The NFL and its apparel partner, Lidl, are taking hits on the profitability side of their business, according to people familiar with the matter.
In 2016, the NFL made $3.6 billion in revenue from apparel sales, while Nike accounted for $1.9 billion in that same period, according the people.
The NFL is also on track to earn $1 billion from licensing its apparel through 2021, the people said.
Nike is expected to have revenues of $2.1 billion this year, and the NFL’s total licensing revenue is expected hit $8 billion, according another person with knowledge of the matter, who asked not to be identified discussing an ongoing matter.
While the NFL is the league’s most valuable asset, Lids apparel and licensing business has not been able to keep up with demand.
The two companies have been at loggerheads over licensing of apparel from other companies.
Lidz apparel is owned by United Parcel Service and has licensing deals with the NFL, the New York Jets, the Los Angeles Rams and the Philadelphia Eagles.
Nike also owns Nike and has licenses to sell apparel to various retailers and brands.
The apparel deal with Nike was approved in 2014 and went into effect in 2020, according a person familiar with Lids business.
Lids is one of several companies in the NFL to have had disputes with the league over the past decade over how the league sells its products, including licensing deals and merchandising.
The most recent round of licensing disputes was between Lidls and the Cleveland Browns, who have a deal with the Browns for apparel.
That dispute led to a $1 million fine being imposed by the league last year.
The Lids dispute also resulted in the Browns paying out $3 million in legal fees, the person said.
The league is in the process of trying to settle the dispute, which is ongoing.
The company’s revenue in 2016 was $4.1 million, but the NFL said that figure is expected decline as more people shop online.
Liddell is expected be worth $2 billion, with a market value of more than $100 billion, the sources said.
It is unclear how much of the apparel licensing revenue that Lids has been able the NFL can recoup from licensing the Nike deal.