Liverpool Adidas decision explained as Reds aim to overtake rivals

Liverpool Adidas decision explained as Reds aim to overtake rivals

Liverpool have started a ten-year partnership with German sportswear giant Adidas after swapping from previous supplier Nike after five years with the American giants

Liverpool are back with Adidas (Image: Robbie Jay Barratt - AMA/Getty Images)

Liverpool and Adidas are back in partnership once again. The first week of sales from the official August 1 launch of the new Reds home and away kits set new records for the club.

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Having made the decision late last year to switch from Nike to Adidas, ending five years with the US sporting apparel giant, Liverpool communicated the decision officially earlier this year with greater detail emerging from the release of the new merchandise at the start of this month. Most notable was the fact it is a ten-year agreement between the Reds and the German firm.

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The actual value of the deal is not known and various reports have placed it around £65 million to £70m per year, but that does not take into account the bonuses for competitive success or how much of a slice Liverpool takes from the sale of Reds/Adidas branded merchandise globally.

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So how does it stack up against other deals, with rival Premier League clubs Manchester United and Manchester City having inked their own £900m and £1bn 10-year deals over the last 18 months with Adidas and Puma, respectively?

Dan Haddad, head of commercial strategy at global advisory firm Octagon, which specialises in sport, told the ECHO: “Adidas and Nike structure their deals very well, and they are very good at forecasting demand and sales. These are highly attributable deals where sales volumes can be tracked easily. It’s difficult to compare apples to apples when it comes to how it stacks up against rivals, but a lot are highly incentivised on bonuses and pitch. For example, Manchester United were penalised for a lack of Champions League football, so it works both ways.

“Good performance on pitch has a huge impact on sales. The ceiling will be far higher for the Adidas and Liverpool deal than what has been reported.

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“With this Adidas deal, the way they are marketing the club and putting a lot behind it tells you quite a bit. Perhaps for Nike, when athat was winding down there was less focus, but from the off and after success last year for Liverpool, Adidas are going to be really leveraging those rights.”

The Adidas deal represented the first time that Liverpool had locked in on such a long-term deal with a partner from the first contract, something that has been commonplace in the United States sporting ecosystem for some time but is now a trend seen in the Premier League.

“In a club’s commercial ecosystem the tier of global partner level is three or four years max, traditionally,” said Haddad.

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“But clubs want to now avoid significant churn at that level and principal partners now are at least five to seven years, which is where clubs look for a starting point. That’s been a changing trend.

“Both Liverpool and Adidas will be confident on this deal. There is a lot of room for growth.

“In the sports apparel sector there is a lot of confidence that the marketplace is still undeveloped. You can already see that with the broader range of products on offer. There will be a belief on both sides there is significant demand that hasn’t been captured."

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