How Liverpool are getting more out of Nike sponsorship deal despite £15m reduction

Ahead of the 2020/21 campaign, Liverpool signed off on a deal with sportswear giants Nike to sponsor their kits, taking over from previous sponsors New Balance.

The Premier League champions were desperate to get the partnership with Nike sealed, even after being taken to court by New Balance. However, New Balance were offering the club £45 million per year in their deal, while Nike were offering only a £30m annual rate.

New Balance were Liverpool’s previous partners

Seems bizarre, right? Why would any club fight tooth and nail to secure a deal that offers £15m less per year? Well, there’s a little bit more to it than that.

Firstly, Nike have also offered the Reds 20% of all income from licensed merchandise sales. This means that the sportswear company would have to sell £75m worth of merchandise to compensate for the £15m reduction.

Last season, the Daily Mail reported that Liverpool sold 1.7 million replica shirts. If we assume that each shirt costs on average around £50, that adds up to £85m, already making up the gap – and that’s just on replica shirts alone.

But that’s not where the benefits end for the Merseyside club. The deal with Nike also offers incredible potential for growth as a brand.

New Balance aren’t exactly unknowns. However, when it comes to stature, they do not compare to Nike. For example, New Balance have 6.2m Instagram followers, while Nike have 128m. Over on Twitter, Nike have 8.3m followers, while New Balance have 257,700. To put it simply, Nike are much, much bigger.

Furthermore, Nike have partnerships that allow Liverpool to tap into a new market that they previously weren’t able to. Nike’s client list includes basketball icon LeBron James, tennis superstar Serena Williams, and rapper Drake. This will enable Liverpool to appeal to those who have no interest in football.

LeBron James is a minority shareholder in Liverpool

Paris Saint-Germain recently did something similar, partnering with basketball hero Michael Jordan and his Air Jordan brand, with the star’s iconic ‘jumpman’ logo appearing on the club’s third kit.

The aim for Liverpool is to catch up with rivals Manchester United, whose deal with Adidas is worth a reported £75m per year and is one of the biggest football club sponsorships. The partnership with New Balance was not sufficient to get them to this level, whereas this deal with Nike should get them competing with the Red Devils as a global brand.