Feel free to merge with another thread if you want too mods, but Elstone has just lashed this on the OS.
http://www.evertonfc.com/news/2015/06/29/club-update-kitbag
In a meeting of our Fans’ Forum last Thursday it was suggested that it would be useful for the Club to update fans on our partnership with Kitbag. The summary, below, provides background as to why the Club entered into the Kitbag partnership and why Kitbag offers a solution for Everton that stands up to scrutiny …
In 2008, after a thorough review of our retail business, and some tough negotiation on our part, our Board chose to outsource the Club’s entire retail operation to an expert. In return for offering that opportunity, we were presented with a guaranteed level of profit - way beyond anything we had earned in the years before - and the elimination of all the risks of sports retailing (look at how the High Street has been challenged and changed over recent years in that sector). Since we made that decision, the arrangement has been the subject of much debate and considerable scrutiny.
Like any good business, we are constantly asking ourselves whether we have the best deals possible. Like any good business, we’re also receptive to change, new ideas and the advice of others.
Our retail and kit deals have faced that internal scrutiny on a regular basis and the assessment always starts with a look at what others are doing.
However, that first step isn’t easy. Testing how good our deal with Kitbag is by making comparisons with other clubs is difficult. To our knowledge, only a very small number of other clubs in the Premier League have secured comparable deals and, given who they are, we believe it shows we’re in good company
. We maintain that our ability to have secured a retail partner – and there aren’t many with an appetite to do it – prepared to take away all the uncertainty of retailing and make sure that every season, good or bad, buoyant retail sector or not, we report a profit, reflects well on our Club.
Our deal’s relative uniqueness also makes comparison of our rivals' Commercial Income, as set out in their published accounts, very difficult. Due to the outsourcing of our retail operation to Kitbag, the Commercial Income figure in our Profit and Loss Account does not include retail revenue; it only includes the guaranteed profit provided by our retail partner and the royalties earned when sales exceed a certain threshold, rendering redundant any direct comparison with clubs who run their own retail.
Throw in all the hyperbole when clubs announce deals and bundle in all sorts of unearned bonuses and you come to the only conclusion possible, comparison with other clubs is very difficult.
So if we have scrutinised Kitbag, how have we done it? In simple terms, we’ve regularly looked at bringing retail back in-house and doing it ourselves. Historically, we have a very poor retail track record, although the same is probably true for many of our competitors. In the early 2000s we were losing considerable sums from operating multiple shops across Merseyside that were simply not profitable. Looking forward, we considered all the risks
and all the opportunities. We looked at how and where we might grow our retail business and married that against shop rents, staff, stock, ordering, online and mobile platforms and all the complexities of retailing. We looked at a sector with high-profile casualties. We talked to other clubs and monitored their retail approach. We reviewed forecasts. And, after all that work, we came to the conclusion that our retail business is in good hands.
Have we signed up for too long? The Board signed up to a long-term deal because we’d secured such good terms. We had an opportunity to exit the deal last year and, after another lengthy review and all the work set out above, we chose not to. We’re on board for four more years.
Are we giving away value? We don’t think so. Remember this is a retail deal and
retail isn’t booming. It’s not TV; it’s not sponsorship; it’s a cut-throat sector trying to keep pace with ever-changing buying habits and expectations.
Are we saying it’s perfect? No, we’re not, but football club merchandising faces challenges across the whole sector. Many clubs have experienced late deliveries and missing stock, but we don’t take comfort from that. We continue to care about service and Kitbag does too. And we are committed to improvement, as we are across all areas of the Club. Last summer aside, Kitbag’s performance can stand up to scrutiny and comparison against almost all of our rivals.
Would we like to see Everton merchandise available outside the two High Street outlets? Yes, we would. It’s not unreasonable to expect to be able to buy an Everton shirt in the Trafford Centre (although it’s perhaps unrealistic to think we should see them in The Metro Centre in Gateshead, for example). As stated earlier, previously we had up to six shops and we lost money. Under JJB, with its national footprint of stores, we had limited ‘coverage’ outside of the North West. Almost certainly, Everton shirts were not to be found on rails in JJBs up and down the country.
The truth of it is that our guaranteed profits from Kitbag are considerably higher because Kitbag controls all of our retail. And in return for that much better commercial deal, it is Kitbag’s distribution policy to only sell through the Club’s retail stores and online channels.
Of course, no one is more incentivised to widen distribution than Kitbag. And if it makes commercial sense, no doubt they will. We must also recognise the ever-growing proportion of retail that is serviced online. Kitbag's family of online retail partners, which includes Manchester City, Manchester United and Real Madrid, among others, is highly impressive.
So what about the kit deal? The first thing to say is that, although the two are linked, we should avoid confusing a kit deal and a retail deal. Kit deals, in many instances, are nothing other than advanced profits. The numbers many of our rivals report on kit deals reflect the fact that they take a cheque up front, then pay considerably more for their replica shirts and end up running shops at much lower profit levels. Fewer and fewer kit deals are about marketing or sponsorship – although our deal with Umbro bucks that trend, as Umbro pay us a fee exclusively to be associated with Everton and we should celebrate that.
We receive a significant sum from Umbro who, at the same time, commit to supplying Kitbag at the keen price that allows them to make their profit, which they in large part hand on to us as part of that guarantee.
In summary, in Kitbag and Umbro we have two really good partners who are committed to Everton. They like us, they are proud to work with us and I think, on the whole, they deliver a service to our fans and a deal for the Club that stand up to scrutiny against our rivals.
