Liverpool FC has recently emerged victorious from a battle with sportswear maker New Balance over a right for New Balance to match the terms offered by a competing kit supplier – but it was a close-run thing. As we pointed out in our briefing on a similar case involving Rangers FC and Sports Direct, such rights often appear attractive – but both cases also demonstrate how easily they can lead to disputes.
What is a matching right?
As explained in our briefing on the Sports Direct v Rangers case, matching rights typically allow an incumbent supplier to match an offer that a customer has obtained from an alternative supplier of similar goods or services. As the Rangers case showed, depending on how they are drafted and subject to any competition law objections, such rights can confer de facto exclusivity on a supplier, provided they are able to match any third party terms.
What happened in the Liverpool FC case?
In 2011, Liverpool FC awarded New Balance a contract to manufacture and sell replica Liverpool FC shirts until 2020. The agreement included a right for New Balance to match the “material, measurable and matchable terms” of any third party offer to manufacture and sell Liverpool FC shirts beyond that date.
The Nike Agreement
In July 2019, Liverpool FC signed a replacement kit supply and sponsorship agreement with Nike, worth a reported £70m per year, which was expressed to be legally binding subject to the exercise by New Balance of its matching right. The agreement contained a “Marketing and Distribution” clause, including a commitment from Nike to:
(i) sell the licensed products in 6000 stores worldwide (including 500 stores owned or controlled by Nike); and
(ii) promote the licensed products via "marketing initiatives featuring…global superstar athletes and influencers of the calibre of Lebron James, Serena Williams, Drake, etc".