Fanatics and merchandising

[Clyde1998]

I’ve been listening to the Price of Football podcast and there’s been a couple of questions regarding merchandising: whether clubs should do their merchandising inhouse or whether it is better for them to outsource it to a third party and how much clubs make from shirt sales.

Apparently clubs receive around 10% of all kit sales, depending on deals with manufacturers, with clubs getting upfront fees (obviously this comes down to specific agreements). Retailers generally get 40% of the sale price of the kit.

There was an interesting point of comparison between Celtic and Rangers referenced: Celtic manage the sales of their merchandising completely, whilst Rangers outsource it. The long and the short of it: Celtic end up benefitting more in revenue terms as they are cutting out the retailer’s commission, but take on the full cost of selling the shirts themselves (such as staffing costs). As a result, Celtic report the overall merchandising revenue in their accounts; Rangers report their commission from the company they outsource it to (this appears to currently be Umbro) - so Celtic have noticeably higher commercial revenue in their accounts. Elsewhere, Keiran Maguire has suggested reversing the deals would lead to a reversing of the difference (although I've seen from a Rangers forum, there seems to be a lot of potential demand for merchandising not being met as a result of their deals).

Back in 2022, we announced and started a deal with Fanatics in which they would become responsible for the online store; the physical shop at the ground; the choice of the merchandise and the management of the sale of club merchandise. This deal runs until 2028.

Since this deal has been signed, the club’s commercial revenue has dropped (and was dropping before relegation). As mentioned above with the Old Firm example, the club’s merchandising model will affect how much revenue it reports.

It’s also worth mentioning this covers all the club’s commercial deals; has to be taken in the context of a longer term decline related to the overall decline in the on-pitch success and attendances, as well as a general malaise around the football club (and in more recent years anger towards the club’s ownership) potentially leading to commercial partners not wanting to associate with the football club.

Additionally, the sharpest drop came following relegation to League One, where I’m sure there were clauses in existing sponsorship deals which reduced payments due to the decreased exposure the league has. A further point on relegation, League One operates its financial rules based on revenue, as opposed to the profit and loss basis in the Premier League and Championship - retaining all of the revenues would be beneficial (at least in the short term).

This is without going into the more general issues with Fanatics: delivery issues (especially when the new kit is first put on sale); the range and quality of products being questionable; the poor customer service; etc. This would have a knock on effect on sales, as people may not want to deal with Fanatics. On the flip side, the club would have to run the retail operations, with all the costs and logistics associated with it.

The question becomes whether the club actually benefits from the Fanatics deal. Would it be better for the club to take merchandising back in house? Someone pointed out back when the takeover was completed, Couhig overhauled Wycombe's merchandising model when he took over there - so it's something that's no doubt under consideration.

[RoyalBlue]

I’ve been listening to the Price of Football podcast and there’s been a couple of questions regarding merchandising: whether clubs should do their merchandising inhouse or whether it is better for them to outsource it to a third party and how much clubs make from shirt sales.

Apparently clubs receive around 10% of all kit sales, depending on deals with manufacturers, with clubs getting upfront fees (obviously this comes down to specific agreements). Retailers generally get 40% of the sale price of the kit.

There was an interesting point of comparison between Celtic and Rangers referenced: Celtic manage the sales of their merchandising completely, whilst Rangers outsource it. The long and the short of it: Celtic end up benefitting more in revenue terms as they are cutting out the retailer’s commission, but take on the full cost of selling the shirts themselves (such as staffing costs). As a result, Celtic report the overall merchandising revenue in their accounts; Rangers report their commission from the company they outsource it to (this appears to currently be Umbro) - so Celtic have noticeably higher commercial revenue in their accounts. Elsewhere, Keiran Maguire has suggested reversing the deals would lead to a reversing of the difference (although I've seen from a Rangers forum, there seems to be a lot of potential demand for merchandising not being met as a result of their deals).

Back in 2022, we announced and started a deal with Fanatics in which they would become responsible for the online store; the physical shop at the ground; the choice of the merchandise and the management of the sale of club merchandise. This deal runs until 2028.

Since this deal has been signed, the club’s commercial revenue has dropped (and was dropping before relegation). As mentioned above with the Old Firm example, the club’s merchandising model will affect how much revenue it reports.

It’s also worth mentioning this covers all the club’s commercial deals; has to be taken in the context of a longer term decline related to the overall decline in the on-pitch success and attendances, as well as a general malaise around the football club (and in more recent years anger towards the club’s ownership) potentially leading to commercial partners not wanting to associate with the football club.

Additionally, the sharpest drop came following relegation to League One, where I’m sure there were clauses in existing sponsorship deals which reduced payments due to the decreased exposure the league has. A further point on relegation, League One operates its financial rules based on revenue, as opposed to the profit and loss basis in the Premier League and Championship - retaining all of the revenues would be beneficial (at least in the short term).

