Liverpool Football Club had an existing deal with New Balance to manufacture and sell replica football shirts with their logo. At renewal time Nike out-bid New Balance’s terms and were held entitled to the contract. The question was whether New Balance had matched Nike’s offer.
Nike made a detailed offer including a large number of retail outlets and marketing initiatives featuring ‘not less than three non-football global super athletes and influencers of the calibre of Lebron James, Serena Williams, Drake, etc’.
In response, New Balance offered to enter into a new agreement on terms ‘no less favourable to the Club than the material, measurable and matchable terms of the Nike offer’.
New Balance denied that the marketing terms referred to were material, measurable and matchable.
Nike countered that the New Balance offer was not made in good faith and purported to match Nike’s offer without having the ability to distribute the shirts in not less than 6 000 stores worldwide.
Although good faith was not mentioned in the contract, it was accepted that there was an implied obligation of good faith (or fair dealing). The court said this duty of good faith is breached by conduct which lacks fidelity to the parties’ bargain. The ultimate question is whether reasonable and honest people would regard the New Balance offer as commercially unacceptable.
The court also found that the marketing offer was not subjective and was measurable. The fame of influencers can be measured in various ways including social media exposure such as measuring ‘max add value, share a voice value or promotional quality score’ which are methods used to value the calibre of influencers. New Balance’s failure to offer influencers of equal status meant that their offer did not match that of Nike.
New Balance’s claim was dismissed and Nike acquired the right to the contract.
The case is New Balance Athletics, Inc v The Liverpool Football Club and Athletic Grounds Limited.
