Lieutenant Dan wrote:
Let's say, hypothetically, that the FA mandates in the next kit contract that the shirts have to be sold for no more than, say, £40.
The kit manufacturers will still bid for them, but they will pay much less for the privilege because their ability to make the money back and make a profit is much more limited. In turn, this drastically reduces one of the FA's major income streams, meaning they have less to invest into facilities and the grassroots game.
It is in the interests of the FA, and English football as a whole, to generate as much money as possible from kit sales.
Well thats moving into an area of economic risk profiles. Assuming the bid to the FA remains the same, a company has to decide between charging a premium sum at the risk of selling less units overall versus selling at a consumer target price (ie lower) but increasing the unit turnover.
There are very complicated algorithms that help with this including a huge amount of social factors. Nike clearly believe the higher price fewer unit model is the least risk option, thats fine, loads of suppliers adopt that model but what most dont do is flippantly mess with a detail that a measurable proportion of the customer base identify directly with.
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