Sports Direct dubs Newcastle United kit deal unlawful

Newcastle United’s proposal to sell next season’s shirts exclusively through JD Sports is “unlawful”, rival firm Sports Direct has claimed.

Sports Direct, run by former Newcastle owner Mike Ashley, is seeking an injunction from the Competition Appeal Tribunal to stop the deal.

Company lawyers said preventing the “home of football supplies” selling cheaper shirts would harm fans.

Newcastle United said there was “no evidence” competition would be damaged.

At the tribunal in London, Sports Direct’s barrister Tony Singla KC said football was “essential” to the firm, which was the “largest sports retailer in the UK” with 488 stores.

He said Sports Direct had sold “all of the top league replica kits including Newcastle for decades”.

But the company has been told that next season it will not be able to sell any Newcastle United replica kits, Mr Singla said, which was an “abuse”, “anti-competitive” and “unlawful” without an “objective justification”.

He said Newcastle United said they wanted to bring the sales in-house but, accepting it needed a wider distribution, had also agreed an exclusivity deal with JD Sports.

Mr Singla said the reason Sports Direct was being cut out was because of the firm’s “discounting practices” which sees it selling shirts at cheaper prices than others.

He said the proposed deal would harm consumers and “distort” the market because the “retailer that offered the lowest prices” would be excluded.

Mr Singla said Sports Direct would suffer from a loss of “substantial” sales, footfall and reputation.

He said if Newcastle fans were unable to buy their kits at Sports Direct then they wouldn’t buy other goods there either and “may never come back”, with people “losing faith in the credibility” of the store.

Thomas de la Mare KC, representing Newcastle United, said Sports Direct had not produced a “scintilla of evidence” to show the deal would harm competition and there was “simply no evidence” to substantiate the claim.

He said what was proposed was a “tripartite” arrangement between the club, manufacturer Adidas and retailer JD Sports, the likes of which had “been in the market for up to 10 years without attracting attention”.

He said clubs of comparable size, such as Celtic, or “one-city” teams including Leicester City and Leeds United, and even the Welsh and Scottish FAs had agreed exclusivity deals with JD Sports which the “gorilla in the marketplace”, Sports Direct, had not objected to.

He also questioned the reputational loss Sports Direct would suffer among Newcastle fans by not having the new kits, as the relationship was already “toxic” following Mr Ashley’s ownership.

Mr de la Mare said the “unpopularity” of Mr Ashley and Sports Direct had previously led to fan boycotts of the shop and the club itself, and it was “bold” for the retailer to claim it would suffer reputational problems because of the kit deal.

He also said the club relied on revenue from merchandise sales and a reduction in that could impact on the players they sign, where they finish in the league, qualification for competitions and resulting broadcasting rights.

Mr de la Mare also said Sports Direct had itself signed such “cosy” exclusivity deals with manufacturer Castore to sell Rangers and Newcastle kits.

That deal meant only Sports Direct could sell the teams’ kits in the first month of launch which Mr de la Mare said was a “critical period” for selling new shirts.

He also said Sports Direct did not sell the full Newcastle kit, claiming the firm had not ordered any socks and wanted only one pair of shorts for every 22 shirts.

The tribunal heard Sports Direct currently pays Adidas £16.55 per shirt for other Premier League clubs supplied by the German manufacturer, and wants to buy 51,000 – or about 14% – of the Newcastle United kits produced.

The new home strip is due to be launched on 7 June, with the away kit coming out in July and a third outfit in August, the tribunal heard.

Sports Direct is also seeking damages and costs from Newcastle United.

Tribunal chairman Sir Marcus Smith said he and his two fellow panellists would make a decision on the injunction application “as soon as possible”, hopefully by Friday.