Fanatics and merchandising

[Clyde1998]

I’ve been listening to the Price of Football podcast and there’s been a couple of questions regarding merchandising: whether clubs should do their merchandising inhouse or whether it is better for them to outsource it to a third party and how much clubs make from shirt sales.

Apparently clubs receive around 10% of all kit sales, depending on deals with manufacturers, with clubs getting upfront fees (obviously this comes down to specific agreements). Retailers generally get 40% of the sale price of the kit.

There was an interesting point of comparison between Celtic and Rangers referenced: Celtic manage the sales of their merchandising completely, whilst Rangers outsource it. The long and the short of it: Celtic end up benefitting more in revenue terms as they are cutting out the retailer’s commission, but take on the full cost of selling the shirts themselves (such as staffing costs). As a result, Celtic report the overall merchandising revenue in their accounts; Rangers report their commission from the company they outsource it to (this appears to currently be Umbro) - so Celtic have noticeably higher commercial revenue in their accounts. Elsewhere, Keiran Maguire has suggested reversing the deals would lead to a reversing of the difference (although I've seen from a Rangers forum, there seems to be a lot of potential demand for merchandising not being met as a result of their deals).

Back in 2022, we announced and started a deal with Fanatics in which they would become responsible for the online store; the physical shop at the ground; the choice of the merchandise and the management of the sale of club merchandise. This deal runs until 2028.

Since this deal has been signed, the club’s commercial revenue has dropped (and was dropping before relegation). As mentioned above with the Old Firm example, the club’s merchandising model will affect how much revenue it reports.

It’s also worth mentioning this covers all the club’s commercial deals; has to be taken in the context of a longer term decline related to the overall decline in the on-pitch success and attendances, as well as a general malaise around the football club (and in more recent years anger towards the club’s ownership) potentially leading to commercial partners not wanting to associate with the football club.

Additionally, the sharpest drop came following relegation to League One, where I’m sure there were clauses in existing sponsorship deals which reduced payments due to the decreased exposure the league has. A further point on relegation, League One operates its financial rules based on revenue, as opposed to the profit and loss basis in the Premier League and Championship - retaining all of the revenues would be beneficial (at least in the short term).

This is without going into the more general issues with Fanatics: delivery issues (especially when the new kit is first put on sale); the range and quality of products being questionable; the poor customer service; etc. This would have a knock on effect on sales, as people may not want to deal with Fanatics. On the flip side, the club would have to run the retail operations, with all the costs and logistics associated with it.

The question becomes whether the club actually benefits from the Fanatics deal. Would it be better for the club to take merchandising back in house? Someone pointed out back when the takeover was completed, Couhig overhauled Wycombe's merchandising model when he took over there - so it's something that's no doubt under consideration.