The actual cost of a shirt

[londonowl]

With talk of 1000% mark ups and the like, I thought I would post some figures on shirt costs. This is not a defence of anything, just information. This is based on a retail price of £50 so will be out of date in 6 weeks!

 

Licensed Product, Adidas, Nike etc.

 

Average Production Cost including shipping, £4.79

Sportswear Firm Average Profit, £12.79

Club Licensing Fee, £2.79

Retailer Profit, £18.13

VAT, £8.25

The remainder is taken up by distribution, marketing etc.

 

This means that the club porits just £2.79 from shirts sold through 3rd parties though £20.92 through own retail outlets.

 

For our own 'Self produced...by Kit Partner Elev8...but made by On The Go Sports' shirt the figures are made up but explained.

 

Average production cost will be higher, I know some will claim the brands to be of a higher quality but this is not necessarily the case and they have economies of scale. Expect production cost of around £6.

Sportswear firms profit will be lower. As a new company looking to make a name for themselves, they will be hoping the deal is a good one for their business. I would be surprised if they are making more than £5 per shirt so we are looking at a cost to us of around £11 per shirt. We have presumably used air freight which will have increased the shipping cost from under 2p per shirt to closer to 50p though this may have been borne by the manufacturer.

 

Anyway, I would estimate a landed cost of approximately £11. It's a guess but not totally plucked out of thin air. In reality, it could be slightly lower but not much.

Import Duty is 12%, £1.32.

Obviously the club retains all retailer margins, there are no licensing arrangements and little in the way of distribution or marketing costs.

 

Shirt retails currently at £40.84 + VAT giving the club a theoretical estimated profit of around £28.52 per shirt (assuming all the staff in the 'Megastore' work for free), an extra £7.60 over the brands. You have to ask yourself if it's worth the trouble. If we shift 30,000 shirts, the extra profit would be around £228,000. Not an insignificant amount of money but not a particularly significant one either.

 

I would guess that for FFP, what we actually have in place is some kind of complicated licensing agreement with 'Elev8' who actually have the kits made in return for an annual licensing fee and then we obviously retain the retailers margin on top but at a lower level because in return for inflated an annual licensing fee, we will be buying the kits from Elev8 at an inflated price.

 

Obviously there is a lot of guessing in this but it absolutely is not a '1000% mark up' as I have read more than once. Actually closer to a 70% GP which is not particularly unusual in the clothing industry and especially in areas where overstocks are likely (for something with a limited lifespan). What it doesn't justify though is being the most expensive in the division at the full £59 price. That's just greed.

 

Makes no difference to me. Both my kids know that I will not buying a Wednesday shirt without stripes and the away kit is not the most appealing so unless they pull something out of the bag with the 3rd kit, they are 4 shirt sales down this year.

[londonowl]

Oops, didn't realise that was so long until I posted it. The abridged version is below.

 

Club is making money on the shirts. They don't have a 1000% mark up. £59 is too much. I'm not buying one. I like to reply to my own posts.

[OxOwl]

Six pound a shirt to make.more like 60p

[londonowl]

Just now, OxOwl said:

Six pound a shirt to make.more like 60p

I didn't make up the production costs of branded shirts. If the worlds biggest sportswear companies need £4.79 to produce one, how is some two bit Aussie going to knock them out for 60p?

[Guest Ash76]

Elev8 will be taking their share so i doubt the club is doing any better out of it, not worth the trouble imo. Chansiri may well see it differently as he, being the soul director of Elev8, will be doing better out of it.

[Costello 77]

4 minutes ago, londonowl said:

I didn't make up the production costs of branded shirts. If the worlds biggest sportswear companies need £4.79 to produce one, how is some two bit Aussie going to knock them out for 60p?

We all know it's a racket.

[londonowl]

1 minute ago, Ash76 said:

Elev8 will be taking their share so i doubt the club is doing any better out of it, not worth the trouble imo. Chansiri may well see it differently as he, being the soul director of Elev8, will be doing better out of it.

