Newco kit deal, the Ashley in the Room

I know we have a big Europa League game tonight but I cannot keep my hands off yesterday’s statement from the ever-interesting Newco.  Their Commercial director, James Bisgrove, who is almost one year in the job, does not have a kit deal in place for next season.

Let’s clarify how the process of getting a kit deal works:

Summer is when kit manufacturers make most of their money.  Product has to be on the shelves in June at the latest, before the schools break and people fly off on holiday.

To achieve this, manufacturing slots are booked for March or early April.  These are high volume items, production cannot be arranged off the cuff.

Clubs’ official launch dates are late April or early May, by this time, stock is in warehouses.

If a club is out of contract, as Celtic are this year, the new deal will usually be announced in March.

The contract itself will be concluded the previous autumn.  The intervening months are used to prepare kit design, confirm manufacturing slots and affect an orderly handover.

At a club like Celtic, the process to complete a new kit deal for summer 2020 will have started a year before, but in truth, conversations about ‘the next contract’, go on between club and suppliers all the time.  I would expect the same at Newco.

So why, therefore, on the 19 February, did Newco issue a public notice, inviting potential kit and retail partners to get in touch?

Time is short.  Multi-million pound contracts with any serious manufacturer will require scoping and due diligence, this could take weeks, if not longer, considering Newco’s complicated arrangements with the Ashley in the Room.

Sports Direct have matching rights on whatever deal Newco can acquire and were awarded recompense for missing out on the last deal.  This means that potential suppliers know that whatever work they put into a bid, Sports Direct have a right to be informed of their terms and, if they want, can decide to take the contract on those terms.

This is perhaps why neither Nike, Adidas New Balance, or anyone else has already secured preferred supplier status.  Worse still, as Newco do not have an offer in place, as it stands, Sports Direct could potentially acquire the rights for £1.

In his comments yesterday, James Bisgrove hopes this kit deal “mirrors the demand of the club’s global fan base.”  Another outcome is possible: the matching clause will gift the deal to Sports Direct for a paltry amount, and the lack of a secured manufacturing slot will result in no shirts on the shelves during the crucial summer trading weeks.  It will be a poor contract and it will perform badly for all concerned.

I am working on a financial piece about Newco for publication next week, which will discuss profound consequences for the Ibrox club.  Yesterday’s statement is consistent with everything else that is going on at the moment.