Should we be looking at new kit deal?- new update pg34 Chelsea NIKE DEAL

[GeekinGav]

I don't agree with that guy's valuation but the shirt sales are completely negligible to these companies. They pay these fees because of the advertising that is associated with it and the fact that every official piece of club gear carries the Nike, Adidas, Puma, etc. logo somewhere. When Nike gives Lebron James a $1 billion contract, they don't do it expecting him to bring in $1 billion in sales from his shoes. They do it knowing they'll make some of it back from his branded gear, but the rest will be advertising for their company as a whole.

Hard to understand why people can't grasp this fact. A 30-second TV spot during the Super Bowl costs something like $5m this year. Nike are paying the equivalent of 105 seconds of ad time in that game to have their logo plastered everywhere with hundreds of millions of eyes in the PL, Champions League, etc. games for a year. The rest is gravy.

Advertising means fuck all if they dont sell their products. They may pay sponsorship deals to players to 'advertise' their brand, but when it comes to making profits, its the sales of their products that is paramount.

Companies like Nike and Adidas now have such global recoginition they technically never have to advertise or sponsor anyone anymore. Advertising is just a boost to their more important product selling profit base.

 

[abellwillring]

Advertising means fuck all if they dont sell their products. They may pay sponsorship deals to players to 'advertise' their brand, but when it comes to making profits, its the sales of their products that is paramount.

Companies like Nike and Adidas now have such global recoginition they technically never have to advertise or sponsor anyone anymore. Advertising is just a boost to their more important product selling profit base.

Sorry, this just isn't true. Nike does $30 billion a year in sales. The $17.5 million this City deal costs them means absolutely nothing. It's worthwhile to them without selling a single item because of the exposure it provides. Ubiquity is far more important than the sales.

 

[FanchesterCity]

It's misleading to say Nike do $30 billion in sales therefore the City deal means nothing (or little).
The reason they make $30 billion is because they do high volume (and with high margin) - There isn't any one single product, or team that brings in the lion's share - it's spread widely across many. Of course Barcelona sell a couple of millions shirts and Nike make about 25 quid on them so that's 50 million from Barca, and City sell about 500K so that's 12.5 million but all those millions contribute to the larger pot of $30 billion (which by the way is sales, not profit). Those shirt sales are seen as an 'offset' against the sponsorship of a team. e.g. if they sponsor you for 15 million and you're likely to bring in 12.5 million in shirt sales, that's 2.5 million of advertising they're prepared to spend. They won't be paying 15 million if you only bring in 1 million in shirt sales.

The shirt sales are a key factor in recouping some of their costs.

 

[abellwillring]

Again, it's completely negligible though. A drop in the bucket. They spend $3 billion plus a year on advertising -- they don't need to sell a single shirt for the City deal to be an exceptional value to them due to the advertising that results from it. They had an ad with Drake at the Super Bowl that cost over $5m to air let alone what the production costs were.

They obviously take sales into account, but the value of having a big club wearing their logo at all times faaaaaaar outstrips what any actual shirt sales (which are not the only branded items they sell anyhow) would be worth.

 

[ws01]

Yeah I highly doubt they'd make back enough from shirt sales to cover what they spend on the actual sponsorship. Brand value, association, exposure, halo effect - all things that I'd say are more important to sportwear companies.

Another reason why the arrival of Pep and furthering ourselves in the Champions League is huge for us.

 

[Shaelumstash]

Advertising means fuck all if they dont sell their products. They may pay sponsorship deals to players to 'advertise' their brand, but when it comes to making profits, its the sales of their products that is paramount.

Companies like Nike and Adidas now have such global recoginition they technically never have to advertise or sponsor anyone anymore. Advertising is just a boost to their more important product selling profit base.

I've got to respectfully completely disagree here. The very reason Nike and adidas have such global recognition is because they advertise and sponsor so much. That's why their brands are so ubiquitous, because they are associated with the most successful athletes and teams in pretty much every sport.

Very little of the advertising they do is directly linked to sales. When was the last time you saw a Nike advert, produced by Nike themselves, that included the price of the product, or told you where you could buy it? Like a "Nike Air Max, £65, available at all good trainer shops"? I can't ever remember seeing one.

All of Nike's advertising is "above the line" which means it's about reinforcing the brand image of Nike. It's not about driving sales of a particular product, it's about creating a positive image of the brand, making it associated with winning and success and being cool and cutting edge.

I've never seen an advert in my life for Nike gym shorts and T-shirts. But I'll pay and extra £5 for some Nike shorts than I will Gola ones. Even if the quality is exactly the same. Maybe I'm an idiot for that, but so are hundreds of millions of people around the world, that's why Nike are the most successful sports apparel company ever.

How have they got there? Well for me when I was an impressionable youth, I loved Michael Jordan and all of the adverting and promotion I consumed as a kid with Michael Jordan promoting the Nike brand has probably stuck with me and influenced me to buy Nike branded gear for the rest of my life.

There will be some kid now in Minneapolis who loves Sergio Aguero, loves City and because he sees us playing in Nike kits he'll buy Nike branded products for the rest of his life. Water bottles, trainers, gym shorts, whatever. That's how branding works, it's about exposure and being associated with success in Nike's instance.

Of course in Nike's ideal world, every penny they spend on sponsoring a kit will be recouped in sales of that kit and they get the brand exposure for free. But the reality is that the more brand exposure they get, the better. That's where the real value to them is.

 

[avoidconfusion]

£100m a year .... dont be daft .... lol

currently Nike need to sell at least 200,000 shirts at £60 a year, just to make a profit on the £12m a year deal. If it was £100m a year, they would have to shift a minimum of 1.700.000 shirts just to make a profit. As much as I love City, if we have that many fans, how many of them buys a shirt? I havent this year.

