Top 20 kit supply deals by annual value (US$ millions)
Total estimated kit supply value of top 20 agreements 2020-21 - $1,191.50 million
The 20 most lucrative European club kit supply agreements for the 2020-21 season amount to an estimated $1.19 billion in value, making up a considerable 75.32% of the total estimated kit supply value from the 15 leagues analysed. The concentration of the kit supply value in Europe’s most elite clubs goes some way to displaying their commercial dominance within the continent. The top ten agreements meanwhile, who are with each of European soccer's super-giants, amount to an estimated $987.52 million in value, making up 62.65% of the total estimated kit supply value from the 15 leagues analysed.
LaLiga heavyweights Barcelona and Real Madrid boast the first and second most lucrative kit supply agreements in club soccer whilst league rivals Atletico Madrid also join them in the top 20. It is Premier League teams though that most regularly command the highest kit supply fees as seven teams from the division feature in the top 20, making up for 41% in value of the total estimated kit supply value of the top 20 agreements. Indeed, five of the Premier Leagues ‘big six;’ Manchester United, Liverpool, Manchester City, Chelsea, and Arsenal feature in the top 10 most lucrative agreements. Three teams from France’ Ligue 1; PSG, Marseille and Lyon, feature in the top 20 as do three teams; Juventus, Internazionale and Milan, from Italy’s Serie A. Two teams from the German Bundesliga; reigning Champions League winners Bayern Munich and Borussia Dortmund feature whilst Galatasaray from Turkey and Ajax also boast one of Europe’s most lucrative kit supply agreements.
Within the top 20 agreements featured, five new kit supply contracts kicked in for the 2020-21 season, with all representing sizeable increases in value on their previous agreements.
Liverpool, after a long winded court battle, made the switch from New Balance to Nike with Sportcal estimating the value of the agreement for the 2020-21 league season to lie somewhere in the region of $90 million, a 70.73% increase in annual value from previous contract. Local rivals Everton also achieved a similar increase in value (67.20%) for their new agreement with Danish sportswear brand Hummel. Everton were previously with domestic supplier Umbro.
Real Madrid, Borussia Dortmund and Lyon each enter into a new contract extension with their respective suppliers. Real Madrid’s agreement with adidas represents a huge increase of 242.86% increase in value on their previous contract arrangement. Dortmund achieved a similarly impressive 213% increase in value whilst Sportcal estimates Lyon’s to have achieved a 30% increase in value for their renewal agreement with adidas.
Brand Spend (US$ millions) + Deal Count For Top 20 Kit Supply Deals
Total estimated brand spend 2020-21 - $1,191.50 million
Number of kit suppliers – 4
Analysis of brand spend and deal count of European soccer’s top 20 most sizeable agreements shows sportswear giants Nike and adidas to dominate the space. Between them, Nike and adidas hold the kit supply contracts for 15 of the 20 most expensive European club soccer agreements and spend a little over $1 billion in annual rights fees in the process, as estimated by Sportcal. This makes up for 86% of total estimated brand spend on Europe’s top 20 most expensive club kit supply contracts. Both Nike and adidas are willing to invest such money into kit supply agreements with Europe’s elite soccer clubs as put simply they hand them the visibility and growth opportunities brands the size of themselves desire. In all though, it is Nike who holds the most of European soccer's most coveted kit supply contract and spends the most in the process.
Both of Nike’s and adidas’ spend on elite European club soccer agreements has increased significantly on that of last season. Nike flexed its financial and marketing muscle to help pick up the contract of reigning Premier League champions Liverpool, estimated to be worth over $90 million for the 2020-21 season. adidas meanwhile enter the first year of an eight-year renewal with Spanish giants Real Madrid, signed at estimated 242.86% increase in value on its previous agreement with the club. The agreement is reported to be somewhere in the region of $140 million per year. adidas also renewed with iconic French side Lyon on enhanced terms for a further five-years.
