Warrior Going On About?

Posted: April 22, 2011 by mcdonaldtaf in Business, Finance, Liverpool FC
Tags: , ,

This morning’s news that we’re on the verge of securing a new kit deal sparked a few twitter conversations and debates. Mainly because most people were wondering who the hell Warrior actually were. They may be better known in America; but over here a lot of people were sat scratching their heads.

Now the goods news is that, from a financial perspective, the deal looks to be very good. £25m per year blows away Manchester United and Nike’s record deal and will certainly help fill the coffers as Anfield. Coffers which may soon have the additional pressure of no European football, for at least one season.

If you look at the deal from a brand perspective though, it looks like a better deal for Warrior. They may be paying for the privilege, but I imagine they are quietly patting themselves on the back at such a coup. Attracting a joint venture with a brand as big as Liverpool FC.

I’m confident that FSG and the club know what they are doing. It is entirely plausible this is the right deal for the club, at the right time. The need to increase revenues outweighing the potential damage to the club’s brand. You see what we have is a match which doesn’t quite look right. Imagine Prince William marrying one of those daughters from my big fat gypsy wedding next week. Ok, maybe I’m being a little harsh. But the fact remains that Warrior have had to pay some big money to have the privilege of supplying our kits. (I’m sure if the Gypsy folk had the money they’d of tried tapping Wills up.)

When it comes to the leading marques in sport, even Warrior’s owners New Balance look like the poor relations. According to Wikipedia New Balance’s revenues total $1.55bn with 4,000 employees. Quite a sum, but when compared to Nike ($19bn and 34,000 employees) and Adidas ($12bn 42,000 employees) the gulf becomes very evident. In fairness New Balance’s figures were from 2006; but unless they doubled every year they’ll still be miles behind. [Update: I’m reliably informed New Balance’s current revenues are $1.65bn]

Then consider the branding work undertaken by the likes of Nike and Adidas. The flashy adverts, sponsorship deals and other brand associations place them clearly at the pinnacle of the sporting good manufacturers. The question is, should we be accepting an association with a company most reds had never heard of until this morning?

I’ve seen the comments of ‘who cares about branding’. To the core of the reds support based in the UK who makes the kit is not as important. But our world wide appeal is very important to the club’s future. There is also those casual kit buyers, of which I am one. If I see a nice Barcelona kit I buy it and it’s the same for international kits. Will we sell as many kits in the UK? Quite possibly. Are we likely to see a reduction in the number of kits sold abroad, especially if they don’t get the design right? Quite possibly.

Flagship brands have to associate themselves with other flagship brands. If they don’t then they run the risk of damaging their own brand.

Arsenal F.C. – O2 and Nike
Manchester United – AON and Nike
Chelsea – Samsung and Adidas
Liverpool – Standard Chartered and Warrior

Which name looks like the odd one out?

All may not be lost though. In much the same way as I said FSG should bring a fresh approach to Liverpool FC, maybe Warrior should bring a new approach to kit design. An approach which will see the fans more involved in the actual design of the kit. It has always puzzled me why the design of such a standard commodity as a football shirt has to be kept under cover and designed by a closed group.

It’s not an idea of my own, as Gareth Roberts (@robbohuyton) of Well Red Magazine first put the thought in my head. But maybe the new fans committee, which will branch out to large groups of fans, could play a key role in the design of the new kits. With a majority of fans having the final say when presented with a range of kits. The technology exists and the club already runs polls. Why can’t FSG (with Warrior) again take a different approach?

This is not a major disaster and like I say it is quite possibly the right decision, in the current circumstances. However it also feels like a downgrading of our kit supplier to me, even if we’re getting more money for that downgrading. The best should associate themselves with the best, this deal does not do that.

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Comments
  1. Sean says:

    Two things:

    1. I live in Toronto, Ontario, Canada so I am not that far removed from what goes on in the United States and even I have never heard of Warrior.

    2. That being said, look at what Under Armour (another American company) has been able to do in a rather short amount of time against the likes of Nike, Adidas and Reebok. Fifteen years ago the company did even exist. Now it is associated with some of the premier players in the NFL and NHL, sponsors some pretty big college programs in the United States and has even dipped its toe into European football starting with Hannover 96 in 2008. Spurs’ will be wearing Under Armour kits come the 2012-2013 season.

