Market Insight: Aston Villa, Fanatics and Luke 1977: A glimpse into the future of kit deals?

Market Insight: Aston Villa, Fanatics and Luke 1977: A glimpse into the future of kit deals?
It’s become an annual occurrence in English soccer: as the season draws to a close, clubs across the land unveil their new kits through extravagant marketing campaigns, which are met with varying degrees of approval and dismay by supporters who see themselves as the current custodians of their respective team’s history and traditions.

For some fans, who is designing those kits is equally as important as the players signed to wear them. Traditionally, clubs have partnered with recognised sportswear brands such as Adidas or Nike, who have established themselves as global specialists in designing and marketing soccer kits. That has been seen as the only way for some time, but an alternative approach is emerging.

Last week, second-tier English side Aston Villa unveiled not just one, but two kit partners in the form of Fanatics, the SoftBank-backed apparel and merchandise firm, and local premium menswear brand Luke 1977. The deal was heralded by the club as ‘ground-breaking’, with the notion of a three-way technical partnership unheard of in England. 

Most significant, perhaps, is that Villa are the first English club to adopt the vertically-integrated manufacturing model that Fanatics has already operated successfully across major sports leagues – including the National Football League (NFL), National Basketball Association (NBA) and Major League Baseball (MLB) – in the US. And if Villa’s relationship with Fanatics proves to be a fruitful one, it could have a transformative effect on English soccer’s traditional approach to kit partnerships.   

“Our vision is that we are building a supply chain that can better service clubs than the existing supply chain alternatives in the industry,” begins Steve Davis (right), president of Fanatics International, “and we believe that when you combine that with our digital, native centricity, along with our use of data to drive ecommerce and to drive physical retail then of course to drive this manufacturing and supply chain, that this is a model that will be adopted more and more in English soccer.”

How the deal materialised

Villa signed a five-season kit deal with Under Armour ahead of the 2016/17 campaign, but announced at the beginning of April that they had agreed to mutually part ways after only two years. According to the Championship outfit’s chief commercial officer, Luke Organ, the club had 11 offers on the table from would-be replacements for Under Armour, and of those proposals, “Fanatics were very much near the top of the pile, but brought in a lot of other opportunities for us to go forward and commercialise this area of the club”.

“I think if clubs do their homework they will see the opportunity that this brings,” adds Organ. “It enables us to go as far and wide as we care to in the retail market, and it enables us to find a retail partner that’s fully focused on activating and driving return on investment through direct sales mechanisms. That in turn will have some benefit for the fan, because we would expect them through that activation to be doing something to engage the fanbase.”

While Fanatics was already a retail partner of Villa, the opportunity to broaden out that arrangement coincided neatly with the US-based company’s plan to start rolling out its ‘v-commerce’ model on a global basis. That expansion was ramped up in 2016 when Fanatics acquired British online retailer Kitbag in a deal valued at around UK£11.5 million, and since then the firm has been working to replicate its home market dominance overseas.

“We believe we are the first of our kind,” says Davis, “but we are building a unique, bespoke, global supply chain specifically for the licensed sports industry, and a bespoke supply chain for the licensed sports industry is a supply chain that needs to look a lot more like a fast fashion retailer than it does a traditional manufacturer.

“We educated them [Aston Villa] about the capabilities that we’re building and our vision for the industry and for the future, and they grabbed onto that and thought it was a great opportunity for them to do something that they were very excited about. So our emerging global capabilities on this v-commerce model and Aston Villa’s priorities just kind of hit the appropriate intersection for this to come together.”

Sewing the seams 

There is already a common misconception that Fanatics’ entry into the UK soccer market makes the company a direct rival to the likes of Adidas and Nike, but that isn’t strictly true. Indeed, the misnomer in sport is that if a brand’s logo appears on a kit then they must be responsible for making it.