PUMA is in continuous battle to keep up with Nike and adidas in the sportswear market and thus kit supply contracts with Europe’s elite soccer teams are vital to the brands marketing strategy. PUMA though does not boast the same financial might and thus must rely on Manchester City (worth a reported $85.80 million annually) as the cornerstone of its portfolio whilst the renewal of its agreement with German club Borussia Dortmund, signed at an increase of 213% in value, demonstrates its willingness and determination to stay present at the top of European club soccer. PUMA also holds agreements with Marseille and Milan of Europe’s elite.
Iconic Danish brand Hummel demonstrated its ambition to become a major player in the European soccer kit supply space through signing an agreement with Premier League’s Everton.
Market tier analysis
Within the overall top-tier European soccer kit supply market, sub-markets can be identified. Sportcal has split the 255 agreements into three tiers, the first being agreements $5 million per year and over, of which there are 44 deals. Second-tier deals relate to agreements $1 million and over, and below $5 million, of which there are 62 deals. Lastly, tier-three agreements relate to those below $1 million, of which there are 149, the most of any tier.
Analysis, for both brand spend and deal count between the perennial top three; Nike, adidas, and PUMA, and other brands serves to illustrate the perennial’s focus, and indeed dominance in the tier 1 market. Nike, adidas and PUMA make up for 94.60% of total brand spend on the 44 agreements included in the tier. Meanwhile the three brands kit out 79.55% of the 44 teams who boast contracts $5 million and over per year.
Within the tier 2 market though the perennials market share in both spend and count drops significantly. In terms of brand spend, Nike, adidas and PUMA make up 40.14% of total brand spend for tier 2 deals, compared to 94.60% in tier 1, and 38.71% of the agreements, compared to 79.55% of agreements in tier 1. Such a drop is understandable on two parts, firstly for Nike, adidas, and PUMA, the agreements are not so appealing in terms of the visibility and growth opportunities, meanwhile, for sportswear brands without the financial capabilities of the perennials such agreements act as the premium, making the market more competitive.
The same analysis can also be applied to tier 3 agreements, i.e. those below $1 million per season. These are not the priority for the perennial top three sportswear brands, although they can be useful in maintaining a market presence within countries. Again though, for smaller sportswear brands, especially those that operate only within their domestic market, tier 3 agreements act as the premium. Analysis does show that in tier three, Nike, adidas and PUMA attain a greater market presence both in terms of spend and deal count than in tier two.
COVID-19 impact on contract lengths
In 2019, Manchester City and Paris Saint-Germain announced 10-year kit supply deals with PUMA and Nike respectively, worth a reported £65 million ($84 million) and €80 million ($94 million) per annum.
In the early part of the last decade those deal lengths were considered the norm, but Wiegand said rights owners are increasingly seeking shorter-term deals.
He explained: “Three years makes no real sense because after 18 months you have to start all over again. It’s a lot of work going from one brand to another. But everyone is wanting to go four or five years, or even four years plus an option of two. Within the 255 agreements analysed in this report, 32 agreements with announced contract lengths begun at the start of the 2020-21 season. As illustrated in the graph below five-year contracts were the most popular, as 12 five-year agreements were announced. This includes Liverpool’s new agreement with Nike which is set to run through to the end of the 2024-25 season. In all, the average announced contract length for agreements starting in 2020 was 4.34 years, supporting Wiegand’s sentiment.
“The market has developed rapidly and clubs just won’t accept long-term deals anymore. They don’t want to be locked down for so long and feel they have been punished when the rights fee they receive no longer correlates with the strong sales.
“Clubs that went to five-year contracts were really rewarded. Look at Arsenal, after so long with Nike they went just for five years with PUMA because they wanted to go again into the market and see if they could get a higher deal, which they did with adidas.” Indeed, as portrayed in the graph in the previous slide, adidas are paying Arsenal around £60 million per year in a five-year deal to 2023-24, double what PUMA was shelling out in the previous five-year contract.