Manchester United Signs Record $1 Billion Deal With Nike
English Premier League (EPL) club Manchester United FC is set to announce a new record-breaking soccer jersey deal with Nike believed to be worth $1 billion over 10 years, according to Sports Business Daily.
Nike has been making Man U's uniforms for the last 13 years but their deal was set to expire at the end of the 2013-2014 EPL season, with adidas, Puma and Warrior Sports all interested in attaining the jersey rights to create the kits for the English club.
Manchester United's previous kit deal with Nike was less lucrative than the contracts other sports apparel companies had negotiated in recent years with powerhouse soccer clubs such as La Liga's Real Madrid CF (adidas) and FC Barcelona (Nike) of Spain or the EPL's Arsenal FC (Puma) and Liverpool FC (Warrior Sports).
The Nike-Manchester United soccer kit partnership is said to be double the amount adidas paid in 2012 for the rights to make Real Madrid's uniforms, a contract believed to be worth $41.15 million, which is set to expire in 2020.
Continuing their business relationship with Nike should bolster Manchester United's profitability, along with the record-breaking kit sponsorship deal the club signed with American auto company Chevrolet, which kicks off next season. Chevy paid $560 million over seven years to have their logos featured on the front of Manchester United's jerseys—a sum that is double what current sponsor, Aon, paid the club and smashes the previous sponsorship record set by the Qatar Foundations, which is paying Barcelona $39.1 million a year for the club to bear their name on their chest.
Chevy noted Manchester United's appeal in the Asian market, particularly in China—which has become the auto company's third largest market behind the U.S. and Brazil—as a reason to team up with the EPL club.
"The partnership with Manchester United is of a global nature, and we intend to continue this relationship to help build the Chevrolet brand around the globe," said global marketing chief Tim Mahoney to AdWeek.com.
Manchester United's deals with Nike and Chevy should be a shot in the arm for the soccer club who recently dropped from the top three on the list of the world's richest soccer franchises, according to the business advisory firm Deloitte LP. Manchester United has been usurped by defending German Bundesliga and Champions League champion FC Bayern Munich, who trail only Real Madrid and Barcelona, with Man U dropping to number four on the list.
The team's business partnerships should also soften the economic blow if Manchester United fails to make the 2014-2015 Champions League season. Man U is on the outside looking in, currently sitting in sixth-place in the EPL standings with 48 points, five points behind fifth-place Tottenham Hotspurs (53 points) and nine points behind fourth-place crosstown rival, Manchester City (57 points), with 10 league games remaining on the schedule and Manchester United needing to finish in the top four of the EPL table to earn a Champions League berth.
The club had previously counted on appearances in the Champions League as part of their long-term financial projections and have recently began to downplay the effects their failure to participate in next season's European soccer tournament will have on business.
"I would say is our starting point [for] long-term strategy is to focus on building a competitive squad that challenges for trophies," said team executive vice-chairman Ed Woodward, during a conference call with investors to discuss Manchester United's quarterly earnings. "Part of the financial strength we have and we have presented in the results today demonstrates that we have the ability to do that. We have the ability to buy players, to churn players, to make sure we are competing at the top level, which is what we should be doing."