Puma sever kit deal with IRFU as part of global strategy to exit rugby
Puma have explained the severing of their €40 million kit deal with the IRFU, midway through an eight-year agreement, as part of a global strategy to exit the rugby market.
Irish rugby already felt the impact on an individual level with the German sportswear giants not renewing five-figure boot deals with frontline internationals, including Ireland captain Jamie Heaslip and Luke Fitzgerald, while Tommy Bowe was released from his contract.
Puma also dropped French club Toulon last year.
“It was an international decision to pull out of all rugby sponsorship in Europe,” said Puma spokesman Seán Kavanagh. “We are focusing on three pillars of the business: football, lifestyle and running.”
Usain Bolt, Sergio Aguero, Cesc Fabregas and golfer Ricky Fowler are Puma’s main sports personalities, while Italy, Borussia Dortmund and Newcastle United are their main kit sponsorships.
“In 2012 business was tougher, despite having single digit growth, and it didn’t meet expectation and our EBITDA was under pressure as well,” Kavanagh continued. “Basically, we have been spending too much money.”
The IRFU commercial and marketing director, Pádraig Power, stated yesterday the loss of €4-5 million (depending on bonuses) per annum will not disrupt their “budgeted revenue streams” over the next two seasons.
Basically, Puma are letting the IRFU keep the gear and paid a settlement, thereby creating an 18-month window to find a new kit sponsor.
“The figures are confidential but we have agreed an exit settlement with Puma,” said Power. “This means there is no impact on how we run our business and on the kit side of things. We will be wearing Puma as far away as the June tour of Argentina in 2014.
“I’ve done four of these kit deals over the last 12 years and it takes about a year to get a new kit partner in place,” added Power, who has overseen Nike, Canterbury and Puma sponsorship.
If the union find a new sponsor in the interim, they can switch over next season. “Scotland have announced a new deal today with an Italian company called Macron and England moved from Nike to Canterbury last year,” he continued. “Warrior came in and paid a huge amount of money for Liverpool to get into the Premiership market.”
Worth £25 million a season, Warrior is a subsidiary of New Balance but Liverpool is the fourth highest selling replica shirt in the world.
The Irish retail market for the sale of replica jerseys has plummeted by 50 per cent in recent years, something the union and Puma both claim had nothing to do with the premature end of the agreement. The newest Ireland rugby jersey cost €66.
Industry experts identify yesterday’s announcement as sacrificing of a mere pawn (Irish rugby) in the greater global sportswear game of chess.
Power was asked if it is feasible for the union to get another multi-million euro eight-year deal in the next 18 months or should the public expect a more conservative arrangement?
“I can’t see into the future. We have already received a number of phone calls from interested parties. We envisaged having a new partner in place that will be very good for Irish rugby.
“We are adequately financed from the current revenue stream and adequately kitted out. It will be done in due course and in a way that is most beneficial and advantageous to us.
“The deal and agreement is confidential so all I can say is there is no diminishment from our budgeted revenue streams in this area until we put a new deal in place.”
By saying there is no drop in revenue stream, are the IRFU getting the same amount of money from Puma this season that they received in the first thee years of the deal?
“I’m saying that we are happy with where we are at. That we are able to deliver the programmes that we budgeted to deliver. We are on track.”