The Unreal situation of counterfeiting in football


Last year saw the launch of the BBC’s annual Cost of Football survey which once again leads to lots of back-slapping, table thumping and general head scratching at the costs fans have to pay to watch and engage with their teams.

Whilst some of this year’s headlines will focus on the first drop in ticket pricing in some areas for the first time in a long time, primarily due to an agreed cap in prices for away ticket sales, you cannot ignore the numbers relating to the cost of football shirts.  Newport County Football Club have probably never been top of many league tables, but according to the survey, they sell the cheapest current replica shirt at £37.50 out of the 92 clubs playing in the professional game today.  At the other end of the scale, the two Manchester clubs sell the most expensive replica adult shirt at £60.

Whilst the cost of football shirts is not a new tub-thumping topic, you can understand some of the outrage today at these figures.  Whilst the actual of producing the shirts is a closely guarded secret by the manufacturers, it is highly unlikely to be more than 20% of the sale price.  It is no mystery in many instances, however, about the amounts that clubs are receiving from shirt sponsorship and the deals with the shirt manufacturers.

The news that Chelsea have signed a new kit deal with Nike for a reported £60 million A SEASON once again puts into perspective how money is dominating the highest level of our national game.  The Blues terminated their existing deal with adidas six years early in what can have only been a purely money-motivated move (that deal was rumoured to be “just” £30 million a year) to sign the deal with Nike for the next fifteen years, which will see them earn £900 million (assuming there are no other bonus elements for winning cups) – read more about the Chelsea deal here.

Football shirts are not like Gucci handbags or Hermes scarves.  They are not luxury items.  They are lifestyle items. Yet they are priced as such. Some brands will say that the reason why the shirts are priced so high is as a direct result of the problem of counterfeiting.  Is that fair?  This is a Catch 22 situation – the more a manufacturer invests in the production process to try and defeat the counterfeiters, the higher the retail price is set which will drive more people to but an inferior but lower cost counterfeit.

One in six products sold today is counterfeit.  In the UK alone it is an industry worth over $20billion.  This number continues to rise every year despite attempts by companies such as NetNames to scour the Internet, find the infringing items and removing the offending websites or online sellers from the web.  However, with money still tight in many households, high-ticket desirable items such as the football shirts fuel the growth in counterfeiting.

Manufacturers state that the prices are being driven up by counterfeiters, not realising that by increasing their prices they make the issue worse.  They claim that the effect of buying fake ‘knock off’ goods has a ‘knock on’ effect on the price of legitimate products.  Every pound, euro or dollar spent on counterfeits is a pound, euro or dollar not spent with the brand owner, reducing the savings from economies of scale that can be passed on to the consumer. Production costs, support costs, marketing costs and legal costs are all higher, which the brand owner must pass on to the consumer – a double whammy.  However, in the football shirt world it seems that the price tag is high because they know irrespective of the purchase price, the demand for the product is already there.  A Liverpool football fan is hardly likely to decide to support arch rival Everton and buy a Blues football top simply because of a price tag.  They will simply seek a cheaper “fix”.  A football fan with £20 to spend on a shirt will spend £20 on a shirt whether it is a fake or not in most cases.

It’s not hard to find counterfeit football shirts.  Many of us will have seen them for same in tourist destinations or street markets – even at first glance you can see they are inferior quality either by spelling mistakes on the sponsor name or even the club badge itself whilst a simple search on a number of market place websites such as Taobao reveals shirts for most major clubs in frightening volumes.

So what is the answer? We’ve seen that fan power does has an impact on the costs associated with football from the agreement that away tickets in the Premier League are capped at the moment at £30. Perhaps a similar campaign could force the club’s and the manufacturers to reduce the price of replica shirts?  They need to be as a part of the solution as they are in the problem.  Educating fans about the social costs of counterfeiting is also a step in the right direction, especially targeting the fans of tomorrow with purchasing power.

This is one aspect that the International Trademark Association (INTA) have been focusing on through its Unreal campaign which aims to educate 16-18 year old on the dangers, both real and hidden of buying counterfeits.  Sporting goods and equipment such as replica football shirts are very much in these consumer’s eyes and so trying to spell out the ethical and criminal nature of counterfeits and the effects it has on society as a whole can only be a good thing.  However, it still needs the manufacturers to do their part too – they need to also educate consumers on the costs and dangers as well as ways by which counterfeits can be reported.

Nothing really changes in football, nor in any other sport.  Despite what many commentators will tell you, it’s no longer a beautiful game.  Clubs are commercial entities with shareholders and owners to deliver a return to.  Fans are brand ambassadors whose loyalty is often measured on how much they spend on branded merchandise rather than if they can remember who scored the FA Cup 3rd round winner back in 1972.

Economic Theory explained by Football – Part 5 – The fake deal in football shirts


In 2012, the major professional sports leagues in the United States lost over $13 Billion in revenue due to sales of counterfeit shirts and merchandise including a whopping $3 Billion alone from the 32 teams in the National Football League (NFL).  Some top end “authentic elite” team shirts which should retail for $250 could be found online with an 80% discount*.   These numbers, whilst staggering on their own, are just a drop in the ocean when we look at the total “black” economy which runs annually into trillions of dollars.

8835116252_85b97df617_kIn Europe, football means something very different to the American version.  Whilst the biggest NFL sides can expect to sell tens of thousands of shirts (neither official shirt supplier Nike or the NFL will actually reveal unit sales), the unit sales for the best selling “franchise”, 2014 Super Bowl champions Seattle Seahawks pales into insignificance to current European Champions League winners Real Madrid who sell over 1.4 million shirt sales per annum, the vast majority now bearing the names of twin superstars Ronaldo and our very own Gareth Bale.  Hot on their heels is Manchester United and Barcelona, each selling over a million shirts per annum. The top ten football clubs sell over 7.5 million shirts per annum across the globe, significantly more than the top ten clubs of any other sport.