    • Sean says:

      Basically what I was trying to say was that if a company makes a few smart strategic moves in can go from being a nobody to a somebody in a relatively short amount of time.

      Liverpool should not worry about the current place the company holds because our current place is not ideal either. We should look to the future and have the vision to see where that company is going to be. This endeavour can help both sides out a great deal.

  2. Andreina says:

    I have to admit I was shocked when reading the news because I am a big fan of Adidas as well and I was so excited with the new away kit for next season that I was already wondering what would they have in store for us on 2012 for our new home kit, seems like I’ll never get the answer for that.

    I don’t want to say that it’s a bad decision just because it’s a brand I’ve never heard of, but come on, we can’t help but raise our eyebrows when we discover that our future kit manufacturer has never done football kits before, we’re not a club to be experimented on, we are a big institution and I want to feel proud of my shirt. It’s thay uncertainty that makes me doubtful.

    Also, we have to admit they’re putting good money on the table, and we sure need it if we want to invest and get ourselves to where we should be right now, which is fighting for the big titles. So I think I’ll have to stick with it at least until I see the new shirt, because if it’s not up to our big club’s status, I’ll make my voice heard.

    So, let’s give this boys a chance, I’ll cross my fingers and pray they prove me wrong. But I’m still buying adidas stuff though 😛

    YNWA.

    • mcdonaldtaf says:

      Fair points. I too am an Adidas fan.

    • Grumpasaurus Rex says:

      “we’re not a club to be experimented on … I want to feel proud of my shirt.”

      I’m sure the same words were said 30-odd years ago, when LFC put Hitachi on the front of the shirts, the first club to do so (English club at least).

      I’m not convinced yet by this, but am not feeling as negative as you or the blogger.

      • mcdonaldtaf says:

        To be fair 30 years ago was a completely different time for sports and certainly sports branding. The hitachi deal was pioneering in those days. Choosing a supplier as they’re willing to pay for the advantage they will get is not pioneering.

    • simpleman says:

      Even though they don’t have experience in designing footy shirts I’m not overly concerned. They’re paying a nice £25m for the privilege of designing a shirt for a global brand and you’d have to think they will throw everything they can at it to make it as perfect as possible. They need this to work not just to get shirt sales but to show their design and technology skills in order to get other clubs to buy into their brand.
      This could indeed turnout to be a great move for both parties.

      I’m trying to be optimistic anyway 🙂

  3. Budared says:

    Interesting debate. I’ve never really thought that it’s particularly important who the manufacturer of a kit is – presuming that people will buy it either because it’s Liverpool or because the design looks good. It will be interesting to see if sales fall (or don’t expand in line with similar clubs) in non-European markets due to the Warrior brand.
    As regards letting the fans help design the kit, I’m not sure whether people would agree and there’s often nothing worse than design-by-committee. I’ve always preferred retro kits but these may not go down as well in the Far Eastern markets

    • mcdonaldtaf says:

      I think technology allows for more fan interaction. It would be a great marketing tool if used right as well. By the fans, for the fans.

    • Simon says:

      As a runner, New Balance make excellent quality kit, and believe me, runners are picky about their kit! So IMHO there are no worries there. In term of design by committee, speaking as a design professional, it generally produces low quality design. Personally, I don’t care if the shirt has three stripes, a swoosh or three swooshes in the logo, it’s the club badge that matters, and ours is the greatest.

      • mcdonaldtaf says:

        One question which has come up is – will they be able to deal with the volumes which will be demanded? The other things which worries me is whether they can make the kits as cheap as the other manufacturers, who will have much greater scales of economy.

  4. Bobby C says:

    I personally am sad to see adidas go. But that being said, I’m annoyed with this immediate negative reaction of the new kit without having even seen a design. It’s a shirt, the crest is the thing that matters, not the three strips.

    Moreover, i don’t like Liverpool being taken advantaged of. There has to be something of a two way street between us and adidas. We were getting 12 million a year while Man united is getting 23-25 million a year while we’re comparable to them on shirt sales. We’re the 4th biggest shirt selling club in the world, and yet our sponsorship deals are comparable to the Spurs? Sticking around a “big brand” for the sake of it just means that we’re one big sucker.

