As was disclosed in the club’s dispute with Sports Direct, Newcastle United is expected to generate additional cash via an arrangement with JD Sports to sell the team’s new shirts.
JD Sports has secured the exclusive rights to sell Newcastle United’s new Adidas shirts, with the agreement set to be financially rewarding. This decision follows a Competitions Appeal Tribunal (CAT) panel ruling against Sports Direct’s attempt to have Newcastle retail next season’s kits in the stores of former Magpies owner Mike Ashley. The CAT president, Sir Marcus Smith, alongside panel members Carole Begent and Dr. William Bishop, unanimously rejected Sports Direct’s application for ‘interim injunctive relief’.
The panel determined that Sports Direct had no reasonable expectation of continuity of supply and dismissed the notion of an obligation for Newcastle and Adidas to maintain supply to Sports Direct. They emphasized that such an expectation would hinder competition rather than enhance it.
A passage from the written judgment stated, “The new owners of Newcastle United FC are working to overhaul the NUFC replica kit business of the club.” This task is described as significant, necessitating substantial investments of time, effort, and finances. Consequently, existing partnerships, such as the one with Castore, must be ended, while new relationships, such as those with JD Sports and Adidas, are being established.
Granting the interim injunction would significantly disrupt the delicate and intricate restructuring efforts underway at Newcastle United FC. The inability to provide precise details is not a reflection of unreal damage to the club, but rather an indication of the genuine yet immeasurable impact.
For instance, the new agreements grant JD Sports exclusivity in the UK market, for which they pay generously. If the injunction were granted, JD Sports would suffer a material loss of this exclusivity. JD Sports has signaled that it would view the club’s supply of NUFC replica kits to Sports Direct as a breach of contract. While Newcastle United FC could argue that such supply is in compliance with a court order, the potential damage to relationships with suppliers would be significant and incalculable.
The replica kit business is crucial for Newcastle United FC, with substantial revenues expected over time. The club is rightly concerned about the substantial disruption to its operations if the injunction were to be granted, even on more limited terms than those sought by Sports Direct.
This reiterates a point previously raised by Thomas de la Mare, who represented Newcastle during the initial hearing. De la Mare emphasized to the tribunal the significant financial impact, referred to as a ‘seven-figure delta,’ stemming from the JD Sports contract. He highlighted that this revenue, which the club anticipates having, could become jeopardized by a potential claim.
De la Mare further explained that for a club like Newcastle, with a turnover around £250 million, such a financial discrepancy is substantial and directly influences decisions regarding player recruitment, expenditures, and adherence to Financial Fair Play regulations.
Despite the tribunal’s refusal to grant the interim injunction, Sports Direct retains the option to pursue the matter in court. The written judgment emphasized that this decision increases the urgency for a speedy trial rather than diminishing it.