Are Football Clubs About to Start Manufacturing Their Own Kit?
Are Football Clubs About to Start Manufacturing Their Own Kit?
Barcelona F.C. is terminating its contract with Nike and considering in-housing kit manufacture—we weigh up the risks and rewards of in-house kit manufacturing.
Barcelona F.C. is set to end its long-standing contract with Nike and is considering disrupting the status quo by taking kit manufacturing in-house. The decision, amidst a series of financial issues for the club, would see Barca sponsor itself and keep 100% of the profits generated from merch sales.
Although teams like AS Roma and Borussia Dortmund have previously taken their kit manufacturing in-house, major European teams haven’t made such a significant move since the early 2000s. Given the club’s global reach and fanbase of ~350million, the decision to move away from Nike bears strong potential for its revenue performance—but what does it mean?
In this post, we summarise key challenges and opportunities clubs like Barcelona face when in-housing:
Challenges: Expertise & experience, Supply chain management, Forecasting, Shifting slow or dead stock, Financials, Fan reactions.
Opportunities: Margins, Collabs, Cadence, Flexibility, Sustainability & Transparency.
Key Challenges
Bringing kit manufacture in-house poses several risks and challenges for a football club, even those as culturally relevant and globally recognised as Barcelona F.C.
Expertise and experience
The most significant challenge of terminating manufacturing and sponsorship contracts with major sportswear brands comes from production expertise and experience. Nike has decades of experience manufacturing football kits, with specialised fabric research and development being highly valuable expertise beyond the scope of most major football teams.
Investment into the network, processes, and functions required to develop products end-to-end and manage the constant cycle of NPD will be a big challenge for any club.
Competition for securing talent will always be difficult, especially as more teams explore the same in-housing strategy.
Supply chain management
Building and effectively managing a high-performance supply chain from scratch, beginning with the infrastructure required to make it work efficiently, is complex and expensive.
While the club may have existing relationships with suppliers and distributors through its merchandising channels, it’s unlikely that clubs have manufactured at the scale required to supply global demand for replica kits.
Additionally, forecasting is essential in providing operational oversight on the demand for kits. Without this, scalability, particularly during seasonal fluctuations in sales, becomes an issue, running the risk of over and understocking.
Delivering quality products that reflect the club’s standards and fan expectations requires well-executed design, production capabilities, material sourcing, quality control, and logistics, which in turn requires a well-managed, structured supply chain, which is difficult to achieve.
Forecasting
Forecasting stock for a global sports team is a unique challenge because merch sales (e.g. replica shirts) spike when performance on the pitch peaks. When major teams go deep into a tournament or challenges for league titles, demand for kits spikes, especially around major fixtures.
This dynamic approach isn’t a typical buying and replenishment cycle, which puts manufacturers in a new situation that a club can’t afford to mess up (for long!).
Shifting slow or dead stock
As a result of their distribution networks, kit manufacturers are better placed to shift slow-moving or dead stock or, in some cases, recycle and reuse.
Financials
Building an efficient supply chain and the teams required to make in-house manufacturing possible–from design to production, marketing, and distribution–requires significant financial investment.
Having the financial capacity to achieve in-house manufacturing isn’t possible for all football teams–Barcelona, in particular, which has suffered a recent series of financial issues, may find difficulty in allocating the finances to make sportswear brand contract terminations profitable long-term.
Fan reactions
Kit manufacturing and sponsorship deals between clubs and sportswear brands inspire loyalty from fans. Throughout the 80s and 90s, adidas and Arsenal delivered some of the game’s most iconic and desirable kits; fans were sourly disappointed when they switched to Nike in 1994.
When adidas and Arsenal reunited in 2019 (following a 5-year stint with PUMA), fan reaction was massively positive, leading to a peak in sales and a quick contract extension.
When a sportswear brand delivers favourable kits, fans grow deep loyalties that can be difficult to shake–the challenge then falls on the club to ensure that these strong expectations are met by showing they are capable of delivering kits that are not only high-quality but well-designed, too.
Key Opportunities
Bringing manufacturing in-house presents a series of opportunities for football teams to bolster their financial performance, sustainability, supply chain transparency, and control over their release cadence through the freedom and flexibility of self-management.
Margins
Depending on their size and negotiating position, clubs will make 7.5 to 20% on the sale of replica merchandise, and the manufacturers – like Nike, Adidas and Puma –take the majority of the money. As such, in-housing provides the potential for a significant margin uplift.
Something worth considering is that the increased margins clubs make from bringing their manufacturing in-house could break the annual kit cycle, which, as it stands, is highly unsustainable.
Collabs
By handing themselves complete creative control over their kit production, teams would be empowered to expand and optimise their collaborative opportunities without oversight from manufacturing partners.
With the reduced lead times and faster turnarounds associated with in-house production, teams can increase their collaborative output with a higher frequency of projects throughout the season.
Enhanced creative control also provides the unique opportunity to experiment and take risks that sportswear brands would be adverse to.
Standout examples of what’s possible in collabs:
Cadence
In-house kit production allows for control over the production schedules and release cadence, which is currently at the whim of sportswear brands’ seasonal calendars. Although teams typically release a series of training kits and lifestyle collections throughout the year, they cannot alter the release cadence to match shifting trends in popularity and tournament performances.
With the ability to increase their release cadence, teams can drastically reduce the lead times associated with seasonal product drops.
Flexibility
Perhaps the most significant benefit of bringing manufacturing in-house is the creative freedom and flexibility it offers teams to design and produce kits as and when they please, without the restriction of partner timelines.
Sustainability & transparency
Progressive clubs have proven more ambitious and motivated to be transparent and sustainable than many manufacturers; to avoid compromising their sustainable commitments or lagging behind consumer expectations, clubs may feel little choice but to wrestle control of kit manufacturing from slow-moving partners.
Standouts like Forest Green Rovers lead the way in terms of garment fibre and production choices of kits. With the rise in brands making conscious choices about sustainable and ethical partners in the supply chain, perhaps now is the time for football clubs like Barca to emulate.
Furthermore, clubs’ increased profit margins resulting from bringing their manufacturing in-house could break the unsustainable annual kit cycle.
What if a major team said: “We are launching new kits once every two years rather than every season. We don’t believe such regular kit drops are sustainable. Because we are serious about protecting the planet's future, we’re making a fundamental change.”
It would hit hard and, in my opinion, make all other clubs look bad by comparison This shift could be a first step in clubs leading the commitment to sustainability.
The barrier has never been lower
The barrier to doing things in-house has never been lower—so much so that the days of models like Fanatics appear numbered.
Their competitive edge has been eroded by the growth in platforms, partners, and talent capable of doing a better job from inside clubs.