The Puma Deal – A comparative analysis

Puma

A comparative analysis

First things first.

The Puma deal has NOT been announced. At this moment in time, it is just a poorly kept secret.

For this analysis, I will assume the Puma deal is a fact and the announcement will come shortly after Arsenal Football Club have been crowned champions in May. (One can dream).

 

Kit Manufacturer Deals

Us folk on the outside have the benefit of not being aware of all of the intricacies of kit deals.

Deals of this magnitude inevitably come with a myriad of clauses and conditions, but our ignorance to all of these allows us to focus on the 2 most important factors:

    • Total value of contract
    • Length of contract

The anticipated terms of Arsenal’s Puma Deal are 5 years at £30-34m a year, but for the purposes of this analysis, I will take the more prudent figure of £30m a year.

 

As you will see from the analysis below, one thing is clear.

Tottenham – £10m per year

MIND

THE

GAP

Arsenal – £30m per year

 

That was just a bit of fun. The real purpose of this analysis is to understand how The Puma Deal compares to our rivals.

I have heard a very positive reaction from most Arsenal fans in relation to the Puma deal, however, compared to our rivals, it is a market rate deal, not the great achievement some have been claiming.

Rather than our commercial department over performing in securing this deal, I believe that other teams have significantly underperformed.

 

Man City

£12m a year over 6 years with Nike is a terrible deal for a club who are now competing for the title and competing in the Champions League.

The catch to this deal, was that Umbro were ManCity sponsors when they were sold by Nike in 2012. The deal was renegotiated to continue with Nike, so it is not truly a new deal, but £12m a year is very poor.

Verdict – 2/10

 

Tottenham

£10m a year over 5 years with Under Armour is a strange, considering it is with a brand with no presence in the game. Due to this fact, I would have expected a premium to have been paid.

£10m a year is poor, however the fact that it is only a 5 year deal, does allow flexibility to put this right sooner rather than later. Considering their lack of global presence and absence from the Champions League, this isn’t the Spuds worst failure.

Verdict – 4/10

 

Man U

£25m a year over 10 years with Nike is a poor deal for a club with such a vast global presence, who are regularly winning trophies and are ever present in the Champions League.

The amount signed in 2011 was a decent value, however, a 10 year contract proves extremely rigid and results in missed revenue towards the latter end of the contract.

Verdict – 5.5/10

 

Liverpool

£25m a year over 6 years with Warrior is a brilliant deal for a club considering the recent poor fortunes and no Champions League football since the 09/10 season. With ‘top top’ players such Steven Gerrard (if you think he isn’t a top top player, you must be a senile red nosed fool) and Luis Suarez, plenty of shirts are sold, making it an attractive proposition for kit manufacturers.

For Liverpool to match the £25m of Man U and then go one better by entering into a 6 year deal allowing them to keep up with the frightening rate of inflation in football.

There may well be American links involved with Warrior being an American brand and Hicks pulling the strings, but at that level of wealth & power, networks are of crucial importance and Hicks has pulled off a masterstroke in exploiting this for the benefit of the club.

Kroenke….take note.

Verdict – 8.5/10

 

Chelsea

£30m a year over 10 years with Adidas is a deal that is deceptively flattering. Though £30m is a decent amount, given the success of the club in recent years, earning £5m more than Liverpool per year hints at under performance. The poorest element of this deal is the 10 year length, which will see them lose out on potential revenue towards the end of the deal.

Also, given the fact that Adidas only have a presence in the Premier League Elite with Chelsea, I feel more value could have been extracted by Chelsea.

Verdict – 5.5/10

 

Arsenal

£30m a year over 5 years with Puma is a deal that has matched Chelsea in terms of value, however the contract length is half that of our trophy purchasing rivals.

This contract length is the most positive part of the deal, which allows us to benefit from footballs crazy inflation at short intervals.

Like Chelsea however, considering Puma have no presence in Premier League, perhaps more value could have been extracted. If the deal is in fact £34m per year, then this is less relevant.

Though the deal is fairly good, it is still a market rate deal and with the signing of Özil & our ever presence in the Champions League, I expected a more impressive deal to be struck.

Verdict – 7/10

 

Man U (again)

Man U have recently renewed with Nike, who appear to be paying a huge premium for tying Man U down to a £25m deal for the last 10 years.

Unfortunately, a 5 year deal at £60m a year has been struck, leaving me scratching my head at the brains involved at Nike. Considering the uncertainty at the club at present, I can only assume there are clauses in relation to Champions League qualification.

Regardless, this is a phenomenal deal which points to the performance of Man U’s commercial department who continue to excel in exploiting their brand.

Verdict – 10/10

 

Conclusion

Arsenal must improve the performance of the commercial department.

In the past few years, a few masterstrokes have been played, primarily in the property market, but these successes are all too rare.

In terms of the number of commercial partners of Arsenal in comparison to the clubs mentioned in this analysis, we lie an embarrassing 5th out of the 6 teams.

Commercial Partners League Table

Club                       Commercial Partners

  1. Man U                                 31
  2. Chelsea                              19
  3. Liverpool                            18
  4. ManCity                              17
  5. Arsenal                               15

MIND

THE 

GAP

6. Tottenham                             11

 

Man U even have a commercial partner called Mister Potato!

Worryingly, Arsenal are behind Chelsea and ManCity in this area, clubs, (who aside from FFP regulations), do not need a dynamic and innovative commercial department to drive revenue, due to their sugar daddy ownership.

Arsenal must ensure the true value is extracted from our rich history and global brand.

This criticism lands at the desk of one man. Ivan Gazidis.

Ultimately, the CEO is responsible for overseeing operations and ensuring off the pitch success. Though I think he is doing a mediocre job at best, the remuneration committee at Arsenal, think he’s worth £2.1m a year in 2012 and £1.9m a year in 2013.

Unsurprisingly, Stan Kroenke forms part of the remuneration committee. Somewhat depressing that the owner dishes out a £675k bonus in 2012 & £450k bonus in 2013, years in which Arsenal didn’t win a trophy.

Makes you wonder what Silent Stan is thinking.

 

You can follow me & ask any questions about the above analysis, on Twitter @ArsenalMoh8

Gooner Ramble

2 Responses to “The Puma Deal – A comparative analysis

  • Nice article, but I think chelsea should be a 6.5, or the orignal Man U being a little lower. But I agree fully with adidas needing to offer Chelsea big money, since they are their biggest team presence in the EPL and in the top 3 worldwide. Also I think Newcastle has a good amount of sponsorship.

  • Nile Robinson
    4 years ago

    Nice article not reali a fan of puma but wil wait to see the kit b4 i judge it

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