PSG, LeBron James and what Liverpool stand to gain from Nike kit deal

Liverpool's partnership with New Balance looks certain to have reached its end after it was ruled on Friday that the Anfield club were free to pursue a new kit deal with Nike from the end of this season.

The Reds' current deal will run until the end of this campaign - and New Balance felt they had a case to renew their sponsorship deal if they were to match any prospective rival bid.

New Balance claimed they were able to equal the bid put forward to Liverpool by Nike, which would have triggered a clause in the current deal that stipulated the Reds would have been obliged to renew with their current sponsors.

However, representatives from the European Champions argued that this would not be possible, citing a variety of reasons including marketing and distribution which Liverpool felt New Balance would struggle to match Nike on.

Liverpool have been offered an initial a £30million-a-year, five-year deal by Nike.

However, the key for the Merseyside club appears to be the increased profile that the Oregon sportswear giants will be able to offer, alongside its unrivalled marketing capabilities.

It is worth noting that the fee Nike has proposed is actually considerably less than that of New Balance's £45m current bottom line annual payment.

However, one overwhelmingly significant factor in Liverpool's decision to back the bid from Nike appears to be the fact the Reds will stand to receive 20% of royalties on net sales of all merchandise, which could see commercial profits skyrocket.

In order to assess the commercial potential of Liverpool's impending deal it is useful to cast an eye in the direction of French champions Paris Saint-Germain.

They are signed up with Nike and have released an extensive range of gear that ties in with basketball superstar Michael Jordan.

For Fabien Allègre, director of brand diversification at PSG, the benefits of a deal with Nike are abundantly clear, something that could bode particularly well for the Reds.

Speaking to SportBusiness Sponsorship, Allègre said: "Sales of Paris Saint-Germain official products have increased by 400 per cent since 2011, driven by Paris Saint-Germain's increasingly strong international reputation.

“In addition to the partnership with Jordan, which brings Paris Saint-Germain to many retail stores, particularly in North America and Asia, the club is also the first European team to open an official club shop in Tokyo.”

The article states that the French giants “sold more than one million shirts in a single season for the first time in club history in 2018-19, following the launch of its Jordan x PSG range in September last year”.

A report in Le Parisien also claims that sales in the first month of the release of the Jordan x PSG shirt alone “brought an extra €15m in club revenue”.

The SportBusiness piece stated: “PSG's strong shirt sales growth was also driven by the club's increased appeal overseas, particularly in Asia and the US.

“This season, largely due to the Jordan X PSG tie-up, shirt sales in the US grew over 470 per cent compared to last season.

“Overall, more than half of all PSG shirts are now sold overseas, and that proportion is growing every year.”

A key aspect to the High Court case involving Liverpool and New Balance was the prospect of utilising basketball superstar LeBron James, himself a Reds stakeholder, in what could perhaps turn out to be a similar role to that of Michael Jordan in relation to PSG.

In fact, it emerged during the trial that emails concerning the possibility of working with the legendary LA Lakers basketballer, also famously a Nike athlete, was raised by Liverpool's chief commercial officer Billy Hogan.

Hogan stated in an email sent to New Balance that Liverpool “specifically envisage deriving a major benefit from working with LeBron James because basketball and the NBA is very popular in China”.

It has now materialised that Nike's offer to Liverpool promises to include the usage of world-renowned superstars in order to market the Reds' brand.

The contract itself is believed to include a clause that vows to guarantee “no less than three non-football global superstar athletes and influencers of the calibre of LeBron James, Serena Williams and Drake” who will be used to further increase the Merseyside club's profile.

Liverpool's current supplier New Balance initially felt they could equal Nike's bid, however, this was dismissed in court on Friday morning.

The key factor seems to have been Nike's offer of marketing initiatives involving superstar figures, which New Balance did not promise and therefore could not "match".

In his judgement on the case, Judge Mr Justice Nigel Teare he said: “Billy Hogan (Liverpool chief commercial officer) told me that LeBron James is the world's most famous basketball player, that Serena Williams, having dominated women's tennis for 20 years, is one of the most famous athletes in the world and that Drake was the world's top selling recording artist in 2016 and 2018....

“I accept that the calibre of the named athletes can be measured in a number of ways but it would be unrealistic (and contrary to the evidence in this case) that their calibre can not be measured.

“I have therefore concluded that the New Balance offer on marketing was less favourable to Liverpool FC than the Nike offer because Liverpool FC cannot require New Balance, on the terms of its offer, to use global superstar athletes “of the calibre of LeBron James, Serena Williams and Drake”.

“It must follow that Liverpool FC is not obliged to enter into a new agreement with New Balance upon the terms of the latter's offer.”