If Chelsea can get 60m we should be looking at that as an absolute mininum.

 

[yankcitizen76]

I wouldn't be surprised if we moved on from Nike. They already have quite a collection of football teams represented. And if they are really paying Chelsea 60 mill, they will be unlikely to renegotiate. But we could still use it as leverage. Plus, our kits would probably become half decent. I always liked Umbro.

 

[Shaelumstash]

Just been reported on Sky that Barca have just agreed a €155m a YEAR new deal with Nike. The biggest manufacturing deal in football.

On the back of The Shite moving to adidas for £75m a year, and Nike poaching Chelsea for £60m a year. Rumours of Spurs moving to Nike for around £50m a year, it seems this summer is seeing huge movement in the manufacturing war between Nike and adidas.

It couldn't have come at a worse time for City.

Our deal is clearly grossly undervalued at £12m. But the problem is this summer we are in a really weak negotiating position. After 2 consecutive years of a drab manager in charge of a drab team that gets very little positive media exposure, and just scraping 4th in the PL, we are really not in a good position this summer to negotiate a new deal.

Of course the hope is that next summer after having the most high profile manager in the world, one of only two truly superstar managers with charisma, good looks and an engaging personality, he'll create huge exposure for our sponsors just by being himself.

That's without even mentioning the team. I expect us to play really attractive, exciting, winning football next season. I expect us to be very successful next season.

The issue is, I think the manufacturing sponsorship market is going to peak this summer, and next summer we may have missed the boat.

Nike were clearly burned by adidas taking over the rags contract. Getting hold of the Chelsea deal seems like tit for tat. There's talk that adidas' strategy is to go balls deep on one club in each league, The Shite, Bayern, Madrid. They're investing their marketing budget for the next 10 years on 3 mega-clubs they expect to be successful.

Nike obviously don't want to lose market share and have gone balls deep on the Barca deal. In the Prem they're obviously betting on Chelsea, and possibly Spurs.

The problem is if we try to negotiate this summer, we're in a really weak position because of the data (media exposure / sales) from the last 2 years. We can try and renegotiate next year when the data will look better, but the market will likely have dropped like a stone by then, as all of the top 5 clubs in the world have renegotiated already.

The strongest bargaining position is when you have two or more parties vying for you business. You can play them off against each other and drive the price up. The problem next summer is adidas won't be in the market for us, they've committed too much on the Shite. Nike will have blown a huge proportion of their budget on Barca, Chelsea and possibly Spurs, so where do we go?

The next tier down of Under Armour, New Balance, Umbro etc, have not got anywhere near the budgets of the big two. It's doubtful we'll be able to command a significant increase from any of those suppliers.

That could leave us in a really weak position with Nike. They could offer us £15m a season and say take it or leave it, knowing we've got nowhere else to go. We could maybe squeeze £20m out of NB or Under Armour, but considering the exposure and distribution that Nike can give us, the extra £5m won't be worth it.

 

[CC1]

Just been reported on Sky that Barca have just agreed a €155m a YEAR new deal with Nike. The biggest manufacturing deal in football.

On the back of The Shite moving to adidas for £75m a year, and Nike poaching Chelsea for £60m a year. Rumours of Spurs moving to Nike for around £50m a year, it seems this summer is seeing huge movement in the manufacturing war between Nike and adidas.

It couldn't have come at a worse time for City.

Our deal is clearly grossly undervalued at £12m. But the problem is this summer we are in a really weak negotiating position. After 2 consecutive years of a drab manager in charge of a drab team that gets very little positive media exposure, and just scraping 4th in the PL, we are really not in a good position this summer to negotiate a new deal.

Of course the hope is that next summer after having the most high profile manager in the world, one of only two truly superstar managers with charisma, good looks and an engaging personality, he'll create huge exposure for our sponsors just by being himself.

That's without even mentioning the team. I expect us to play really attractive, exciting, winning football next season. I expect us to be very successful next season.

The issue is, I think the manufacturing sponsorship market is going to peak this summer, and next summer we may have missed the boat.

Nike were clearly burned by adidas taking over the rags contract. Getting hold of the Chelsea deal seems like tit for tat. There's talk that adidas' strategy is to go balls deep on one club in each league, The Shite, Bayern, Madrid. They're investing their marketing budget for the next 10 years on 3 mega-clubs they expect to be successful.

Nike obviously don't want to lose market share and have gone balls deep on the Barca deal. In the Prem they're obviously betting on Chelsea, and possibly Spurs.

The problem is if we try to negotiate this summer, we're in a really weak position because of the data (media exposure / sales) from the last 2 years. We can try and renegotiate next year when the data will look better, but the market will likely have dropped like a stone by then, as all of the top 5 clubs in the world have renegotiated already.

The strongest bargaining position is when you have two or more parties vying for you business. You can play them off against each other and drive the price up. The problem next summer is adidas won't be in the market for us, they've committed too much on the Shite. Nike will have blown a huge proportion of their budget on Barca, Chelsea and possibly Spurs, so where do we go?

The next tier down of Under Armour, New Balance, Umbro etc, have not got anywhere near the budgets of the big two. It's doubtful we'll be able to command a significant increase from any of those suppliers.

That could leave us in a really weak position with Nike. They could offer us £15m a season and say take it or leave it, knowing we've got nowhere else to go. We could maybe squeeze £20m out of NB or Under Armour, but considering the exposure and distribution that Nike can give us, the extra £5m won't be worth it.

God. We're all doomed