    If adidas weren’t willing to pay up, move on. It shows them that we’re not the organizational dinosaur that we’ve been, left in the dust by the likes Man U, Bayern, and Real in terms of commercial revenue (not even taken into account of stadium). Why do you think we haven’t won a title in 20 years? Commercial success off the field is directly related to success on the pitch, there’s an almost 1 correlation between wage bill and league positions in football.

    Personally I applaud this move, it shows adidas, and the rest of the commercial world that we can’t be had.

    • Budared says:

      Fair point. Do you know how these deals are structured? Do LFC get £25m plus a commission on each shirt?

      • Bobby C says:

        I don’t really know. Clubs usually get a commission on each licensed product, but these information are very closely guarded by the manufacturers. I did a calculation on another comment below, I still think we’ll be quite far ahead.

  5. Gaffer Tom says:

    I’m not surprised that many have never heard of Warrior. And that’s because they are a company whose origins in the game of lacrosse and nothing else. I’m skeptical of their ability to make a proper football kit despite the fact that they make top-quality lacrosse “gear.” I have experience in this field, having played lacrosse in college. But for the most part, their equipment is no different from any of the other companies, just a bit more expensive.

  6. Danny Marks says:

    I’m not that sure why it matters who makes the kit. Correct me if I am wrong, if we sell 1 shirt next season we will make 25 mil, if we sell 25 mil, we will make 25 mil??? Obviously the lower shirt sales could have an impact on future deals. However I’m all for fresh starts… That’s what we need at LFC, a completely fresh start.

  7. pravin says:

    i’m not bothered about design they will come up with a good one i’m pretty confident about it.. but i want to talk about some other point. we all know that we are sitting fourth in the no. of kit sales and the fans from Europe and Asia has a very important role in this process. and most of them are buying their kit from a nearby Adidas showroom (yes we have showrooms in every main cities)

    from 2012 onward from where are we going to buy our kits from?? do they have a showroom in europe in asia atleast in UK?? how are they going to tackle this problem within one year ?? i’m not getting a clue.. yes it will be available online.. but that is a different perspective.. 13mill we save every year from this deal.. whats the amount they get from sales through adidas showrooms in europe and asia?? will there be a dip??

    • Bobby C says:

      I don’t know how it is in England, but when I grew up in Hong Kong, I’ve always brought kits from 3rd party retailers that stocked everything. I doubt very much that people in Asia (especially) buys Liverpool kits from showrooms. That’s also not how it works in the States where I am now. You go to specialty shops that carry football kits.

      We sell around 900,000 shirts a year. And we don’t make all the profits. Let’s do a very conservative calculation. Assume we make 30 quid a shirt (which is WAY high an estimate), and say we loose 20% sells (which is another high estimate).

      30*900000/20= 1,350,000
      That’s a fraction of the 13,000,000 that we take in extra every year.

  8. benthespread says:

    is this the same Warrior that make MMA clothing?

  9. Bhaskar says:

    Nice way to present the deal but apart from all the apprehension u have i have one of mine to add. Adidas has a global supply network. Even in towns in India and China adidas store exist which sell LFX merchandise. Warrior is an unknown entity in substantial parts of asia and i for one have no idea of their supply and distribution power in one of the worlds fastest growing soccer market.

    The concerns regarding design i do not share as i am hoping those guys who have paid a huge premium over our last kit manufacturers will come up with the design to make it a success, as it is their first time they will be hungrier and greedier to earn the approval of LFC fans in particular and football followers in general. Also as their first foray into big league of football kits manufacturing i thin they will be concerned with coming out with something good as it will help get their brand noticed and also their future business.

    My concern, as previously mentioned, is what if the kit is a big hit with lots of demand being generated in Asia but the supply and distribution capacity is not there to meet it and profit from it. that will effect the shirt sales number. hope Warrior is figuring out a solution to the problem.
    I won’t mind wearing a shirt from any manufacturer if it has a LFC badge on it’s left side right over my heart.
    YNWA

    • mcdonaldtaf says:

      I have spoken to several people who have raised concerns about Warrior’s ability to deal with such a big deal. They’re not off to the best of starts as their website keeps getting crashed by visiting LFC fans.

