The Shirt Sales Myth

An updated Extract from Done Deal, my football industry book that you can buy here on Amazon.

When David Beckham moved to Real Madrid, this seemed to herald the era of news stories about increases in shirt sales covering the transfer fee and wages for a new player. More than 1 million Real Madrid shirts were reportedly sold in the first year of Beckham’s four-year stay at the Bernabéu. The same narrative is regurgitated whenever a big name moves – Pogba to Manchester United, Ronaldo to Juve or Neymar to PSG.

The headline values that manufacturers attach to shirt deals for elite clubs can be very large. It was reported that the latest Manchester United deal with Adidas was worth £750m over a 10-year period. Adidas forecast at the outset that they believed United shirt sales would reach £1.5 billion over the length of the deal.

Indeed, Chelsea are said to have ended their current deal with Adidas early (after paying a hefty termination fee of around £40m) in order to secure a new deal with Nike, worth £60m per year. They did the same in 2005, agreeing an early end to their then agreement with Umbro by paying £25m to sign with Adidas.

Shirt manufacturers will pay such astronomical figures only if they believe they are going to profit from the deal. People suggesting that Manchester United would make an additional £40m in shirt sales revenues after signing Zlatan or Pogba seem wide of the mark for the following reason. Kit manufacturers usually take 80–90% of all revenue from shirt sales. Clubs in return receive large, ‘up-front’ payments from their kit manufacturer. At best, the club can earn 20% of all net sales, though for many large deals, such royalty payments to a club only kick in only once a large number of sales have already been made – say, 2 million shirt sales.

It is reported that as Manchester United’s deal with Adidas is so large, it may be that it receives no additional royalties on shirt sales until a certain sales milestone is reached. Let’s say that after one million shirts are sold, the club receives a generous 20% of all shirt sales (again, for simplicity, £10 per £50 shirt). For the club to recoup Pogba’s transfer fee of £89m, it will need to sell one million shirts to start earning the royalty, and a further 8.9m shirts to recoup the entire fee. The club sold an impressive 1.85m shirts on average per season from 2014/15 to 2018/19 , yet still nowhere near the amount needed to claw back their £89m transfer investment.

This traditional structure based on ‘more’ up-front payments and ‘less’ profit-sharing is evolving. A case in point is Nike’s 2020 partnership with Liverpool. Before the 2020 Nike deal was signed, the shirt deal structure may have been as follows. Suppose Liverpool’s home shirt retails for £50, and that the club is making £10 from each shirt it sells. To recoup the transfer fee spent on Sadio Mané (around £30m – and that doesn’t include his wages and if profit sharing again only kicked in at one million shirts), Liverpool would need to sell four million shirts. Bear in mind that Liverpool averaged 1.13m shirts sold per season from 2014/15 to 2018/19, and you see that it is usually very difficult to recoup the money from large signings from shirt sales alone.

Interestingly, due to the New Balance v Liverpool High Court case (see my blog setting out the details here), the figures presented in Court by New Balance estimated that actually 2.9m Liverpool shirt units would be sold in 19/20 season (significantly more than the figures set out above). This was a 59% increase on sales from previous year. In. contrast to the above Adidas and New Balance examples, Nike’s offer was to pay Liverpool £30m per season plus 20% of net sales of all licensed products (meaning a share for the club from the first product sold rather than in the two above examples from the millionth product onwards). All licensed products included shirts, training merchandise and wider lifestyle products. It means that while Liverpool may be receiving a lower ‘guaranteed’ advance of £30m, the club shares in the substantial upside. Analysts have suggested that reasonable estimates for Nike’s 20/21 season and beyond could likely net Liverpool north of £65m+.

Whilst it is unlikely that many clubs recoup the transfer fees spent on particular players through shirt sales, it is clear that the traditional model is shifting in some cases away from large upfront guaranteed amounts and towards performance related (i.e. numbers of shirts sold) upside.

You can subscribe to my channel here and if you like the videos please share them across your social channels.

Recent Posts

Fundraising Auction for Riverside Youth Club

I’m really proud to be helping Riverside Youth Club create life-changing sports opportunities for some of the most

Read More →

Five Key Takeaways from the Post-Brexit FA Work Permit Rules

1.       The Basics: The previous Governing Body Endorsement (GBE)

Read More →

Updated UEFA, EPL and EFL Football Cost Controls

By Jodie Cox, Alex Harvey and Daniel Geey Introduction It continues to be a time of great flux in the football industry.

Read More →

The Book

Done Deal

An Insider's Guide to Football Contracts, Multi-Million Pound Transfers and Premier League Big Business Insightful, enlightening and thought-provoking, leading Premier League lawyer Daniel Geey lifts the lid on the inner workings of modern football.

Whether it is a manager being sacked, the signing of a new star player, television rights negotiations, player misconduct or multi-million-pound club takeovers, lawyers remain at the heart of all football business dealings. Written by leading Premier League lawyer Daniel Geey, who has dealt with all these incidents first hand, this highly accessible book explores the issues – from pitch to boardroom – that shape the modern game and how these impact leagues, clubs, players and fans.

Buy Book