Football kit revolution: Barcelona and Nike’s role in evolving benchmarks

Once modest agreements with local manufacturers, kit supplier partnerships are now critical to a soccer club’s global brand strategy.

As Barcelona’s lucrative extension with Nike demonstrates, teams are seeking even more ways to maximise value from selling their shirts.

There was once a time when soccer teams did not give much thought to who made their playing kit, with practicality taking precedence over profit.

Perhaps the most famous case of this came at the 1986 FIFA World Cup. Fearful of the sweltering heat in host country Mexico, Argentina’s head coach Carlos Bilardo dispatched a member of his coaching staff to buy some lightweight jerseys. 

Silky blue shirts were acquired, with the Argentine Football Association’s (AFA) crest and player numbers hastily added before the team’s round-of-16 clash against England.

A ‘Hand of God’ and one of the all-time great World Cup goals immortalised the shirt, which later sold at auction for more than UK£7.1 million (US$8.9 million) in 2022.

However, during that intervening period, kit supplier contracts have gone from relative novelty to a billion-dollar revenue generator for teams. 

The market has also become highly competitive as sportswear brands jostle for space and the right to produce some of the most recognisable kits in the world.

Old kits deal

Back in the early 1900s, early contracts were modest. Deals were often informal and struck with local manufacturers on a short-term basis. The financial aspect was minimal, sometimes limited to free equipment or a nominal fee.

As soccer grew in popularity during the 20th Century, larger manufacturers entered the scene and kit deals started incorporating financial payments alongside the 
provision of playing attire. Bonuses based on merchandise sales were in their infancy.

The replica kit market was also virtually non-existent, with Leeds United touted as one of the first clubs to sell shirts to fans as part of their deal with Admiral in the 1970s. 

The brand’s pact with the Yorkshire outfit was worth a modest UK£10,000 (US$12,500), equating to about UK£105,000 (US$132,000) in today’s money.

Teams started receiving far larger payments from kit suppliers by the 1980s. Manchester United’s initial tie-up with Umbro for the 1992/93 season was reportedly one of the first multimillion-pound agreements. 

Now a global brand whose shirts are spotted in every corner of the world, United’s latest contract with Adidas until 2035, includes a minimum cash guarantee of UK£900 million (US$1.13 million).

A kit supplier contract is now an essential source of a team’s income, often outstripping the value of front-of-shirt sponsorships and stadium naming rights partnerships, the latter of which remains rare in European soccer.

At the top end, Real Madrid are pocketing a reported €120 million (US$125 million) per year from their deal with Adidas, which runs until the end of 2027/28.

In the English Premier League, Manchester United are an outlier, earning around UK£90 million (US$113 million) per season, while Manchester City, Arsenal and Chelsea reportedly receive between UK£60 million (US$75.2 million) and UK£65 million (US$81.4 million) annually from Puma, Adidas and Nike, respectively.

Contracts have also got much longer, with decade-long deals not uncommon and becoming more incentivised.

Liverpool, for example, got a guaranteed UK£30 million (US$37.6 million) from their current arrangement with Nike but also received a royalty of around 20 per cent on net sales of club products.

Meanwhile, United will be hit with a UK£10 million (US$12.5 million) penalty every time they fail to qualify for the UEFA Champions League under the terms of their deal with Adidas.

Exactly what constitutes the overall value of a kit deal has changed. When Liverpool switched from New Balance to Nike in 2020, the latter’s annual flat fee paid to the Reds was reportedly less per year. 

However, Nike agreed to promote the club through other high-profile athletes and distribute the new kit through an estimated 6,000 global stores, compared to New Balance’s reported 3,000.

Such was New Balance’s desire to not lose out to Nike, it took Liverpool to court, claiming a contract clause meant the company could match its rival’s terms. 

Liverpool successfully argued that Nike could deliver far greater total revenue than New Balance. The Reds are now set to move on to Adidas from next season and are in line to earn more than UK£60 million per year.

“The globalisation of the audience for elite football is probably the key factor in the growth,” Phil Carling, senior vice president of football at the Octagon agency, tells SportsPro.

“For elite clubs, those 15 to 20 clubs, the kit deal outside of the broadcast [deal] is the most important commercial arrangement that they will have.

“But it is also absolutely pivotal to how they project their brand. The relationship that they create with the manufacturer has a huge bearing on how they present themselves to the world.

“It’s much more of a marriage between the elite club and the manufacturer than it ever has been.”