In most cases, however, the brand will design and market the uniform, while the actual manufacturing of the kits will be outsourced. For Villa, it is Birmingham-based Luke 1977’s logo that will appear on the upper right chest of their claret and blue playing tops, but Fanatics will control the whole value chain - from design, to manufacture, to retail, to distribution. 

“This model that exists basically allows a club to kind of separate out the selection of a performance brand for their kit from the monetisation of merchandise and how you deliver to fans effectively,” explains Davis. “So this model allows far more flexibility than exists in a traditional sense.”

The design, meanwhile, will be a collaborative effort, with Luke 1977’s input set to prove particularly valuable given that the brand’s owner, Luke Roper, is a Villa fan. Luke 1977 will also help to market the kit, and Organ says it will be the first time the club have had full open access to all data of the brand, meaning they can track any spend or engagement that comes as a result of any Villa marketing activity. 

“It’s a step forward for us in revenue terms in both the Championship and the Premier League,” says Organ, “and even though we’ve increased that commercial value, we’re able to engage with a brand who is both local to Birmingham and also fully understands Aston Villa and the history and traditions of the club.

Organ (centre) says Villa's three-way partnership with Fanatics and Luke 1977 will open up opportunities that weren't available through more traditional kit deals

“One of the clear opportunities is that we get sight of our product from design through manufacture all the way through to retail. We didn’t necessarily have that at the best of times with brands who invariably used non-owned production houses, but with Fanatics, we’re able to see that production and see all of the cost points, the fabrics and the construction quite clearly all the way through to retail.”

The fact that Fanatics controls the entire supply chain is beneficial in more ways than one. Not only will Villa have better sight of their kit throughout the process, but by cutting out the middle men, the v-commerce model will also allow the club to serve the real-time demand of product-buying fans, which will essentially render stock shortages a thing of the past. 

“It allows you to really manage a healthier retail operation with your club because you can always chase demand with a much more flexible supply chain and make sure essentially that you avoid out of stocks more frequently and you don’t end up with too much excess merchandise,” explains Davis. 

“As an example,” he adds, “in European soccer the kits change every year, and in American sports, the kits or jerseys that the players wear change every three to five years. Therefore, the importance of a fast-moving supply chain that can meet supply with demand is far more important in European soccer than it is in American sports, albeit it’s incredibly valuable to both.”

And such a capability could soon become even more pertinent for Villa, who are currently preparing to embark on the topsy-turvy Championship play-off journey in search of a place in the Premier League. Should that quest be successful, it’s likely that demand for their shirts will multiply, meaning this type of efficient, reactive approach will prove particularly valuable.        

Stocking the world 

For now then, Fanatics is dipping its toes into the UK market rather than making a giant splash, but there is likely to be a number of English clubs looking on with interest. 

Despite being a domestic competition, the Premier League is a global product, meaning clubs have to rethink how they can service an international fanbase. Asia, in particular, has been the destination for countless pre-season tours in recent years, and Fanatics’ ambition to expand into China will likely spark additional interest from some of England’s top sides.       

“Premier League clubs in particular have built fanbases around the world at such a pace over the last five years with the media deals that they’ve done,” says Davis, “but these fans don’t currently have the access to merchandise to support the teams that they are growing to adore. So it’s our goal as well that what we’re building and putting in place will allow clubs to service their fans on a truly global basis and make this merchandise accessible.”

And for Championship clubs like Villa, who Organ admits don’t have the same level of exposure as their Premier League peers, the opportunity to tap into Fanatics global network is one which can make breaching new markets a more seamless process. 

“It enables us – through Fanatics’ scale – to enter more markets than we would perhaps be able to with a traditional sports brand in this marketplace,” says Organ. “Fanatics are in however many markets they’re in, and we can reach most corners of the earth. They have built from the bottom up, so first and foremost their business has been built on operational delivery and logistics globally.

“If they’ve got that nailed it makes our route to market much easier, coupled with the fact that they have relationships with most of the big retailers across the world - and that’s quite rare in sport.” 

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