  10. Great topic to start discussing since the big news this morning.

    I love Adidas, and was excited when Liverpool got them as a sponsor. But I’m not against a new start, with a new up and coming company. As some others here have said, we need a fresh start, along with our fresh new owners, new manager (hopefully Kenny), new staff, and some new players. My main concern is whether the lack of recognizable appeal of Warrior will have an effect on worldwide sales. Other than that, I really don’t care.

    Someone else mentioned here that no one had heard of Under Armour until a couple years ago and now it’s a HUGE brand, with massive athlete endorsements all over the place. There’s no reason, with the backing it has, that Warrior can’t be the same in a few years.

    Liverpool need to start being the trendsetters again in every way. This is just one new way!

    • mcdonaldtaf says:

      Under Armour are huge as they are better known, but not from a company size perspective. In fact they are still smaller than New Balance, although bigger than Warrior.

      I agree about fresh starts, but this just feels like an odd tangent to me. The other question is how much did Ian Ayres have to do with it, or was it driven by FSG?

  11. Ian Dodds says:

    Firstly, I think it will be impossible to dis-aggregate a fall (or rise) in shirt sales due to kit brand from a general fall (or rise) in shirt sales. They are influenced by a wide-range of variables from on-field performances and success in various competitions, to star signings (or sales) and consumption patterns in e.g. India/China, etc etc.

    Secondly, your statement that big teams associate with big brands appears to confuse correlation and causation, as there’s no evidence to suggest a team can’t succeed without a globally-recognised brand on their shirt. Barcelona faired well without a sponsor, and then with a charity on their shirt (though they’ve now obviously signed a mammoth deal).

    The only tangible, measurable effect such big brand-big team unisons could realistically have is to provide significant finance for purchasing players, investing in youth etc., and Liverpool signing the most lucrative deal with a relative unknown demonstrates that you don’t have to be ‘famous’ to be able to put a lot of money on the table.

    • mcdonaldtaf says:

      Agree that other variables play a part in shirt sales, but the look and feel also does. There is also something to be said for the brand you are buying. I am a ‘brand whore’ and I used to only buy the home Reebok kits. Running up until my boycott of merchandise I owned every Adidas kit. I cannot be alone.

      I think you are mixing up success on the pitch and continuing to grow the LFC brand. These are entirely separate matters. The brands on your shirts make no difference to what happens on the pitch, agreed. But branding deals can have a knock on effect onto the club’s own branding. This is potentially more important than ever now as we look to continue growth within global markets.

      There are also more pragmatic concerns with the deal. Can they cope with such a big deal? Do they actually have the money – given it’s over 25% iof their annual revenues? Will their website ever cope with LFC fans visiting it?

      But on the plus side, and to balance the above. I believe Adidas had restrictions in place with their LFC deal which prohibited our number and location of stores.

  12. Sam Wanjere says:

    I love latching onto any provocative but constructive debate.

    I’m one of those excited by what the uncertain future holds. I too remain unsure about who will miss the other more. Is it we or Adidas, for whom we sold the fourth most shirts worldwide (after Real Madrid, Barcelona and MUFC in no particular order). I guess we’ll see and therein might lie all potential excitement.

    We are not in any ideal position any of us would love. I choose to see the positives of having owners that care, part of the Custodian Theory, and who are bent on seeing this club occupy the pinnacle it belongs in. That in itself is enough to keep this Kopite going.

    Something to consider will be the uniqueness of our kit. We are the only army that will be kitted by Warrior. That can be positive. As Warrior’s marquee brand, we are in a position to call lots of shots when it comes to how they treat our kit. That is another plus. In that sense we won’t see repeated design ideas in different colors as seen in what Adidas do annually.

    I also hope we’ll see more community participation in design ideas, as seen in the Wolfburg shirt design here, http://wp.me/pRdtS-a6.

    I have a good feel overall and cannot wait to see what the future holds for this magnificent institution.

  13. Sam Wanjere says:

    I love latching onto any provocative but constructive debate.

    I’m one of those excited by what the uncertain future holds. I too remain unsure about who will miss the other more. Is it we or Adidas, for whom we sold the fourth most shirts worldwide (after Real Madrid, Barcelona and MUFC in no particular order). I guess we’ll see and therein might lie all potential excitement.

