Sponsorship, Agencies, Licensing, Soccer, Europe

Inside the deal: PSG and Fanatics’ landmark ecommerce partnership

Global sports merchandise and retail specialist Fanatics announced its biggest ever soccer partnership in late June, a deal with PSG worth tens of millions of euros between now and 2030. SportsPro spoke to Fabien Allegre, PSG's marketing director, and Fanatics' president of business affairs, Gary Gertzog, to unpick the finer details.

by Tom Bassam
Inside the deal: PSG and Fanatics’ landmark ecommerce partnership

Fabien Allegre is not your typical sports industry marketing director, but given the project he has undertaken at Paris Saint-Germain perhaps that is not really a surprise.

Allegre’s background prior to his arrival at Parc des Princes in 2008 was in the music industry. He was formerly the chief operating officer for NRJ Music, the offshoot label of the most popular music radio station in France, and he gives off a rock star vibe - all long hair and impassioned monologues.

Since Qatar Sports Investments (QSI) took over at PSG Allegre has been tasked with exponentially growing the identity of what was a big - but by no measure dominant - club.

“Since 2011 the objective has been for Paris Saint-Germain to build one of the top clubs in the world and - at the same level - to build a real, lifestyle/global brand,” Allegre explains to SportsPro.

“On my side with the brand, it is about not only addressing fans of Paris Saint-Germain the football club but also of Paris as a city - the culture and DNA that we have in common.”

Now, Allegre thinks he has signed the deal which could well deliver on that ambition.

Fabien Allegre, PSG's marketing director, was one of the key negotiators on the Fanatics deal

At its most basic level, the French soccer champions’ new ten-year partnership with sports merchandise and ecommerce specialists Fanatics brings in an annual multi-million euro fee, but it has been signed off with the bigger, specific purpose of tripling their income from digital product sales by 2023.

“We currently do like €12 million and the objective is in a few years to go to over €30 million,” asserts Allegre.

PSG’s ties with Fanatics date back to their deal with UK-based sports retailer Kitbag, which was bought out by Michael Rubin’s company in 2016 for US$17 million. An ecommerce deal was then agreed between PSG and Fanatics in 2017, but discussions on their new wide-ranging partnership began a year ago. Since then, Fanatics International president Steve Davis, head of corporate development Zohar Ravid and Joachim Hilke, the company’s managing director of global partnerships, have been working on the deal. On the PSG side, Allegre, club president Nasser Al Khelaifi and their legal team oversaw negotiations.

One of the signatories, Gary Gertzog, Fanatics’ president of business affairs, tells SportsPro there were two key reasons why PSG were interested in expanding their relationship.

“One, they observed how we conducted our business with them, and two - perhaps more importantly than that - they looked at what we’d accomplished over the years with other partners in the US and our new relationship with Nike.”

It’s not a date, we’re getting married now.

Fabien Allegre, PSG marketing director

Allegre concurs: “Fanatics has this capacity and they already did it for a lot of American franchises.”

He adds: “It’s not a partnership like a sponsorship deal or we give you the keys of Paris Saint-Germain. It’s far away from that.

“It took some time because I strongly believe we need to know the people internally - the staff and the top management - to see if we are on the same line. It’s not a date, we’re getting married now.”

Whilst the coronavirus pandemic undoubtedly delayed the nuptials, Allegre insists it was an engagement that was never going to leave either party in tears at the altar.

“What was very interesting,” adds Allegre, “was that we both stayed very motivated to make this deal happen. We spent a lot of time on the phone discussing what was happening [with the Covid-19 pandemic] and what are the consequences on the business side. I can say now that our ecommerce will be very strong.”

Fanatics accept that Nike products to make up the bulk of sales it sees an opportunity to create new lines

The other goals of the partnership are clear. PSG currently have between 110 to 120 licensees, mainly in Europe, which Allegre wants to double in the next two years. With Fanatics now providing access to more than 1,000 licensees that it works with globally, it is a target that should easily be met.

The deal also expands the club’s reach by tapping into Fanatics’ database of 45 million active clients - all in key PSG markets across Europe, North America and Asia.

For Fanatics, the company now gains an even broader set of ecommerce rights, taking over global distribution for the club’s merchandise operation. Fanatics also becomes the master licensee for PSG, meaning it will be able to make or sublicense to third parties all club products, except for those made by the club's technical partner Nike.

Whilst the company expects the majority of product sales on the ecommerce side to be Nike, Fanatics will also be working with PSG to develop other lines it thinks there is a lot of potential in.

“PSG are very focused on presenting fashion forward products that hit all ends of the marketplace and that’s exciting,” says Gertzog.

What was not apparent when the deal was announced are the human resources that Fanatics are putting into managing the partnership. There will be close cooperation day-to-day, with a new Paris office being staffed by Fanatics’ licensing and account management executives.