This is without going into the more general issues with Fanatics: delivery issues (especially when the new kit is first put on sale); the range and quality of products being questionable; the poor customer service; etc. This would have a knock on effect on sales, as people may not want to deal with Fanatics. On the flip side, the club would have to run the retail operations, with all the costs and logistics associated with it.

The question becomes whether the club actually benefits from the Fanatics deal. Would it be better for the club to take merchandising back in house? Someone pointed out back when the takeover was completed, Couhig overhauled Wycombe's merchandising model when he took over there - so it's something that's no doubt under consideration.

Having been messed around so much in the past by Fanatics, I will not buy any club merchandise online. I still buy from the Fan Store which I realise is also run by Fanatics but the staff in there are really good and at least I know whether what I want is in stock so that I can get my hands on it immediately.

However, IMO the product offering is very poor and extremely limited compared to when the club ran the Megastore. This means that we've quite often gone in there before a game and come out empty handed because there was nothing in there worth buying. Even the grandkids aren't tempted by anything.

I realise that the larger the product offering the bigger the risk of losses through things not selling but I suspect too much of a risk averse approach is currently being adopted and that will result in lost revenue to the club.

Personally I would like to see merchandising taken back in house but accept that might not be felt to be the best commercial approach.

[Clyde1998]

Having been messed around so much in the past by Fanatics, I will not buy any club merchandise online. I still buy from the Fan Store which I realise is also run by Fanatics but the staff in there are really good and at least I know whether what I want is in stock so that I can get my hands on it immediately.

However, IMO the product offering is very poor and extremely limited compared to when the club ran the Megastore. This means that we've quite often gone in there before a game and come out empty handed because there was nothing in there worth buying. Even the grandkids aren't tempted by anything.

I realise that the larger the product offering the bigger the risk of losses through things not selling but I suspect too much of a risk averse approach is currently being adopted and that will result in lost revenue to the club.

Personally I would like to see merchandising taken back in house but accept that might not be felt to be the best commercial approach.

There's a couple of things I've been looking at from the online shop, but have decided the same thing. I'd rather buy from the physical store, but most of what I may spend money on isn't available there (would also help with sizing, that's different with each manufacturer).

IIRC, at least when our kits were produced by Puma, they'd deal with the production of non-kit related clothing products (things outside the first team kit; training kit and coaches' clothing). I had hoodies/fleeces growing up which were produced by Puma and were of good quality: the badge was sewn on; good material; etc. Their quality justified the pricing being demanded. I only don't have them any more because I grew out of them or wore them out after wearing them regularly over a few years!

It appears Fanatics themselves are responsible for that now and the current offering in that category seem to be generic clothing with a badge printed on. I'm not paying £40/50 for a hoodie or £25 for a t-shirt when all they've done is got a plain t-shirt and printed a badge on to it. The club would hardly get anything me buying them anyway!

I had a look at what Oxford and Swindon offer on their websites, with both clubs (appearing) to manage their merchandising themselves.

Swindon do have a fairly limited range of products, but there's more on there I'd consider buying (if it was Reading related) than what's offered by Reading at present at the lower price range of the market: a choice of well designed scarves (£15); a few low priced pin badges (£4); a range of mugs (£10); a couple of plastic water bottles (£10); stationary set (£10). Brings me back to the sort of stuff I had as a kid. They've got things like backpacks (£38 produced by Adidas); boot bags (£15) and lunchbags (£16) - none of which the club has.

Even the pricing of the couple of items of club produced clothing - hoodies (£36) and t-shirts (£20) - were lower than at Reading and have more of the revenue going directly into the club. There's only an option of one colour for each and the badge is printed on, compared to the many colours from Fanatics, so that's perhaps a limitation. The club could order to demand though.

Oxford completely blow us out the water: better scarf range; a huge range of plushies; an impressive range of hats/caps; a couple of club books; greetings cards; pint/shot glasses; mugs; coasters; cufflinks; mouse mats; phone cases; bags; cushions. All of which are at prices I'd be very happy with.

Clothing is much better designed than us - for £25 (original price), I could get this at Oxford compared to this at Reading. There's also socks and underwear; a wider range of coats; a wider range of better designed hoodies/sweatshirts.

Looking at the Oxford offering just makes me feel insulted by what Fanatics are giving us.

Another aspect I was thinking about is how it's free advertising for the club too for fans to be wearing branded items as leisurewear. When do you see people walking around Reading wearing any club merchandise? Only really people wearing kit on match days. You'd see so much more with the range of offered by Oxford. That kills any sense of awareness that there even is a club in Reading to casual observers.