Nike, Liverpool or football club angle. There are some interesting things that I think will appeal to some who don’t have bought from us before, as well as help us attract new fans.
“There are more Converse lines coming later this year and it will be interesting to see how they are received as we move them into more countries than we did with the initial launches. There is much more to come.”
It’s hard to imagine Liverpool and Nike not extending their partnership beyond 2025. After all, when it comes to who can fill Nike’s shoes and deliver what the club needs now in terms of scale and product offering, there’s really only Adidas that could come close, and given the long-standing relationship between the Reds and Nike, that seems unlikely.
But there will be some elements to consider when negotiating how much the next deal could be worth to Liverpool, and part of that will come down to the Reds remaining a competitive force at the very highest level, able to compete for the biggest trophies and attract players with global appeal. While the narrative surrounding FSG among some sections of the supporter base has long revolved around a greater interest in financial success as opposed to competitive success, the reality that exists is one where the two are inextricably linked. Without competitive success, financial success will not come to the extent they desire.
Returning Liverpool to the top four this season will be important, as will how they approach their recruitment and retention. At a time when football is booming in key markets and reaching new eyes, being at the forefront of that conversation is of huge importance to ensure the club continues to reach and engage the next generation of global fans.