“This deal and some other things we’re working on will be a catalyst to increase our presence in Paris,” confirms Gertzog.

Those entwined operations and the hands on approach from Fanatics are vital to the partnership’s success, according to Allegre.

“It’s not like the usual deal that the club are doing to give a licensing contract to a partner and they will manage it on their own,” he says. “The objective for us is to keep all the strategy and marketing side of the brand development. We, together, strongly believe that we need to have people that know Paris Saint-Germain and they need to work closely on a daily basis with the whole team - digital, purchasing department, etc. But also to understand the project of Paris Saint-Germain, which are not the same as other clubs Fanatics deal with.”

The long-term nature of the partnership, which will begin this summer and run until 2030, mirrors that of Fanatics’ other major deals with the likes of the National Football League (NFL) and Major League Baseball (MLB). Gertzog acknowledges a deliberate shift in the company’s strategy during the last seven years towards contracts with double digits in the length column. Asked about the thinking behind that shift, Gertzog explains that it helps develop the business within each partnership and provide security to sublicensees.  

“Our partners expect us to make significant investments in the business - we want to be able to do that - and those investments take a long period of time to monetise,” he continues. “They’re significant upfront investments so we want to be able to have the proper return on that.

“Over time you start working better with a partner. If there is a three-year deal or five-year deal, you’re pretty much within the first year and a half to two years thinking - given the lead times, product development and other things you may be working on -  ‘well, should I be putting the effort into this, how do I know I’m going to be renewed?’

“A [long-term deal] changes the mindset. It lets everybody think about growing the business. It gives you the opportunity to plan properly, invest properly.”

A long-term deal changes the mindset. It lets everybody think about growing the business.

Gary Gertzog, Fanatics’ president of business affairs

One of those areas of investment from Fanatics has been on the cloud technology which allows it to react quickly in times of high demand - say after a championship win or following the announcement of a new signing. According to Gertzog, the company has spent “several hundred million dollars” on innovation to position itself as a leader in mobile-first ecommerce.

For Allegre the technology element was a very attractive part of Fanatics’ proposition and sees PSG take an alternative path to that of European rivals Barcelona, who recently brought their merchandise operation back in house.

One of Allegre’s key moves when the Qataris invested in PSG was to wrestle back control of those rights from Nike. Now, with several years of brand building in place, Allegre feels it is time for the next step: “[Fanatics can] make sure that we can take advantage on a worldwide basis, say if we win the Champions League, or reach the final - what can we do? How can we grow the business?” 

He adds: “For sure you can invest a lot in your platform and of course the marketing budget is really important if you want to [triple ecommerce revenues]. Or you can go to the biggest player in ecommerce for fans’ goods which is Fanatics. They have all the background, the technology, they know how to run the digital marketing, as they are spending money for lots of different teams they get a better price on advertising. So it’s really based on one plus one equals three.”

PSG's deal with Nike and its Jordan Brand has bolstered to the club's image

Fanatics values what PSG have done to skilfully grow their brand to get it to the point where the company felt comfortable making such a significant investment. Statement signings on the pitch such as Neymar and Kylian Mbappe have been matched by commercial deals which recognise a soccer club of increased stature. Perhaps the most notable was the €80 million (US$89.9 million) a year contract renewal signed with Nike last year that runs through 2032.

That relationship has also seen the Parisiens draw on their city's heritage as a fashion capital, appearing on the catwalk via their collaboration with Christelle Kocher. Another Nike-led innovation came with kits being produced by Jordan Brand in its first foray outside of basketball. That collaboration contributed to a 470 per cent increase in shirt sales in the US, signalling PSG’s growing credibility as a brand that was further entrenched by their 2018 collaboration with streetwear brand A Bathing Ape.

“Since 2011 we started to work on brand development that is far away from the other football clubs,” says Allegre.

“It is part of our DNA to work with brands or designers that have the same values that we have - excellence in their own field.”

The club’s merchandise operation currently produces some 5,000 licensed products over 350 categories and now includes their #PSGLimited lifestyle range, which recently went live with its first product - a US$750 paddle board. Gertzog says Fanatics has some ideas around new PSG product categories, but does not want to front run the club in terms of announcements.

“We want to have a partner that has the desire and the agility to work with us closely and see what products we can introduce to the marketplace that haven’t been introduced before - what sticks and what doesn’t,” he says.

You can be sure that PSG will not be pushed into going in directions they are not comfortable with. The deal ensures the club keep ownership over their brand and its development, which is not typical of every such arrangement.

But what is that identity the club are so keen to protect?

“PSG is about a brand of passionate people," says Allegre. "The passion is not only for football, it’s a crossover of passions and how they mix. You can be interested in contemporary art, go to a football game in the evening with friends then have dinner in a nice restaurant. All these elements were very distinct ten or 15 years ago - now they can all be mixed in one fan’s day.”