Barcelona contemplates breakup with Nike amidst sponsorship uncertainty

Hummel Shop / Opportunity India
Hummel Shop / Opportunity India

Barcelona to make key decision on kit supplier this month.

March will be decisive in making a final decision about the technical sponsor for the 2024-25 jersey and whether FC Barcelona will maintain the contract with Nike until 2026, with the option to extend it for two more years. According to the agreement signed in May 2016, the club can notify the American multinational two years in advance if it does not renew. In this regard, Barcelona is within the deadlines, but there is deep dissatisfaction with Nike on the board, voiced by President Laporta on RAC1 on February 9th. There is a significant faction advocating for an immediate break from the alliance established in 1998. Differences have long existed, with the incoming board faced with three lawsuits filed by the outgoing Josep Maria Bartomeu administration in 2021.

According to Fernando Polo of Mundo Deportivo, given Puma’s better financial offer, Barcelona is considering breaking ties with Nike and having a third party (Hummel being a real alternative) manufacture the kits while prominently displaying the club’s own brand for a year. Work has been ongoing for months, including employee trips to Asia to assess the cost of manufacturing and selling the apparel at a profitable price. This provides some confidence that this approach would be profitable for a year while awaiting a powerful brand to take over manufacturing and payment of a significant amount above the fixed €80 million paid by Nike.

However, there are also voices in the boardroom advocating for a thorough examination of the consequences of breaking with Nike and the wisdom of retaining those guaranteed revenues even if Puma is considered for the short term. In other words, cutting ties with Nike now and spending a year with a self-branded jersey would leave the club without the fixed amount paid by the technical sponsor. This would create a significant financial gap, especially in the context of the need to increase revenues to meet La Liga’s 1/1 rule in financial fair play, rather than starting with a deficit of €80 million and hoping to reverse it through the sale of own-branded merchandise.

Breaking with Nike now would also entail the risk of having to provision for subsequent litigation, with a judge determining the amount of lost profit, i.e., the earnings Nike would forego for the remaining contract years. Hence, the Oregon-based multinational remains inflexible. Everything is on the table because some see a clear path to creating a self-brand, while others prefer to go with Puma, and there are even those who prioritize renewing with Nike but seek improvements in the new contract.