What do teams want now?

In the past, a team’s priority was locking in a hefty flat fee with a manufacturer. While that’s still important, sides now also want extra control.

A case in point is Barcelona’s new extension with Nike, which is reportedly now the richest kit supply contract in soccer. According to Mundo Deportivo, the deal is for 14 years until 2038 and worth about €127 million (US$133 million) annually, which equates to more than €1.7 billion (US$1.8 billion) in total. 

The contract is also said to include a signing bonus of around €158 million (US$165 million) for the LaLiga outfit, which will be paid by Nike throughout the deal.

Barca, though, reportedly made sure the renewal gave them absolute control over international e-commerce, which would increase the income for their Barca Licensing & Merchandising arm, and ditched several on-pitch performance-related clauses.

The globalisation of fanbases has also put additional pressure on teams to align with manufacturers that can meet worldwide demand.

“Reaching and monetising that audience does rely on having retail outlets and the ability to project the brand into multiple different markets,” says Carling. “There are only a handful of manufacturers that actually have the capability of doing that.

“I think that's what's of interest to most of the elite clubs when they do those deals. Is [my kit partner] a company that can invest marketing dollars into the promotion of my brand and then physically get it into retail in multiple different markets that matter to me?”

Can smaller brands compete?

Carling believes the chances other sportswear brands have of breaking Adidas, Nike and Puma’s dominance are “extremely limited”.

Many have tried. A recent contender is British startup Castore, which has sought to lure clubs with a model that gives teams a higher royalty percentage as agreed revenue targets are hit.

At one point, Castore’s roster of Premier League clubs featured Aston Villa, Newcastle United and Wolverhampton Wanderers.

Now, Everton are the only English top-flight outfit kitted out by the brand. Villa and Newcastle went to Adidas, with the former making the move after players complained about Castore’s ‘wet-look’ shirts.

Wolves, who are understood to have found the working relationship with Castore challenging, now have a deal with Sudu, which was launched by Levy Merchandising with the backing of the club’s owner Fosun Sports Group.

That pact has seen the West Midlands side dispense with the traditional brand licensing agreement in favour of combining kit operations into one entity. 

According to Wolves, this will mean improvements to the supply chain and significant cost savings, while also boosting sales to overseas retailers and wholesalers.

If upstart brands do want to gatecrash the kit market, offering better service and producing unique designs that will appeal to a broader audience is certainly a start. 

Even so, it is difficult to see the biggest teams looking past the financial guarantees and broader distribution offered by established manufacturers.

Should the domestic game prove too competitive for fledgling sportswear companies, Carling believes international soccer represents an alternative route.

“Puma has done a very good job with some of the African clubs,” he says. “[They’re] very much at the leading edge in terms of design, brand and all the rest of it.”

However, the quadrennial nature of showpiece tournaments such as the World Cup means interest in national team kits may only spike every few years, rather than annually with a club. The upshot is that supplier deals with international sides tend to be cheaper.

“Even becoming the kit supplier of Brazil is not as expensive as becoming the kit supplier of Liverpool,” notes Carling.

Castore's 'wet-look' shirts were a blow to the brand's attempts to establish itself as a prominent kit supplier in the Premier League (Image credit: Getty Images)

Will the market continue evolving?

Historically, the vast majority of retail income for clubs has been driven by kit sales. But other product lines, such as leisurewear, caps and retro shirts, are now eating into that percentage. 

According to Carling, Manchester United’s deal with Adidas excludes “many categories of products”, ensuring the Red Devils can go and sign separate licensing deals or produce their own lines.

Many consumers are also now buying soccer shirts purely as a fashion statement, which has prompted special releases from teams. Notably, AC Milan’s fourth kit for 2023/24, produced in collaboration with the Pleasures clothing brand, was the best-selling kit in the club’s history.

“I think we're going to see more of those collaborations and more of that sort of activity,” says Carling. “This ability to do sublicenses with fashion brands that meet a slightly different audience, but also talk eloquently to how the brand [of the team] wants to evolve.”

The rise of digital assets adds another element for teams to consider in future contracts. And while Carling believes the “broad structure” of kit deals isn’t going to change for now, the onus is on clubs to better understand their consumers.

“Clubs need to be able to provide that data and analysis to the various manufacturers who are looking to do licensing deals with them,” says Carling.

“When you're asking for US$100 million a year for a licence, you better have the data and the analytics.”  — Sportspro.com