    We are not in any ideal position any of us would love. I choose to see the positives of having owners that care, part of the Custodian Theory, and who are bent on seeing this club occupy the pinnacle it belongs in. That in itself is enough to keep this Kopite going.

    Something to consider will be the uniqueness of our kit. We are the only army that will be kitted by Warrior. That can be positive. As Warrior’s marquee brand, we are in a position to call lots of shots when it comes to how they treat our kit. That is another plus. In that sense we won’t see repeated design ideas in different colors as seen in what Adidas do annually.

    I also hope we’ll see more community participation in design ideas, as seen in the Wolfsburg shirt design here, http://wp.me/pRdtS-a6.

    I have a good feel overall and cannot wait to see what the future holds for this magnificent institution.

  14. […] Warrior Going On About? This morning’s news that we’re on the verge of securing a new kit deal sparked a few twitter conversations and debates. […] […]

  15. Bill says:

    I can’t see the shirts being any more expensive as pricing is paramount in marketing. They may even undercut the other brands which to be honest are way too expensive, I don’t believe in paying over the odds for a label, It’s the colour and the badge that matter.

    • mcdonaldtaf says:

      I believe there are usually profit sharing agreements within these contracts. I’m sure both sides will be keen to retain their existing profit margins. Meanwhile Warrior will not have the economies of scale that either Adida or Nike have. I’m not saying that the prices will go up, but I don’t see them coming down either.

  16. Kevin says:

    Warrior is quality. They have been expanding into sports beyond lacrosse and doing it well. Most of my lacrosse gear was Warrior, including a fantastic UnderArmor style shirt from before UnderArmor was in lacrosse catalogs (the first place I saw it in the US). FSG knows what they are doing, so while I am slightly surprised, I am excited for both LFC Warrior. Warrior is a great brand, if growing, that LFC can align with and set themselves apart some, and Warrior gets a chance to show itself off on a global level. Expect great things both ways.

  17. Ed Margerum says:

    Warrior Sports is a subsidiary of New Balance which may be better known.

    • Greg says:

      Warrior is Boston-based as far as I am aware, I suppose they will be known by lacrosse fans. I just hope its not a jobs-for-the-boys mentality from FSG. I hope they are seeing a potential to forge a real partnership. It would appear to be a gamble, as we are effectively trying to assist Warrior to become a global name and they are paying big money for that privilege, but if it comes off, I would guess that LFC’s back-end commission on shirt sales will also be very favourable.

      While I am also a long standing adidas fan, I care more about the “Originals” brand than the “3-striped triangle” sporting version of the brand LFC currently wear. Also it looks like Adidas were calling the shots with less money up-front compared to our rivals, and brand positioning worldwide in their stores was being relinquished to promotion of Chelsea kits. I know Chelsea were champions last year, but it shows how badly we are being treated by adidas if they are selling 900K+ shirts of ours each year, but they are marginalising us in their stores. I will still buy adidas originals as that brand symbolises a nostalgic time in LFC history, but I will not lose too much sleep if they are not part of our future. We have never been shy to adopt new brands as fans with our casual wear, so the same should apply to our club kit.

      As for Warrior, well they are up and coming, the fact that they are a new kid on the block when it comes to football could be turned to our advantage, but this means much will hinge on their first design – it can’t be too americanised – with a garish team logo. We can only hope they can be innovative without misjudging the wishes of the fans. I hope they do submit a selection of designs for fan consideration, as they most certainly need to get this right first time.

      One concern is one of global distribution, we can’t just rely on the internet to sell shirts. They will need to be on display in stores in India and the far east markets. I hope that this will be achieved by FSG aggressively expanding our LFC superstore outlets in these territories. Also, another concern is that New Balance manufactures in the US and the UK, and deliberately avoids the exploitation of far-east ‘sweatshop’ production of their goods. While their morals are to be applauded, it may not make the most financial sense to produce the kits for twice the costs in the US. That may be Warrior’s problem rather than LFC’s, but I think they will have problems if prices of replica kits are forced to rise because of this.

      Its time for us to finally take our overseas market by the scruff of the neck and maximise the potential revenue without relying on 3rd parties to do it for us. I have confidence that FSG are going to do this right, after 20+ years of us missing the boat, and this deal could be the start. There are plenty of reasons to be positive I think…..

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