Cristiano Ronaldo move shows FSG problem with £ 70million Liverpool goal
Manchester United will sell more shirts thanks to Cristiano Ronaldo joining the club.
Just as Paris Saint-Germain have seen Lionel Messi’s jerseys fly out of the hangar since arriving earlier this month at Parc des Princes, United know that from a marketing standpoint, having the most athlete popular worldwide in its colors, with more than 500 million followers on Instagram, Facebook and Twitter, means that the world gaze will be fixed on them.
Liverpool have long wanted to try to bring in the kind of money United could command, with OId Trafford’s side still leading the way at some distance in the Premier League when it comes to money generated from commercial activity. Liverpool have sought and managed to close the gap in recent seasons.
Part of the FSG Reds owners’ plan to gain ground on United commercially was to hire Nike as a kit maker, a deal that was struck in 2020 after a legal battle with former partners New Balance before the High Court.
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United orders Â£ 70million per year guaranteed by Adidas and no royalty share on merchandise sales. Liverpool’s deal with Nike is only Â£ 30million a year guaranteed, but with a 20% royalty reduction on sales of Nike / Liverpool licensed products it is possible, some analysts say industry, to see that annual sum increase to Marque from Â£ 60 million to Â£ 65 million.
Much has been done about shirt sales in recent months, with inaccurate claims that PSG are able to pay for Messi’s place simply by selling shirts. A report from newspaper i said that in order for PSG to do this they would have to sell 12million jerseys based on the roughly seven percent figure most top clubs get from a jersey sale. And while there was initial interest in Messi’s move, the reality is that the French side won’t be selling that figure, especially considering that Man Utd sold the most shirts last year, i.e. 1.85 m.
Man Utd and PSG are bound by guaranteed deals with Adidas and Nike respectively, with PSG using the Nike Air Jordan branding on their kits to align with their business approach and attempt to make it a lifestyle brand.
While Ronaldo and Messi’s signing will likely see more shirts sold, and some welcome extra income, the impact won’t make too much of an impact on the bottom line. The actors themselves will do very well given their right to part of the sales thanks to their image rights.
If the FSG is to bring their Nike partnership with Liverpool to the level they are hoping for, they will likely need to act to spark increased interest in jersey sales.
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In his book Done Deal, sports lawyer Daniel Geey explained: âBefore the signing of the Nike 2020 deal, the structure of the jerseys deal was perhaps as follows.
âSuppose the Liverpool home shirt costs Â£ 50 and the club earns Â£ 10 on every shirt they sell. To recoup the transfer fees spent on Sadio ManÃ© (around Â£ 30million – and that doesn’t include his salary and if profit sharing again only one million jerseys), Liverpool would need to sell four million jerseys.Keep in mind that Liverpool sold an average of 1.13 million jerseys sold per season of 2014 / 15 to 2018/19, and you see that it is generally very difficult to recover the money from the big signings from the shirt sales alone.
âIt is interesting to note that due to the New Balance v Liverpool High Court case, figures presented to the court by New Balance estimated that in reality 2.9 million units of Liverpool shirts would be sold over the course of season 19/20. This was a 59% increase over the previous year’s sales. Unlike the above examples of Adidas and New Balance, Nike’s offer was to pay to Liverpool Â£ 30million per season plus 20 percent of net sales of all licensed products (i.e. a club share of the first product sold rather than both (examples above from millionth product).
“This means that even though Liverpool may receive a lower ‘guaranteed’ advance of Â£ 30million, the club share the substantial rise. Analysts have suggested that reasonable estimates for Nike’s 20/21 season and beyond could likely bring Liverpool north of Â£ 65million – more. “
The Reds squad is packed with stars and well-known names, many of whom have engaged their long-term futures for the club in recent weeks. Mohamed Salah remains Liverpool’s most commercially marketable asset and his future is still unresolved, although he is expected to stay at Anfield.
It would all be great, but without a marquee finish in the next two windows the Reds run the risk of not maximizing the advantage they have over 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 provide additional business advantage.
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Following Ronaldo’s deal to join Man Utd, social media was not full of praise for the FSG’s approach this window, with the Reds having so far only landed Ibrahima Konate while that Jadon Sancho, Ronaldo, Raphael Varane, Jack Grealish and Romelu Lukaku have all come up as rivals for the title.
The transfer window ends on Tuesday and it remains to be seen whether Liverpool will choose to sign up, with a suggestion that they could wait until next summer. It’s hard to imagine, however, that this approach will appease some fans.
Financial accounts for the year ending May 2021 will be released early next year and Liverpool are expected to post losses much larger than the Â£ 46million pre-tax loss that was posted for last year , with a full year of pandemic to include.
But there is some hope that the 2022 accounts will improve a lot with the return of fans, and the contract renewals that Liverpool have recently undergone are expected to significantly reduce their amortization costs on the balance sheet, potentially leaving room for a big addition. .
And if FSG really wants to see the value of his contract with Nike, he’ll have to give fans around the world a reason to be excited and spend their hard-earned money. It remains to be seen whether they make a call to answer them before the end of this window.