Obviously these numbers only reflect the official sales.  Browsing the new adidas store at Bluewater last week I picked up a Real Madrid shirt, complete with an official Champions League badge on the sleeve. The prices tag? £60. Last month Nike and the Football Association found themselves being the talk of the town for the wrong reasons with questions even being raised in the Houses of Parliament over the price of the New England shirt, with those “authentic elite” versions again costing upwards of £90.

Football shirts are not luxury items, yet their official price tag puts them in the same category as similar types of items sold by the likes of Armani, Gucci and Versace.  £60 for what essentially is a t-shirt is simply crazy, irrespective of the new-fangled material used to differentiate the latest version from the almost identical one released the previous year.  They are a lifestyle purchase. Whilst a very small numbers of sales will be based on fashion sense, the vast majority are based on the blind loyalty that football fans have for their team.

In the last few years manufacturers and clubs alike have come under criticism for the number of new kits they bring out.  Whilst nobody is forced to buy the new, upgraded version of the shirt when it is released, that same blind loyalty has has queuing up to buy the shirt on the first day of sale.

It is the rule rather than the exception that clubs bring out a new football shirt every year.  Not just one shirt, but in some instances six different versions if you count the special “European campaign” and goal keeper ones. Chelsea, for instance, have released fourteen different kits, excluding their goalkeepers one, in just five seasons.

With the retail cost increasing every year it is no wonder that the market for counterfeit goods is swelling every year. Just last month a huge haul of fake football shirts was discovered on its way into the United States. More than $1 million worth of Chelsea, Barcelona and other major European football teams shirts were found in a container at Savannah Port in Georgia that had arrived from China.  The US Customs and Border Protection force will readily admit they got lucky in finding the counterfeit items in Georgia – hundreds of millions more pass under their noses every year without detection.

The majority of counterfeit football shirts are made in Asia where raw materials and workers wages are very low.  Over the course of the last few years I’ve been to the Grand Bazaar in Istanbul, the Night Market in Marrakech, the Ladies Market in Hong Kong and even the Sunday Boot Fairs of Sidcup.  Vast ranges of every major football shirt can be bought for just a few pounds.  The quality of the counterfeits varies per seller, with some offering “special edition” shirts.  When I was in. Morocco two years ago, one stall was selling Manchester United, 2012 Premier League Champions shirts, made specifically for the Reds title success.  The problem? Rivals Manchester City won the title with virtually the last kick of the season.

It is fairly obvious that you aren’t buying the real thing at the price they are being sold for, although production techniques now mean that fakes come in a variety of grades of quality.  At the low end the wrong material and non-exact match colours will be used and often there will be spelling mistakes (Liecester City anyone?) whilst the higher grade ones will often have all the bells and whistles of the real thing including holograms and inside printing.

But there is another side to counterfeit football shirts that you may not have considered and that is the conundrum of brand awareness.

Consider this situation.  Every counterfeit shirt carries the branding of not only the football club, but also their main commercial partner(s).  The whole reason why major brands invest millions into putting their logo on the front of a football shirt is to increase their brand awareness both in existing and new markets.  The hundreds of millions invested by Emirates into their sponsorship of Arsenal, Olympiakos, Paris Saint-Germain, Hamburger SV, AC Milan and now the European Champions, Real Madrid means they have huge global exposure from the sales of official shirts.  But their logo also appears on counterfeit items as well, increasing their global reach albeit through illegitimate channels.

Consumers simply associate Emirates with these shirts, irrespective of the legitimacy of the shirt.  Whilst the airline may be deeply unhappy that their logo is being used on counterfeit items, they are essentially increasing their return on investment through free advertising. I have no doubt that the sales of fake shirts are taken into commercial consideration when they are negotiating their deals, but it is a by-product that they inadvertently benefit from.

And what of the clubs themselves? Football is now a global game.  The elite clubs no longer consider the summer break as a chance to rest and relax.  They now travel far afield to play exhibition games in front of sell-out crowds in new markets.  The forthcoming Guinness International Champions Cup in the USA is an example of this where some of the world’s biggest clubs including three of Emirates sponsored teams, Olympiakos, AC Milan and Real Madrid will play a series of games around the USA to boost interest in the game.  Last year Chelsea travelled to Singapore and Malaysia, whilst Manchester United played in Hong Kong as part of their strategy of increasing their global fanbase.

Many of these fans, in the Far East especially, have significantly less disposal income than their core fans have in England.  They cannot afford the real-deal, climacool, multi-weave new shirt at £60. But they can afford the counterfeit at £5.

By buying a counterfeit shirt, one that they can afford, they are still buying into the brand, happy to market the club by wearing the badge, albeit one that may not be official. Does this make them less of a fan?  By spending 90% less on a shirt they can then afford to buy a ticket or subscribe to the club’s online streaming content.  What is more important to the club? New fans who will engage with the club on a regular basis or ones who will contribute a small amount of money once a season through an official shirt purchase.

The whole sports apparel and merchandise market is unique.  Someone who buys a counterfeit Gucci shirt or a fake IPhone charger is doing so for very different reasons than someone who buys a fake replica Barcelona shirt.  Whilst football clubs need to have a brand protection strategy in place, are counterfeit shirts the maker concern for global sporting brands? It’s an interesting debate, one that will certainly differ whether you have the emotional engagement as a fan or the commercial view as a sponsor or the club itself.

*Source:  Allan Brettman, “NFL, Nike fight to keep counterfeit products off the market,” Orgonian, November 16, 2013.