Why is Messi Buying Houses in Miami? 🤔
And, Nike vs. StockX in Fake Sneaker Battle 👟 ❌
Welcome to your weekly fix of the best stories from the world of sports business.
Today, we are going to talk about Lionel Messi and fake sneakers. Let’s start with Messi.
On Monday, Journalist Álex Candal told DirecTV Sports that Messi had agreed to join David Beckham’s MLS side Inter Miami when his PSG contract ends in 2023. This deal supposedly involves Messi obtaining a 35% stake in the club, worth an estimated $200 Million.
At this point, we should mention that Lionel Messi’s agent has called this report ‘completely false.’ Those may be strong words but they aren’t incredibly convincing when you realize that Messi has hinted at plans to join MLS in the past and has purchased numerous properties in Miami over the last few years. He even sent a video to David Beckham in 2018 when Inter Miami was born saying:
"Hi David, first of all, congrats, I hope all goes well with the new project... who knows, in a few years maybe you will gimme a call."
So, the idea of Lionel Messi joining the MLS is getting more and more realistic each month, which begs the question… Are Messi and the MLS a match made in heaven?
The short answer is yes. From a wages standpoint, he would join a club with rich investors who would be more than happy to pay him millions each year. In fact, he can expect to earn a rather astronomical pay packet when you factor in sponsorship and image rights payments. In just five years at LA Galaxy, David Beckham earned a reported $255 Million. Now imagine how much sponsors would be willing to hand over if arguably the most talented footballer of all time joins a league in the richest economy on the planet!
But what about the 35% stake in the club? Well, it is almost guaranteed that this stake, currently valued at $200 Million, will increase in value. The MLS is fast becoming one of the most popular sports leagues in America, with viewership across the major networks increasing by around 50% between 2020 and 2021.
Beckham opened his Miami MLS franchise for a fee of $25 Million and the club is already worth around $600 Million. Many analysts predict that most MLS clubs will be worth at least $1 billion within the next few years, with rising audiences causing massive increases in sponsorship and TV revenue. With Messi on board, Inter Miami would be in a better position to challenge for trophies and would attract far more in sponsorship revenue. When you factor in the upcoming multi-million dollar stadium, it seems like Messi’s investment in Inter Miami is guaranteed to see a positive return.
To get a better understanding of how Messi could improve the economic fortunes of Inter Miami and the wider MLS, let’s look at the impact he has made on Paris Saint Germain.
According to officials at PSG, the signing of Lionel Messi is one of the main reasons behind a 13% increase in the club’s commercial revenue over the last 12 months.
PSG’s overall revenue from all sources this year is set to hit a record of €700 Million (up from €556 Million last year.)
This is thanks in part to the return of crowds to the stadium but also because of 11 new sponsorship deals and a 40% increase in merchandise sales.
PSG Marketing Director Marc Armstrong has attributed the boost in income from sponsorship to the ‘Messi Effect.’
"The arrival of Messi has acted as an accelerator for several ongoing negotiations and has made it possible to further increase our brand value.”
The increase in merchandise sales can also be linked to Messi, with 60% of the shirts sold over the last year having Messi’s name on the back.
Wherever Messi ends up next year, one thing is for certain…ka-ching! 💰
Nike vs. StockX 👟 ❌
Accusing someone of having fake sneakers is a big deal! You have to be certain when you make such a grave allegation. Such crimes can see a person’s credibility reduce to almost zero.
That is what makes it surprising - and a little ironic - to hear that Nike is accusing official reseller StockX of selling fake Nike sneakers to the public.
To fully understand the entire story we need to go back to February 2022, when Nike sued StockX for breaching copyright by selling NFTs that included images of Nike shoes and logos.
As a part of the investigation process to build their case, Nike purchased four Air Jordan 1 retro’s from the StockX reseller site.
Nike inspected the shoes and discovered that, according to their own tests, all four of the pairs were fake.
What makes this discovery extremely important is that StockX claims that each pair of used sneakers sold on their reseller site is checked for authenticity.
In fact, StockX pride themselves on having a rigorous checking procedure that is supposed to practically eliminate the chance of a customer receiving a fake.
A few days ago, Nike decided to add the accusation of fake sneaker sales to the complaint filed against StockX for selling Nike NFTs.
So, why does this whole situation matter, and what could this case mean for the future of sneakers?
Well, you could argue that Nike went public with the accusation around fake sneakers to discredit the StockX brand and convince them to settle the case before further PR damage is done. This is a point of view that StockX themselves would agree with.
"Nike's latest filing is not only baseless but also is curious given that their own brand protection team has communicated confidence in our authentication program, and that hundreds of Nike employees -- including current senior executives -- use StockX to buy and sell products," explained StockX in a statement. "This latest tactic amounts to nothing more than a panicked and desperate attempt to resuscitate its losing legal case.”
Nike claim they are simply providing crucial context to their case.
"StockX has linked the infringing Nike-branded NFTs to counterfeit goods and sold those 'claim tickets' to fake shoes at heavily inflated prices to consumers who had no opportunity to inspect the shoes before reselling the NFT to another unsuspecting consumer,” explained Nike in a statement.
It is important to point out here that the NFTs that StockX are selling, award the holder ownership of a rare sneaker held in a vault. Nike are therefore claiming that, because StockX in fact hold and sell a bunch of fake sneakers, they are running a scam and the NFTs are not worth the high valuations. Furthermore, having the Nike name on NFTs that are linked to fake sneakers would damage the Nike brand.
At the end of the day, this dispute will probably have to be settled by the court and that decision could have far-reaching implications for NFTs.
Currently, there are little to no rules governing if someone can create an NFT of a copyrighted image without the owner’s permission. If StockX win the case, it could be seen as setting a precedent for other NFT makers to use copyrighted images in their products. If Nike win, expect NFTs to come under strict new copyright rules.
One thing that is certain is that StockX face a fight to maintain their reputation as a reliable place to purchase authentic sneakers.
Social media users have already started to mock StockX’s authentication process, with this video receiving almost 2 million views on YouTube and tens of Millions across other platforms.
Talking of Nike, the Oregon-based brand has just released a huge new advertising campaign to celebrate its 50th year in business.
The ad is part of a series of retro ads that Nike is set to release over the coming months.
Nike may have spent the last 50 years on top, but there are some serious challengers on their way up.
ON, the athletics company that counts Roger Federer as an investor just announced a 68% increase in revenue in Q1 of 2022. The company made $237.3 million in sales (up from analyst estimates of around $170 Million) and sold more than 1 million shoes in march alone.
While these results are promising they are still far from the $12 Billion that Nike makes per quarter.
While we have expensive sports apparel on our minds, why not check out our latest YouTube video?
Did you know that A Man Utd shirt today costs 3X as much as 30 years ago?
So are greedy club owners and apparel brands ripping us off? Come with us as we take a deep dive into the economics of football shirts.