 

I don't think this is right. More likely Elev8 pay us an inflated licensing fee to help with FFP. Elev8 won't profit from the deal.

[RUMBELOWS91]

1 minute ago, Ash76 said:

Elev8 will be taking their share so i doubt the club is doing any better out of it, not worth the trouble imo. Chansiri may well see it differently as he, being the soul director of Elev8, will be doing better out of it.

You think Chansiri is taking a chunk for himself then?

 

 

[Ronseal]

13 minutes ago, londonowl said:

I didn't make up the production costs of branded shirts. If the worlds biggest sportswear companies need £4.79 to produce one, how is some two bit Aussie going to knock them out for 60p?

Cus hes a one man band knockin them up in his garage after work..on material hes imported from thailand..for 1$ a lorryload

[ash60s]

I bet the first batch smell of fish as well

[Guest Ash76]

5 minutes ago, RUMBELOWS91 said:

You think Chansiri is taking a chunk for himself then?

 

 

 

It is possible but would be legal on the face of it. Why else would you set up Elev8, if you're doing it in house what is wrong with simple SWFC branding?

 

[Guest Ash76]

8 minutes ago, londonowl said:

 

I don't think this is right. More likely Elev8 pay us an inflated licensing fee to help with FFP. Elev8 won't profit from the deal.

 

Also possible but why bother setting up Elev8? Why not keep it truly in house?

[RUMBELOWS91]

Just now, Ash76 said:

 

It is possible but would be legal on the face of it. Why else would you set up Elev8, if you're doing it in house what is wrong with simple SWFC branding?

 

Because the Chairman likes to reinvent the wheel at every opportunity?! 

[londonowl]

2 minutes ago, Ash76 said:

 

Also possible but why bother setting up Elev8? Why not keep it truly in house?

Because a licensing fee will do two things, firstly, Elev8 can pay over the odds and make a loss as long as that company can make a business case for it. Secondly, licensing fee is a fixed amount. It's better for the club finances to have a contract for £1 million a year in place and make £1.50 on shirts than for all shirt income to be dependant on sales.

Edited October 20, 2017 by londonowl

[Guest Ash76]

Just now, londonowl said:

Because a licensing fee will do two things, firstly, Elev8 can pay over the odds and make a loss as long as that company can make a business case for it. Secondly, licensing fee is a fixed amount. It's better for the club finances to have a contract for £1 million a year in place and make £1.50 on shirts than for all short income to be dependant on sales.

 

Fair enough, time will tell but my first thought was Elev8 will do well out of it

[londonowl]

Just now, Ash76 said:

 

Fair enough, time will tell but my first thought was Elev8 will do well out of it

What would be the benefit for DC to set up a company which he owns 100% whose sole purpose is to make money at the expense of another company...which he also owns 100%.

[Guest Ash76]

1 minute ago, londonowl said:

What would be the benefit for DC to set up a company which he owns 100% whose sole purpose is to make money at the expense of another company...which he also owns 100%.

 

If I have 2 companies and want to make money then it's surely beneficial to have one of them operating successfully than both operating at a loss? 

[Ronseal]

A bit ot but i bought an england shirt in thailand a few years ago for a fiver..it wer mint..exactly tje same as a 'real one'..i cant believe a thai businessman cant get a few thousand football shirts knocked up in a matter of days

[S36 OWL]

45 minutes ago, EXCALIBUR said:

no stripes no buying.they can keep that shower of crap they produced

 

^^^^^^

 

This 

[chazzyowl]

Very good point. The smaller the manufacturer the higher the production costs. Just think, larger brands such as adidas and Nike produce millions of feet of material to produce kits for hundreds of clubs around the world most using the same template; thus making the production cost remarkably low. Where as a manufacturer such as the one we're using will produce far less in comparisons and the bespoke nature of the kit means that the production cost will more than likely be higher than that of the major manufacturers. In theory anyway.