The (Rumoured) Adidas Deal: Win-Win

By now you’ve probably heard that Adidas and Arsenal have apparently agreed to a deal that makes Adidas the exclusive kit supplier following the end of Nike’s contract in 2014, with the deal being worth 25m GBP per season. If you haven’t, well there you go. If such a deal is true, does it represent a significant coup for Arsenal? Adidas? Or is it that rare circumstances where both parties stand to do well by it?

For Arsenal, the benefits are obvious. 25m per season represents a significant upgrade from the Nike deal (in the region of 8-10m per season, I believe) – added resources for the ‘war chest’ that (hypothetically) can fund bigger and better transfers, wages for key players, and general re-investment in the club. Not only that however, the agreement represents a commercial deal that was made from a strong negotiating position, rather than our weak and slightly needy position circa-2006 after building our spacebowl library (the Emirates). It demonstrates that Arsenal Football Club are moving forward in strong financial standing, a clear message to our future commercial partners that we will expect top-dollar compensation to be a part of our brand.

No longer hungry for cash-injections and front-loaded deals, we are demonstrating that we have emerged from the construction of a new stadium and are ready to negotiate deals appropriate to a club of our stature. Hopefully the significance of this deal (and the ones that follow) will raise expectations on the club, its owners and directors to fund and field teams capable of competing for championships. After all, while not being the sole motivator of a kit deal, there is a reasonable expectation of success with such expensive investment. Look at how the relationship deteriorated between Adidas and Liverpool, long-time partners, as Liverpool declined in form and results.

A well-known mockup that has been circulating around the web for a while. Not bad!

Speaking of Adidas, what do they stand to gain from this outlay? Firstly, it’s been suggested they are pursuing a strategy of “owning London” by being the kit provider of all the major London teams (Chelsea, rumoured Arsenal and Fulham, perhaps others later). This would not surprise me if true, considering how London has been a focal point of their advertising (particularly in the Originals line) and that the marketing power of effectively monpolizing one major metropolitan centre’s list of A-teams would give them a unique edge over the competition. Regarding portfolios, Arsenal would also represent a big name to replace Liverpool; consistently a top-performer in England, as well as a perennial Champions League participant, Arsenal are a constant sight on TV to the million-bajillion watchers of the two competitions.

Furthermore, Arsenal shirt buyers are voracious and insatiable. Despite no trophies in seven years, Arsenal shirts have remained the 3rd most purchased in the world after Nike’s Barcelona and Manchester United (I admit, citation needed). With such inelastic demand, Adidas is basically guaranteed to move significant volume even if Arsenal continues to struggle for silverware – and don’t forget the tie-ins either. A given customer is a lot more likely to buy the rest of his or her ensemble in Adidas if the centre piece of it is an Adidas kit. That’s a lot of sales.

This consistency in purchasing comes even in the face of Nike’s bold (if not ‘radical’) kit designs that have drawn the ire of some fans, especially those who object to the non-traditional looks including, but not limited to: white stripes instead of sleeves; an off-white third kit; navy blue on the home kit; and a lack of a classically-Arsenal yellow-and-blue away kit for longer than most can remember. Adidas could stand to profit from this pent-up desire for a return to the look of yesteryear, particularly as “retro” is in-vogue and as notalgic sentiment continues to grow amongst fans frustrated by a lack of title-winning heroes. A modern take on the 1989 “charging through the midfield!” for example, might placate both these markets and be a commercial success. I won’t ask for credit on that suggestion, Adidas, but feel free to thank me in the comments section.

Thomas and the ’89 kit. Classy.

Of course, the deal is unconfirmed speculation right now and I may just be swept up in the dream of a significant income boost that could get us buying established players rather than (or in addition to) promising prospects. But I don’t see it as unrealistic nor unfeasible, and if the trigger is officially pulled on this deal for the amounts that are being reported, I can only conclude the deal will be a “win-win”.
This entry was posted in Insights and tagged , , , , , , , , , , , , , , , , , , , . Bookmark the permalink.

One Response to The (Rumoured) Adidas Deal: Win-Win

  1. Pingback: The (Unconfirmed) Puma Kit Deal: Examined | CanadianGunners

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )


Connecting to %s