The growing strength of “power brands” Nike and adidas is driving projected rights fee increases at Liverpool, Paris Saint-Germain and Real Madrid, an industry expert has said.
The former head of a leading sales agency told SportBusiness Sponsorship: “The sports brand market is consolidating massively. You’re seeing the power brands get stronger and stronger – and you’re seeing some of the smaller brands disappear from the market.”
The source added that challenger brands such as Under Armour and New Balance have come in and “found out the market is not quite as lucrative as they first thought”.
“Kit deals are quite unique in that they’re looking for a direct return on investment through replica or other merchandising sales. The deals are getting more complicated and all the big players are locking and loading with the big clubs,” he said.
The source believes that sales potential in Asia the is key to unlocking significant value, but “football clubs that are big news in Asia are few and far between”.
In the last few days, it has been reported that Nike is prepared to pay more than £75m (€87m/$98m) per year to take over from New Balance as kit supplier to English Premier League club Liverpool, starting in 2020-21.
Paris Saint-Germain is reportedly looking for about €75m ($85m) per season from a renewed deal with Nike. The Ligue 1 club is currently tied to an eight-year deal with Nike, worth €25m per season, from 2014-15 to 2021-22.
This week, it was reported that Real Madrid is closing in on a $100m-per-year basic deal with adidas, with up to €50m extra per season from sales of branded merchandise, after 2019-20.
That deal has reportedly been negotiated up from the €70m-per-season basic fee the two parties came close to agreeing in 2015, as part of deal worth €100m per season with add-ons from sales of branded merchandise.