NEWCASTLE UNITED will begin a lucrative new clothing deal with Adidas later this month, having ended the sportswear deal with Castore that was signed during Mike Ashley’s ownership spell.
The club’s retail operation is undergoing a major new expansion, while Eddie Howe will take his first team to Australia in the week after the end of the season to play two exhibition games.
The changes are part of the process to grow commercial and retail revenue that is being overseen by the club’s Chief Commerical Officer, Pete Silverstone.
Chief Sports Writer, Scott Wilson, met Silverstone at St James’ Park to discuss the move back to Adidas, the need to grow income to help with FFP, the pros and cons of heading overseas to play friendlies and the value of securing more European football next season.
What do the ongoing changes in retail and the new Adidas kit deal mean – and how close are they to being completed?
“It’s getting there. It’s been a long, long project if I think back to a lot of discussions and deliberations about the next kit partner. Decisions were made there and finalised, and then from finalisation of the decision to reunite with Adidas, we then had a lot of time working out what model we wanted to operate retail.
There’s lots of different models, and it doesn’t matter about size of club – different clubs operate differently. You can outsource your retail completely to different third parties, even without it being a kit relationship. You can insource some of it and outsource others, you can run the store yourself and run your ecommerce via someone else, or you can bring it all in-house.
We’ve decided to bring it all in-house, primarily to be able to build a relationship directly with the fan. This way, the fan can buy directly from the club, and the club can deal with directly with fans who want to buy from the club. If, or when, there is a delay, or delivery issue, or product feedback, or a desire to have this type of product or that type of product, the relationship between the club and the individual supporter is there.
If you look at the main club store at Borussia Dortmund, it’s incredible the amount of different products that are available. Let’s say our fans want Newcastle United garden hoses. Well, we can get that feedback directly from them now, and then try to find that product.
So, being in-house like that is real step change for us. But then once you decide that, it’s about how you build it. The units that have gone in outside St James’ Park are the first physical manifestations of the store, but there’s also been an awful lot of work done on our website. That’s all behind screens, but there’s an awful lot of work been happening there.
You have to bring in staff, and we’ve been lucky to be able to hire incredible local talent, with great retail experience. They’re building their own teams now because you need to be able to have store staff, ecommerce staff. This is one step in the journey.
It’s good to see the temporary retail store there now, but I’m already thinking about the next step, which is the full store, and that’s due to be finalised this week. Building work starts soon on that, and kits are beginning to come into the country ahead of the launch of the Adidas relationship in June. Then we’re also now thinking about the launch of the away kit, nailing down when that’s going to be, and the launch of the third kit too. It’s all happening, and it’s really exciting."
How crucial is it for Newcastle to grow their retail and commercial revenues – and how big a challenge is it to get to the level where a Manchester City or a Manchester United currently are?
“If you look at retail and commercial revenues separately, then it’s pretty easy to increase your retail revenues when you don’t have any. That’s the starting point, really.
Bring retail in-house, and build a product range with Adidas, and outside of Adidas, that reflects the demands of your fans. Bring in product that they can buy, and then build retail revenues from there.
We’ve already discussed bringing everything in-house – we will now build our own retail business. Retail is not just Adidas and kits of course, it’s caps, bags, calendars, board games, golf products – whatever the fan is willing to buy, we’ll try to find for them.
Then, you’ve got commercial revenue. Clearly, building sponsorship income is vitally important. Revenue, in general, is vitally important given the European and Premier League rules. The more we have, the more we can spend on the pitch, which is what every football club wants to do.
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Building those commercial revenues is really important, and having the right group of commercial partners is important too, partners who are going to build you revenue.
We’re on track to bring those partners in, and it’s partners that are going to help you build your brand. That’s what Sela have been doing with us, with ‘Unsilence the Crowd’ and the drone show. Saudiair are able to launch an incredible activation within the city, which you’ve seen a glimpse of, with the Formula E collaboration.
I don’t need to tell you that Adidas have some pretty extraordinary launch plans for us, which will put us on a global marketing platform, which is fantastic. The bigger we build our brand, and the more profile and activation we do, the more other partners want to partner with us.
Most importantly, the more we do globally to build our brand, the more people want to be associated with us and follow and support our team. Unlike people who are born in Newcastle, who I would hope will always be Newcastle fans, if you’re born in New York or Riyadh or Beijing or Shanghai, then you don’t have a local connection.
You follow a club that you relate to, whether that’s the colours of the strip, players, activations like ‘Unsilence the Crowd’, what the city means to you – a whole host of things. It’s really important we grow that global audience and relevance, to then bring in increased commercial revenue."
Is the attraction of Adidas more than them simply being a popular sport brand?
“Absolutely. If we talk about the different elements of the commercial horizon, then we’ve got the retail element and they’re going to deliver us incredible product which, at times, will hark back to the heritage and history of the past, but also be forward-looking.
So, they’ll provide us with great product to sell. That goes without saying, and having seen the designs for this year and next year, and ideas for the future, I’m pretty sure our fans will buy in to that and want to have that product.
