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Saturday, June 2, 2012

Kitblag - Who’s having the shirt off Everton’s back?

Everton who finished seventh and were FA Cup semi-finalists last season, the fourth most successful club in English football history and well placed within the world’s top thirty clubs by brand value, would appear to be missing out substantially on the lucrative kit supply windfall that all major clubs are currently enjoying and developing in this era of financial fair play. The pressing question is, have we been hugely undersold once again or is someone benefiting at our expense?

For the 2012/13 season Everton have a new kit supplier and with the launch of the new black and gold away strip fans would appear to have given their wholehearted approval to Nike’s first attempt at producing an Everton shirt to be seen in which hopefully should fly off the shelves in record numbers.

For all Evertonians the purchase of merchandise is an integral part of being a modern football supporter; it offers the opportunity to be identified with the club, it brings a sense of belonging and, perhaps most important of all, you hand over your hard earned £55 for your shirt and £85 for your child’s kit safe in the belief that you're helping to fund the club, you’re doing your bit, just like buying your season ticket, we’re all standing together; but who exactly are we standing with?

KEIOC has always supported the clubs merchandise operation, but we find ourselves increasingly concerned at the financial impact, or to be precise the lack of impact, that the outsourced contract with Kitbag is having on our club.

One would expect that having one of the world’s leading kit manufacturers as a new supply partner would bring about a much needed and significant increase in our commercial income stream, but you’d be wrong.

Kit supply contracts with leading football clubs throughout the European leagues are big business. Manufacturers including Adidas, Nike and Umbro pay Premiership clubs a small fortune for the right to supply their kits and this lucrative income stream, which has grown by 48% in recent years, is set to explode with new contracts for Liverpool and particularly Manchester United who could see a £60m a season contribution to the Old Trafford club from 2015.

The reasons for the appeal of Premier League clubs’ kit rights are not only quantitative. Andrew Walsh, Head of International Affairs at SPORT+MARKT, explains, “The global reach of the English Premier League makes it a very attractive prospect for the world’s top sports merchandise manufacturers and, in turn, kit contracts are becoming an ever-more relevant source of income for the clubs. It’s not only about how many shirts you can sell, but about generating brand interest and loyalty and taking advantage of media exposure.”

As can be seen below, with a market estimated at 4,000,000 shirt sales per annum last year, the premiership has some of the most lucrative opportunities in the £260m [2011/12] European supply contracts market.

  • Arsenal                £13m per season (Nike, 2003 - 2013).
  • Chelsea              £20m per season (Adidas, 2010 - 2018).
  • Liverpool             £25m per season (Warrior, 2012 – 2018).
  • Man United         £23.5m per season (Nike, 2002 - 2015).
  • Man City              £12m per season (Nike, 2013 – 2019).
  • Spurs                  £10m per season (Under Armour, 2012 - 2017).

These are the payments leading premiership clubs are enjoying in addition to the actual revenue received from their merchandise sales through their retail operations. So how does Everton compare?

Evertonians expectations have to be realistic when it comes to commercial contracts; we have to acknowledge that financially the clubs listed above have left Everton in their wake in recent years, so it would be idealistic to expect parity with these deals.

Rather remarkably though, Everton has a kit supply contract worth just £650,000 per annum, yes that’s right, just £650k a year which began when Kitbag brought in Le Coq Sportif who they've now replaced with Nike.

By contrast Newcastle’s owner, Mike Ashley, is said to have recently obtained a “significant improvement” to their new deal with Puma whilst Aston Villa’s new contract with Italian manufacturer Macron is worth £3.75m a season.

Why are we apparently the paupers of the premiership's kit supply contracts? We've clearly just had the opportunity to correct this anomaly but last year KEIOC sources indicated that our new supply agreement with Nike was delivered through Kitbag which means that Everton are left with a relative pittance, confirmed when it was reported that the club were “to prosper more in marketing opportunities than by an immediate up-front influx of cash.”

This type of management double-speak to the fans always alerts KEIOC. The explanation will join other memorable favourites which include, “the stadium will be effectively free” and "this new scheme is totally self-funded by partners so there is no net cost to the club; in fact, it is cash-positive from the start.” These were phrases used for the failures at Kirkby and the Park End and we can all smell total bullshit a mile off, this is no different. Caught red handed on these occasions the Club chose to brazen it out, this time will be no different but as ever the proof is there for all to see, or not to see as in the case of Kirkby, the Park End and now nothing from Nike.

Outsourcing in itself isn’t the problem, Everton are a football club not a catering or merchandising business, but these contracts are under-delivering and we don’t appear to have the ability to address the problem. As can be seen above, other clubs kit supply contracts alone eclipse the three million a season received from kitbag in total for Everton's total annual merchandise sales and the merit payment from just one place in the league equates to all the Sodexo money received for the catering operation, approximately 1% of our turnover. Our CEO readily tells the fans we have no money and you wonder why?

Who’s to blame for this latest fiasco? It would of course be easy to blame the employees who are left to do their best by an anonymous, impotent and by and large totally absent board of directors, but as with everything at Goodison the root cause always leads back to the desperate lack of investment and the directors failure to address the fundamental financial problems which beset the club which are making the club unattractive to prospective buyers. Would you buy a business whose major income streams have been hived off to other businesses for a pittance?

Given that an industry expert confirms that kit supply contracts are about far more than just selling quantities of shirts, are we really to believe that Aston Villa is more than five time a more lucrative prospect than Everton? Everton should be comfortably commanding a figure between £6-8m per season.

Sadly, in the Premier league table of commercial revenue performance, Everton have been left wanting for many years as they sit rather uncomfortably between Sunderland and Wolves; a situation that has little prospect of improving under an administration that accepts, indeed rewards, mediocrity; a situation which should indicate to David Moyes that it is he who will have to make up the shortfall through disposals; so just be careful whose name you choose to adorn your latest Everton shirt.

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