Newcastle United’s exclusive football kit supply deal with JD Sports is “anti-competitive” and will mean higher prices for fans, rival retailer Sports Direct has argued at the Court of Appeal.
Sports Direct, run by former Newcastle owner Mike Ashley’s Frasers Group, is seeking a temporary court order forcing the club to supply it with replica kit for the 2024/25 Premier League season.
Last month, the Competition Appeal Tribunal unanimously rejected the company’s request, concluding that it had “no reasonable or legitimate expectation” of continued supply from outgoing manufacturer Castore.
It said a suggestion that new kit maker Adidas and the club were obliged to continue provision would be “a significant fetter on competition”.
Amid plans for a full trial of the legal case at a later date, Sports Direct took its bid for an interim injunction to the Court of Appeal on Thursday.
The retailer’s lawyers argued at the hearing in London that the tribunal took the wrong approach and that the club’s arrangement with competitor JD Sports is “an unlawful anti-competitive agreement”.
Newcastle’s refusal to provide Sports Direct with kit will “distort competition in the retail market and ultimately lead to consumers paying high prices”, judges were told.
Tony Singla KC, representing Sports Direct, told judges the case concerned its order for 50,000 items of kit with a value of £1.5 million.
In written arguments, he said that Newcastle’s approach was “an abuse” of the club’s “dominant position” in the market.
“Bluntly put, a Newcastle fan will not switch to buying an Arsenal jersey, even if faced with a price hike,” he said.
The barrister told the hearing there was a “complete lack of transparency” over the JD Sports deal, which was done in October 2023 but which Sports Direct only learnt about in February.
He added in written arguments that “home of football” Sports Direct was “the largest sportswear retailer in the UK”, with 488 stores, that had sold Newcastle’s kit “continuously for decades”.
“The club’s fans’ alleged dislike of Sports Direct’s majority shareholder, Mr Ashley, is difficult to square with Sports Direct’s success in retailing the club’s replica kit, including through its Newcastle stores,” the lawyer said, adding in court that fans’ antipathy to the billionaire was “massively overstated”.
Mr Singla said the deal secured by the club, now majority owned by Saudi Arabia’s Public Investment Fund, aimed to “achieve higher prices in the downstream market” by “eliminating its largest competitor on that market with a reputation for fierce price competition”.
Mr Singla said an injunction needed to be in place by May 17 to allow time for the delivery of the new Adidas manufactured kit before its expected launch on June 7.
The barrister later said that after the tribunal hearing, Newcastle’s owners “injected £37 million of equity into the club”.
He said it was “fanciful” that an injunction would create Financial Fair Play issues and rejected the idea that it would “kill off” Newcastle’s “in house retail operation”.
Thomas de la Mare KC, representing Newcastle United, said in written arguments that the tribunal reached a “fully justified” conclusion.
The lawyer said Sports Direct had in recent years “enjoyed exclusive retailing rights” alongside Castore over the club’s kit which had “no material distinction” between the exclusivity now offered to JD Sports.
“Sports Direct in effect seeks an injunction to preserve the preferential arrangements put in place for it during the period when Mr Ashley owned both it and the club, even after his sale of the club,” Mr de la Mare said.
He said competition would be “preserved”, adding: “Under the new arrangements there will be at all times three independent competing retailers, the club, Adidas and JD Sports.”
Mr de la Mare said it was “entirely fanciful” to suggest an absence of kit at Sports Direct stores would make consumers less likely to return and buy other products.
“Following Mr Ashley’s period of ownership of the club, many fans feel a ‘deep and lasting antipathy’ towards both him personally and Sports Direct,” Mr de la Mare said, adding in court that fans’ relationship with the businessman was “toxic”.
“Therefore, among club fans in particular, Sports Direct simply does not enjoy a positive reputation, whether as home of football or otherwise,” he continued in written arguments.
“The idea that in this context the non-availability of shirts would make any difference is unreal: Club fans who continue to shop at Sports Direct are therefore precisely those fans who do not shop based on so-called reputational factors.”
Mr de la Mare told judges that the kit deal was “nowhere close” to an “elimination of all competition”.
He said an injunction meant Newcastle could face up to a third of certain items of kit being taken away amid its efforts to re-launch its club shop and when “football finance is more fraught then it has ever been”.
The hearing before Sir Geoffrey Vos, Sir Julian Flaux and Lady Justice Andrews ended on Thursday, with the judges due to give their ruling at a later date.