Adidas are also a sponsor, so they want our marketing platform and the assets and imagery that we provide – the player imagery, the player marketing, the media exposure around the stadium and different assets and rights.
Then they will also provide sponsorship to us. They will market our brand globally and in targeted territories, in a unique way. Adidas are also the sponsor and kit partner of other top clubs – Arsenal, Manchester United, Real Madrid, Bayern Munich, Juventus – and we find ourselves with the same marketing partnership and capacity as they do.
Our ambition is to have the great product and great platform, and ultimately have as many fans to sell our Adidas shirts to. Of those clubs I’ve just said, we don’t sell as many shirts at the moment. But our goal and ambition is to catch them up."
To what extent will the Adidas kit designs hark back to Newcastle’s past?
“Growing up, everybody is probably aware of the game-changing products and kits that Adidas designed for Newcastle United in the 1990s. Some of those designs will inform current kits.
In my time at Arsenal, we brought back the bruised banana kit, and that was incredibly successful from both a fan perspective but also a culture perspective. Some of these iconic kits are culturally relevant to all football fans.
They are unique fashion items that happen to have been worn by David Ginola and Alan Shearer, the Entertainers, as well as Ant and Dec. They are iconic pieces and we are working with Adidas to try to bring them back.
They are so bespoke, but there's no way you'd wear some of them on a pitch now. The grandad collar kit was thick and heavy on a pitch – you’d never get the players wearing them now because it wouldn't work for performance.
So, you have to find other ways to bring back those kits. It is now clearly a great opportunity for us and Adidas to build global fanbase and relevance again, and bringing back some of those products would be really exciting.”
Were Adidas keen to bring Newcastle back on board?
“Absolutely. Adidas had an exhibition here in Newcastle last November, with the Spezial trainers. They were bowled over by the amount of people who came – I think they had more than 10,000 visitors in five days. It was the unique, bespoke Spezial and Gazelle trainers, and I think that just showed that the city has a love affair with Adidas.
I’m sure every company would have looked at Newcastle in the 1990s and wanted to have been involved, and I’m sure every club at the time would have looked and thought, ‘We want to have a kit design partner like Adidas’.
I’ve had relationships with a number of the senior people at Adidas for many years, and from the CEO to the marketing director to the head of football to the person who’s leading on our global partnership, everyone of them references how special it was when Adidas had Newcastle in the past. They talk about the queues at midnight for the kit launches.
It was a very special club to Adidas back then, and a lot of the charcaters are still there and are saying, ‘We can’t wait to make it special again’. They’re really authentic comments from very senior stakeholders at Adidas. It’s really exciting that everyone’s behind this getting back together."
To what extent will the increased revenue help on the pitch – and how much does the team’s performance affect commercial sales?
“We’ve got top, top players at this football club, and that matters when you’re doing a deal like this. It goes hand in hand.
If you take something like a kit deal, then we know that signings drive kit sales at times. That’s one part of it all.
The product off the pitch – so the quality of the designs and the manufacturing – has to be right, and then on the pitch, the better things are going, the easier it is to generate growth.
Obviously, we’re having an incredible season, and with three games to go, we’ve got a lot to play for. The team performing at the best level possible definitely makes a difference to every other aspect of the club."
How big is qualifying for Europe commercially?
“There’s lots of different elements. It’s not just about the club, it’s about the city as whole. We’ve had great feedback from the city from our recent pursuits in Europe, in the Champions League, bringing Paris, Dortmund and Milan here.
It was great for the city, and the tourism and trade in the area. Taking Newcastle fans outside of the city was probably even better for those cities that we visited because we had a great time.
And then, from a commercial perspective, just keeping the club at that European level is really important. It makes a big difference in terms of marketing and sponsorship deals when you can keep talking about us as a European side.
From a retail business perspective, the more matches you have in your stadium, the more people are coming there and the more opportunities they have to spend. You can launch new ranges around European matches.
Our ambition remains to be in European football next season, but recognising that there’s many clubs that also have the same ambitions as that."
What is the value of the Australian trip – and potentially other overseas trips in pre-season?
“You have to build profile. If you’re trying to build a fanbase, then it doesn’t happen overnight and it doesn’t happen with the click of a finger. You have to invest time and effort into travelling to new markets.
We’ve had a lot of very happy Newcastle fans from Australia reaching out to us and asking what events we’re going to be running there. It was the same when we went to the US, which was brilliant.
We’ll continue to plan to travel, while maintaining and respecting the football needs. It’s about hitting that optimum point between growing the brand and making sure that the preparation is good. That’s the fine balance that every club works hard to achieve.
But if we don’t put ourselves in these environments, then we won’t engage with fans in far-off territories and be able to say to sponsors, ‘Look what we did in Australia, or whatever country. Look at the fan reaction we had – we can help you in that territory by doing this and that’.
It’s what we need to do to keep growing commercially. Hopefully, we can have similar experiences to what we had in Atlanta, when we filled out an 80,000-seater stadium for a game against Chelsea. That’s the power of the Premier League, and it’s the power of a club like Newcastle United. We can engage with fans and make them happy in far-off territories."
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