Do football clubs score with retail opportunities? Neil Hodgson examines the figures
EVERTON set off to Wembley for the FA Cup final this week intent on winning their first silverware in 14 years.
Should skipper Phil Neville lift the most famous trophy in world football aloft, come 5pm on Saturday, supporters will view their day a massive success.
And, off the field, the club bean counters will also be calculating how much extra revenue the Blues could glean from commercial sources, such as sponsorship, endorsements and retail.
Surely every proud Evertonian would want to wear a replica shirt embroidered with “FA Cup winners 2009”?
But are football clubs exploiting retail opportunities to the utmost – or are they merely playing at the retail game?
Everton would love to increase their retail income. But it will always come a poor third behind TV income and match receipts from season tickets and gate money.
The club saw its commercial income increase last year from £4.6m in 2007 to £5.46m.
It is heading in the right direction – but alongside the commercial achievements of neighbours Liverpool, with their global appeal, the Blues’ performance does not bear scrutiny.
Last year, Liverpool raked in £41.8m of commercial income and club spokesman Ian Cotton revealed that, when accounts are submitted for 2009, their retail and online sales will be of a similar magnitude.
It often comes down to how many replica shirts clubs can sell, and given Liverpool’s pedigree the world is their oyster, with markets like China, Thailand and South Korea offering a fertile return.
With turnover of £210.9m, the Reds are in an exclusive league of the world’s 20 richest clubs headed by Real Madrid (£365.8m) and Manchester United (£324.8m) and including FC Barcelona (£308.8m), Chelsea (£269.9m) and Arsenal (£264.4m).
Everton’s 2008 turnover was £75.6m.
And with years of success and a trophy room laden with silverware, the Anfield club has been able to hone its commercial activities to eke out every available penny, cent or baht from their loyal fans. Liverpool’s fan store, in the city’s Liverpool One retail complex, is the biggest team store in England.
And the team have a more than able commercial partner in Crosby-born fashion guru and Liverpool fan George Davies.
His S’porter company, set up in 1995, works with Liverpool on designing LFC-related clothing and accessories alongside the team kits.
Ian Cotton said: “All our stores and staff belong to Liverpool FC. S’porter provides buying support and retail sales and distribution expertise. And the combination of them and Liverpool FC is an excellent combination.”
Speaking at the launch of the Liverpool One LFC store, Mr Davies said: “When I started in football retail, it was just about the strip.
“But I understand brands and I saw this as more than just the sports strip, but about all the merchandise that surrounds the brand. I believe in theatre in retail and that’s what we will be doing at this store.”
Everton hopes to establish a similarly fruitful link with its new retail partner, Kitbag.com, which replaces JJB from next week.
Kitbag.com looks after home shopping retail for Real Madrid, FC Barcelona, Manchester United and Chelsea, and will drive Everton’s store and online operations.
Ray Evans, Huyton-born managing director of Manchester-based Kitbag.com, revealed his target is to more than double Everton’s retail take to £10m in the first year of their deal.
He explained: “We’re bringing a retailing offer that is truly multi-channel. I know that is an over-used phrase, but it gives the customer the channel of choice.
“Fans can buy through the internet, mobile phone or by going to the stores.”
And he revealed a new service exclusive only to Everton: “Fans will be able to go to a store and order through the till, online. They could, for example, send a shirt to their father in America, named and numbered and delivered within 48 hours, anywhere in the world.
“We are bringing the internet into the retail stores. Kids today don’t know a world without mobile phones or the internet.”
He added: “We know we can double sales on the internet from our experience with other clubs. Currently 30% of our sales are overseas and we want to see a huge uplift in overseas sales for Everton.”
However, James Dow, co-founder of Warrington-based corporate finance specialist Dow, Schofield Watts, believes football clubs have consistently failed to exploit the full potential of retail, even if they outsource responsibility to, or involve, a retail partner.
He said: “Football clubs are not strong retailers. Everton have gone for a retail partner because it takes different skills to run a retail store.
“Most clubs who have done it on their own have ended up with significant losses, mostly due to poor stocking. They will end up going with probably the most attractive royalty deals with manufacturers, rather than what consumers want to take off the shelves.” And he believes many clubs who choose a retail partner do so only based on what guaranteed contribution they will promise the club, rather than their industry track record.
“I don’t think any of the football clubs make good retailers because the clubs are under-resourced and they don’t have a sufficient skills set,” he said.
“Most clubs are probably loss-making when running their own retail operation.
“The answer almost certainly is to outsource, but it depends on how good the outsourcing deal is.
“By outsourcing, it allows people to get on with managing the club.”
But he believes the English Premier League could learn a trick or two from their Continental peers by combining retail with the visitor experience.
Mr Dow said: “Merchandising in Continental Europe has always been driven by replica kit sales, but the bigger clubs attract tourists linked to a stadium visit.
“I don’t think Everton or Liverpool are equipped or focused on developing the combined match day or stadium tour/retail experience. They are not targeting the overseas visitors.
“The emphasis is on getting the season ticket sales in, rather than targeting the discretionary visitor.”
He suggests that working with low-cost airlines like Ryanair and Easyjet, who fly thousands of European tourists into the city, could prove lucrative for the two Merseyside giants, but added: “That would probably work better for the likes of Liverpool and Manchester United than Everton.”
The emerging overseas football markets in countries like Thailand, Malaysia and South Korea could prove fruitful, but the issue of pirated replica kits will always be a concern.
However, Mr Dow is convinced that however football clubs tackle retail, it will always be a secondary consideration: “Retail will probably still be quite far down the pecking order, even in 10 years’ time, in comparison to TV money and season ticket sales, which are all clear profit.”
neil.hodgson
