Elite Sports Group Limited

A large sportswear company has entered administration following a price fixing scandal that drained the company’s reserves and limited its ability to secure future contracts.

Headquartered in Hertfordshire, where its office staff and UK showroom are based, Elite Sports Group Limited was the exclusive licence holder and distributor in the UK for the Hummel sportswear brand, supplying professional and amateur sports clubs across football, rugby union and league with bespoke it programmes. The company also managed the store and online retail operations for eight of these clubs. It employed 40 head office staff and 110 retail staff across its retail stores.

The company suffered financial difficulties due to the on-set of the Covid-19 pandemic, which led to a reduction in the company’s revenue, with a number of football matches during the 2020/21 football season being cancelled or closed to the public, which in turn affected sales at retail stores.

The company subsequently benefitted from greater opportunities in the pro wholesale and retail business units after two major competitors exited from the UK football market, with the company winning headline contracts with two football clubs in 2020 and 2021. These new contracts were initially profitable, but they significantly increased the company’s working capital requirements and left the business vulnerable with limited liquidity to fund day-to-day operations. Trading losses during this period were also significant.

The company’s reputation and profitability also took a huge hit from a legal claim launched against it by the Competition and Markets Authority in 2021, which alleged that the company colluded with a professional football team and sports apparel retailer to fix the price of football shirts for the team. In September 2022, the company agreed a settlement at circa £459k payable over five years. The legal case has been a significant drain on the the company’s reserves and management bandwidth, and impacted the company’s ability to win new contracts due to the uncertainty of the potential range of outcomes.

During this period, the company was placed on stop by Hummel for the supply of product for approximately six months. The company also owed considerable arrears to several football clubs and, although it was able to negotiate payment plans with a number of suppliers, it was not always able to adhere to these plans. The company also defaulted on an agreed payment plan with HMRC on VAT arrears of circa £945k.

As the company was ultimately unable to secure further funding, Benjamin Wiles and Michael Lennon of Kroll Advisory were appointed Joint Administrators on 23 November. They have been assisted by Shoosmiths.

The Joint Administrators’ proposals can be found HERE.