Friday 18 October 2019 14:16, UK
A multimillion-pound sponsorship dispute between Liverpool and sportswear giant New Balance has reached the High Court.
The club is being sued over its alleged refusal to honour the terms of its reported £40m-a-year deal with the company, which expires in May 2020.
Under the terms of the deal, New Balance is entitled to renew its sponsorship if it matches the terms of any competitor's offer to sponsor Liverpool kit.
But the current European champions, who have been offered a £30m-a-year five-year deal by American sportswear giant Nike, argue that New Balance cannot match Nike's offer in relation to the marketing and distribution of Liverpool products.
Opening New Balance's case on Friday, Daniel Oudkerk QC said his client was "one of the world's leading sports footwear and apparel manufacturers with annual revenues exceeding three billion US dollars".
He added that Liverpool, who are currently top of the Premier League, "has enjoyed very significant success on the pitch" in recent seasons, which he said had been reflected in record sales.
"It is anticipated that the club's home kit will once again be the club's highest-selling kit at 2.9 million units (sold)," he told the court.
Mr Oudkerk told Mr Justice Teare that the key issue in the case was whether New Balance had matched "the material, measurable and matchable terms of a third-party offer".
Liverpool argues that New Balance has not matched Nike's offer, which includes a commitment to sell licensed products in "not less than 6,000 stores worldwide, 500 of which shall be Nike owned".
But Mr Oudkerk said New Balance has "approximately 40,000-odd retail doors globally".
Mr Oudkerk submitted that, after the club received Nike's offer in June, it initially refused to disclose the terms of the offer in order to get New Balance to "effectively bid blind" - and then proposed terms "based upon a £60m annual payment".
In his written case, Mr Oudkerk argued that Liverpool dismissed New Balance's offer to match terms as the club was "wedded to Nike", and that "it appears that the club had resolved to reject the New Balance match come what may".
He added that Liverpool "appears to have considered the renewal option inconvenient", pointing to a WhatsApp message between two of the club's directors in which one said the clause "just absolutely screws us".
Guy Morpuss QC, representing the club, argued that the claim was "really an attempt by New Balance to use a matching clause for a purpose for which it was never intended".
He said New Balance's contention it could distribute Liverpool kit to 40,000 stores was "a myth", adding that the company had "grossly overstated" the number of stores it could distribute to.
Opening Liverpool's case, he said: "We make no secret of the fact that we were trying to use Nike's (offer) ... as a stick to beat New Balance with to try and get a higher fee out of them."
Mr Morpuss added that that was an "entirely legitimate commercial tactic".
He said that "what New Balance needed to do if it was not going to offer us the additional money, up its annual fee, was it needed to actually come forward and genuinely match the terms that Nike offered".
He said the "main point" in issue was "could they (New Balance) match the distribution that Nike was offering: 6,000 stores, 500 of which were owned and operated by New Balance?"
"The idea that New Balance would even get football kit into anything close to those 40,000 stores is utterly fanciful," Mr Morpuss said.
He explained that, under the terms of its offer, "Nike was paying us a lower fee than New Balance (but) Nike is guaranteeing distribution and it is paying us a royalty" of 20% of net sales of Liverpool products.
Mr Morpuss submitted that New Balance had "pretend(ed) they can match so they can pay the lower fee, but not actually match", and said the company had "a record of telling Liverpool things that were wrong".
The hearing is due to conclude on Tuesday and Mr Justice Teare is expected to reserve his judgment.
